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Finance Consumer COVID-19’s financial impact has debt counsellors bracing for a deluge Updated:

COVID-19’s financial impact has debt counsellors bracing for a deluge

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Financial support services are adapting and expanding as the types of Australians accessing their services change due to the coronavirus pandemic.

Calls to the National Debt Helpline fell drastically following increased government support, but are beginning to increase rapidly according to the organisation’s director of community engagement, Maura Angle.

The debt helpline is a free service putting Australians in financial hardship in touch with trained debt counsellors who can help with a range of complex problems.

Speaking to The New Daily, Ms Angle said the past three-or-so weeks were quieter than their equivalent weeks in 2019.

But the tides are beginning to change, and the debt helpline received 2765 calls nationally in the week from April 20 to 26.

“For the same period last year, there were 2351,” she said.

“We are now getting an increase, and we’re expecting that to increase further from here on in because of the volume of people who are now unemployed.”

March ABS data showed only a marginal increase in the national unemployment rate, up to 5.2 per cent from 5.1 per cent in February.

But the data did not capture the full extent of job losses, as the ABS asked people whether they had a job between March 1 and March 15, before cafes and restaurants were restricted to takeaway services on March 23.

Next month’s release will paint a more accurate picture of the labour market – with leading economists predicting unemployment will soon hit double figures for the first time since April 1994.

Research house Roy Morgan estimates 2.16 million Australians – 15.3 per cent of the workforce – were unemployed by the end of April.

That loss of employment is the likely culprit for the National Debt Helpline’s increasing call volumes, Ms Angle said.

And anecdotally, many of the Australians calling have never experienced this type of financial hardship before.

Many, Ms Angle said, have found themselves jobless for the first time.

No cause for alarm

On paper it’s a worrying trend, by Ms Angle said Australians facing hardship can rest easy knowing that help is available.

What’s more, government has increased its funding for financial support services – allowing organisations like National Debt Helpline to put on more financial counsellors to assist those who need help.

But she encouraged anyone who thinks they may need assistance to call sooner, rather than later.

“Now is the time, don’t leave it,” she said.

“If you’re umming and ahhing or feeling like you’re already under financial stress, get help. The longer you leave, it the worse it will get.”

Fiona Guthrie, chief executive of Financial Counselling Australia, agreed.

“There will be a way through this,” she said.

“Talk to a financial counsellor, it can be life changing – so please ring.”

Banks, government must prepare for a cliff

Both Financial Counselling Australia and the National Debt Helpline are confident they are adequately prepared for increased demand.

Even so, Ms Guthrie said she would like to see government and banks come to the table and provide ongoing support beyond.

Relief packages offered by both banks and government (including the JobKeeper programme and increased JobSeeker payments) currently have expiry dates on them.

A sudden removal or unwinding of these programs could create a financial “cliff” which many Australians will fall off if not adequately supported, Ms Guthrie cautioned.

“My big worry is what happens after JobKeeper finishes on September 27 and if the JobSeeker payments revert back, back below the poverty line,” she said.

“There’s no doubt that one of the reasons we haven’t had as many people calling financial counsellors is that government’s safety net has helped – that’s a really good thing.

“There’s a group of people who have had enough money for the first time to pay their rent and put food on the table.”

Ms Guthrie said banks need to work with their customers to make sure they aren’t suddenly slapped with unfeasible debt levels.

And government should keep the JobSeeker payments at their current levels (up to roughly $1100 a fortnight), rather than returning them to pre-coronavirus levels (up to around $550 per fortnight) as is currently the plan.

“It needs to stay where it is; it hasn’t increased for something like 25 years,” she said.

“What kind of a community does that to people who have lost their jobs? To say they can’t have enough money for their food, for their rent or their electricity? 

“That’s what the previous payment level was like. We can’t do that to them again.”

  • The National Debt Helpline is available from 9:30am until 4:30pm Mondays to Fridays on 1800 007 007