Financial Wellbeing and COVID-19

The Centre for Social Impact (CSI) has published a factsheet discussing the fiscal policy responses by Australian governments to reduce the impacts of the COVID-19 crisis on the financial wellbeing of the nation.

This factsheet highlights the need to address the gaps created by the “problems-based” approach implemented by the Australian Government in response to the COVID-19 pandemic.

The full CSI factsheet can be found here.

Introduction to financial wellbeing and COVID-19

The COVID-19 pandemic has dramatically impacted the global economy. In Australia, lockdown practices and physical distancing rules have reshaped the functioning of society and the economy.

The most significant change already observed, is that many households have seen their income reduced significantly because job losses and insecurity caused by the pandemic.

While so far, measures have supported financial wellbeing for many Australians, a recent Consumer Policy Research Centre report estimates that 12 million Australians are concerned about their financial wellbeing as a result of COVID-19.

As we transition from a public health crisis towards an economic and social one, it is important to consider the principles that underpin our recovery. Those principles must be informed by who is included in the recovery, and how they should be included.

  1. Keeping up with day-to-day expenses,
  2. Meeting future expenses,
  3. Being able to cope with unexpected financial events.

All Australian households have experienced at least one of these areas. To unpack this, we need to first understand the position Australia was in before the crisis.

Financial wellbeing before COVID-19

Alarmingly, before COVID-19 there were many economic indicators which pre-empted that Australia would struggle to cope under the stress of a new financial crisis. Here are some prior pandemic indicators which emphasise areas of pre-existing financial stress and poor financial wellbeing:

  • One-third of the Australian private rental market is in housing stress, whereby housing costs are higher than 30 per cent of household incomes.
  • Worldwide, Australia has the second-highest household debt to income ratio.
  • Given an emergency, one Australian in eight is unable to raise $2,000 in a week.
  • One-third of Australian households have less than one month of income in savings.

This means for many Australians a slight reduction in household income would be devastating and many do not have the savings to support their household if their incomes did decrease.

The impact of COVID-19 on Australian households

Unemployment throughout the pandemic has been a key driver of increased financial stress, which jumped from 5.2 per cent in the March quarter 2020 to 7.4 per cent in the June quarter 2020. These figures do not include people who were stood down and are receiving the JobKeeper payment. This means unemployment is in fact significantly higher than captured by the ABS Labour Force Survey. For those who stayed employed, many faced reduced hours. Monthly hours worked between March 2020 and April 2020 fell by 9.5%. The flow-on effect of reduced and insecure income for Australian households is housing stress, which is a major concern for many Australians now.

There are predictions that mortgage stress levels during this crisis will exceed those experienced in the Global Financial Crisis (GFC) in 2019. Mortgage stress is already impacting approximately 1.4 million Australians. Whilst banks have deferred and/or reduced mortgage repayments there is a greater concern when these relief initiatives are removed soon. So, knowing this is impacting the financial wellbeing of so many Australians and despite many initiatives and support packages by the Governments and financial institutions, what else is needed in Australia to improve financial wellbeing?

Recommendations to improve Australians’ financial wellbeing

So far, the government has been implementing a “problems-based” approach to improving the financial wellbeing of Australians. The approach frames solutions through the questions of “what does government need to do to support the economy until it returns to normal again?” Whilst this approach is beneficial for delivering timely solutions, and all levels of the Australian Governments have been able to deliver a breadth of support through this approach, there are gaps and inequalities created by this approach. The problems focused approach looks at the new problems but often excludes the already existing problems. For example, the casualisation of the Australian workforce was not considered with the JobKeeper support payments, resulting in a large proportion of the Australian workforce left without support during this time. For this very reason, some of the most vulnerable groups within Australian society have been excluded or insufficiently supported and forced to make difficult decisions in a time of crisis.

Arguably, and for these reasons, the Government must consider shifting from a problem-based approach to a principles-based and strengths-based approach. A principles-based approach focusses on achieving ideals of social outcomes. Whilst a principles approach can be complicated, it is designed to be more adaptable and can be better applied to everyone, not just selected groups.

A key principle Governments need to implement is the outcome of no one being left behind, so vulnerable groups in society are prioritised and inequity does not grow. Below are some of the key gaps which will require additional support, specific to the housing and community sector. A full list of gaps can be found in the CSI factsheet.


Many Australians are at risk of homelessness when the moratorium on evictions and the deferral or reduction in rental and mortgage repayments ends. Furthermore, many households experiencing reduced incomes will be under increased housing stress.

Increasing support for people with a disability

Despite other social welfare payments being increased, the disability pension not been increased. People with disabilities have been experiencing increased costs and require additional support through the pandemic. Increased support is needed to provide adequate care and support during these challenging times.

Debt related stress

Australia has the second-highest debt to income ratio and this requires urgent attention by the Australian Federal Government. Decisions to reduce housing debt-related stress should not be determined by financial institutions. Investment in financial counselling programs is an important priority.

Protecting the financial future of vulnerable people

Accessing superannuation early is a detrimental financial support initiative at best. This does not ensure the future financial security of Australians and those who meet the eligibility criteria are already significantly financially vulnerable. Policy considerations to rebuilding Australians’ super holdings need to be considered, especially for vulnerable groups who have taken advantage of the two, up to $10,000 superannuation withdrawal opportunities.

Supporting NGO’s and charities

Many sectors, including charities, were initially excluded from the JobKeeper program. A COVID-19 Community Sector Impact Survey showed 33 per cent of charities surveyed thought that COVID-19 posed a significant threat to their viability, and an additional 39 per cent a small threat to their viability. This lack of support also does not consider the increased demand on charities and community services during the pandemic. Providing increased support to charities and NGO’s is essential to prevent future hardship experienced by those who rely on such services and to prevent people from missing out on needed support.

Increasing the previous JobSeeker Payment

Many Australians breathed a sigh of relief when the JobSeeker payment was increased above the poverty line during the pandemic. The previous Newstart payment was below the cost of living, causing many Australians to live below the poverty line and forced many households to miss meals and not access the support health needed. The recent announcement by the Federal Government to cut the JobSeeker payment by $300 a fortnight is unfair and unjust as it will again push many Australians below the poverty line from September.


The COVID-19 pandemic has emphasised the need to successfully navigate the public health crisis whilst reducing the long-term economic and social cost and supporting the financial wellbeing of millions of Australians. While Australia is faring relatively well compared to the rest of the world, the Government responses have created increased inequities across Australian society and the gaps need to be addressed.

A principles approach which focuses on societal outcomes needs to be considered as a new approach for Government and vulnerable groups who have been left behind by current government initiatives need immediate support.