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Renters, single income families at most risk -

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Renters, single income families at most risk from financial crisis

The World Today - Thursday, 7 May , 2009 12:18:00

Reporter: Oscar McLaren

PETER CAVE: Today the Wesley Mission threw itself into the debate on the financial crisis in Sydney
with the release of a report into financial stress. The organisation puts out reports yearly but it
says this most recent one gives it the greatest cause for concern.

It paints a picture of single-income families and families who are renting being most at risk and
unable to meet the modest increases in the cost of living.

Wesley Mission has used the report to call for national efforts to boost financial literacy.

Oscar McLaren was at the report's launch.

OSCAR MCLAREN: The Wesley Mission surveyed 450 families in the Sydney region at the end of last
year.

The questions dealt with a number of issues about their financial status but they focussed on two
key scenarios. One was whether households would be able to handle an increase in accommodations
costs of $160 per month. The other was whether they would be able to meet a sudden cost of $2,000
for something like a medical bill or car repairs.

One-fifth of families said they wouldn't be able to handle the $160 increase, and one-quarter
wouldn't be able to find the $2,000.

The CEO of the Wesley Mission, the Reverend Keith Garner says there were also worrying signs about
people's debt levels.

KEITH GARNER: More than one in four of the respondents surveyed in our study found it difficult or
impossible to pay off their credit card bills and that really is a serious issue. In fact what is
perhaps even more serious is many people are putting on to those credit card bills things like
utilities, things that are actually going to go up.

Whatever people are saying, whichever political colour, whichever analyst says that is actually one
of the things that's going to happen. You know our electricity, our water, our gas, all those
things. And if you start sticking those too on the credit card, well, you've got painful things
that are there.

OSCAR MCLAREN: When interviewed after the launch of the report he said that renters are at the most
risk.

KEITH GARNER: For lots of reasons people have actually found that there are less opportunities to
rent because some people have lost their investment properties because they can't lend anymore
because they can't pay their mortgages.

And there has been some talk about rents coming down. We have to say that what we have found is
that that's not equally across either a city like Sydney or New South Wales or I suspect all across
Australia. And so there really is pressure upon people who are renting.

OSCAR MCLAREN: Now you mention that this survey, the actual questionnaires were handed out in
December of last year and that a lot of the effects, you know these $160 increases in living costs
might have happened already.

KEITH GARNER: Oh look, we've found every time whenever we've put a stake in the ground the
situation has got worse.

And although people are talking about green shoots I think when a situation improves it takes a lot
longer to improve than it does to get bad. And so I think the recovery from the illness is going to
be longer. The impacts are only just beginning to be felt and of course we're waiting to hear
what's going to happen in the unemployment market. And we'll see some not only figures but
indications of where the Government feel that's going to go.

But we're very concerned for single families, for people where there's only one income and for
people who are in middle and lower Australia because they really are doing it tough.

OSCAR MCLAREN: The Wesley Mission has renewed calls for a nationwide financial literacy program to
educate people at various stages in their lives.

The Minister for Superannuation and Corporate Law Nick Sherry was on hand at the launch today,
fresh from announcing new regulation of margin lending. He gave no specifics but agreed that a much
broader financial literacy program is needed.

NICK SHERRY: That needs to take place in a range of ways; very obviously at school level - basic
budgeting, basic budgeting. They're important, these are important holistic issues to minimise any
impact of the financial distress we see in the community at the present time.

OSCAR MCLAREN: The Wesley Mission says financial counselling services are being overwhelmed and it
had to turn away two-and-half-thousand families from its services last year but the Reverend Keith
Garner says he's concerned to see that many people are just trying to avoid the issue of their
financial difficulties.

KEITH GARNER: Fewer people, this is a strange thing to say but fewer people sought help from
financial, professional financial advisers and people who might be counsellors.

That's an interesting thing because you might expect the opposite. You might expect we're entering
a time when it gets tougher and harder that we'll seek out people that help. But our experience has
been here through the professional counselling services that we provide here at Wesley Mission,
we've realised that in fact less people go for help.

And that head in the sand, that caught before the lights of the car is a common experience. People
are struggling to manage so what do they do? Nothing.

PETER CAVE: The CEO of the Wesley Mission in Sydney, the Reverend Keith Garner ending that report
from Oscar McLaren.