While debate on the adequacy of the safety net for working age Australians continues, the dialogue around asset building has only just begun. We constantly refer to people who rely on income support as "low income earners", low paid" or low anything else that places this group at the bottom end of the scale. This includes relatively low levels of assets - it's pretty difficult to build any sort of asset base when housing, food, utilities and transport costs consume most of your income.
One application of asset based policy is incentive or matched savings schemes. Acknowledged as a key strategy by which low income people can improve their financial capability, save and build assets, individual development accounts or IDA's as they are known in the US & Canada are restricted savings accounts with the savings matched by a donor, often at the rate of 2:1 but sometimes at 3:1. Funds saved and matched can only be used for educational purposes, purchasing a home or starting up a new business.
There are hundreds of government supported community based asset based projects operating in North America & the UK. The American Dream Demonstration, the largest US project, found that when provided with the right institutional and program supports, low income people can and do save for asset oriented uses. A similar project has operated in Australia for the last two years. SaverPlus was developed by the ANZ Bank and the Brotherhood of St Laurence in Melbourne and includes three major components: matched savings at the rate of $2 for every $1 saved, to a maximum matching amount of $2000), financial literacy education and relationship management. Participants must meet certain criteria to join the program- they had to be parents or guardians of children enrolled in a government secondary school, be in receipt of a health care card, earning income apart from Centrelink income support payments and a demonstrated capacity to save. Total savings were directed towards a goal that related to secondary school educational costs. Items saved for and eventually purchased included computers and other IT equipment, stationery, books, uniforms, school camps, tuition, TAFE fees and sports and musical equipment. Comments from participants include:
"It's made me more aware of saving for my children's education and educating me in finances. Before this I did not save for their schooling and was financially unprepared for the school year"
"My daughter and son have been attending Maths tutoring, They both feel more confident about Year 9 & 10 Maths exams and it has reduced the stress when trying to understand new Maths subjects"
There were 268 participants in the pilot, most being female sole parents aged between 30-50 years .The key findings from the pilot included:
· 92.4% of participants achieved their savings goal. Average monthly savings was $104.10
· Average final balance of participants savings at the end of the saving period was $1198
· 94.7% of participants reported an increase in their financial and money management capabilities
· 84.2% of participants reported that they were still saving three months after completing the program
· Participants reported a sense of achievement, an increase in self-confidence, feeling more in control and positive impacts on the family and the children involved.
There is clearly an opportunity for researchers, Governments, donors and community based organisations to investigate asset based policies that will help low income South Australians to save and sustain their futures. SACOSS is keen to hear from potential partners to progress this initiative.