Role for Government in delivering financial capability

This Strategy is designed to raise public awareness on the current financial capability barriers which exist as well as encouraging the dissemination of information, tools and support available to make individuals more adept at navigating an increasingly complex financial world.

The Commonwealth Government can assist to build financial capability in ways that would not otherwise be delivered by others in the financial capability community. This is because of its size and capacity and its unique access to individuals through, for example, the school curriculum, the tax and transfer system and other Government interactions, and information and welfare services.

The size and capacity of the Commonwealth Government means that it is best placed to deliver large‑scale initiatives that reach a significant number of Australians. This can be through creating new resources or leveraging pre‑existing resources and amplifying their audience through the utilisation of Government touchpoints. The Government is also well positioned to take a holistic view of financial capability and direct interventions where they will support the work already being undertaken. This could include:

Providing leadership at a national level by creating and encouraging mechanisms for greater coordination and information sharing between stakeholders
Commissioning specific research or convening expertise on financial capability challenges and how to address them
Identifying initiatives that are successful in building financial capability and exploring opportunities to scale‑up their reach.

Existing Government initiatives with a focus on financial capability

There already exists across Government a range of initiatives that include improving Australians’ financial capability as one of their functions. Some of the most significant ones are outlined in Figure 2 below. The transfer of policy responsibility for financial capability to the Treasury provides the Government with the opportunity to provide leadership and a centralised perspective on how these initiatives are developed and delivered, to ensure that they have the greatest impact on building individuals’ financial capability. Many of these are being delivered through agencies within the Treasury portfolio, particularly ASIC and the Australian Taxation Office (ATO), with whom Treasury works closely. The Department of Social Services (DSS), Services Australia, Department of Education, Skills and Employment (DESE) and Department of the Prime Minister and Cabinet (PM&C) also deliver significant initiatives with a financial capability component.

Existing Government Financial Capability Initiatives

National Financial Capability Strategy

In addition to setting the framework for future actions, the new National Financial Capability Strategy will bring leadership and a common perspective to the work already being done in existing programs to build Australia’s financial capability.

General Programs

Moneysmart (ASIC) – A website program of consumer education helping Australians to be in control of their financial lives. Programs include Moneysmart for Teachers, and applied research into consumer financial decision making.
Manage Your Money (Services Australia) – Financial information such as how to budget, manage debts, accessing financial counselling and savings/retirement.
Boosting your Super campaign (ATO) – Aims to improve visibility of superannuation options and consequences for individuals to encourage the growth and protection of their retirement savings.
Your Future Your Super Project (ATO) – Aims to make the superannuation system work better for people: individuals are able to choose well-performing products that suit their needs, and it holds funds to account for poor performance.
Funding for financial capability through Community Benefits Payments – Delivered by Ecstra Foundation and funded through the Community Benefits Scheme, Ecstra provides resources, support and education to assist financial consumers. Ecstra provides grants to support financial education, community programs, research and outcomes measurement.

Indigenous Australians

Indigenous Women’s Financial Wellness Strategy (PM&C) – Delivered by the First Nations Foundation, the IWFWS supports and empowers Indigenous women across Australia with money skills for a safe and prosperous financial future.
Indigenous Outreach Program (ASIC) – Provides support to Aboriginal and Torres Strait Islander consumers who want to know more about money matters. The team also works with industry and consumer advocates to improve services provided to Indigenous Australians.

Low income earners / vulnerable people

Tax Help program (ATO) – A free service that helps low-income earners lodge their tax return online. Tax Help is a network of ATO-trained and accredited community volunteers.
Financial Information Service (Services Australia) – Helps financially vulnerable customers make informed decisions about their current and future financial needs.
Commonwealth Financial Counselling and Financial Capability (DSS) – Voluntary, free and confidential services to help eligible people to address their financial problems, make informed financial choices and build their financial capability.
Commonwealth Financial Counselling and Financial Capability: Capability Building (DSS) – Supports the capacity and capability development of organisations funded for Commonwealth Financial Counselling activities, to deliver high quality, high functioning services.

Small Businesses

ATO Small Business Program – Aims to improve Small Business owner’s tax and super experience and provide support to help them manage and grow their business or help them get back on track if they need it.
Entrepreneurship Facilitator initiative (DESE) – Provides new business starters with facilitators to provide information and advice about running a business, mentoring, workshops, networking events and links with useful services.
Exploring Being My Own Boss Workshops (DESE) – Aims to give new business owners an understanding of self-employment and entrepreneurship and be better able to identify business opportunities.

Young People

Moneysmart for teachers – provides resources, including activities and e books, aimed at teachers to support them teaching young people about money in the classroom.
Tax, Super + You (ATO) – A resource for secondary school teachers mapped to the Australian curriculum. Developed to interactively educate future taxpayers on the value of the tax and superannuation system and what their role is in them.
Paying it forward (ATO) – A teaching resource which focuses on developing civic values and the financial wellbeing of primary school students that is mapped to the Australian curriculum.
Teacher professional development (ATO) – An accredited online professional development course for primary school teachers to help them in educating students about the value of the taxation and superannuation systems.

Women

Preventing Financial Abuse project under the Fourth Action Plan to Reduce Violence against Women. (PM&C) – Targeted actions to prevent and address financial abuse against women, with online resources translated into ten languages and best practice workshops for the women’s and financial services sectors.
Government funding for women’s economic security – In 2018/19 the government announced funding to Ecstra Foundation to support initiatives to help women be in control of their financial lives.

CALD Communities

Migrant education (ATO) – Aims to teach new migrants about the value of the taxation and superannuation systems, their role in these systems and their personal tax obligations, with in-language videos and print materials, presentations and events.

Bringing a financial capability perspective across Government

The Department of the Treasury is leading financial capability policy at a national level across the Australian Government. In addition to leading development and implementation of the Strategy, Treasury is positioned to bring a financial capability perspective to many related issues.

Processes closely related to financial capability

The table below shows links with other current Government policies and reform agendas that will have a direct impact on individuals’ levels of financial capability, or where increasing financial capability will directly improve outcomes under those strategies.

Government strategies and reforms	Relationship with financial capability
Consumer Data Right	The Consumer Data Right (CDR) gives consumers the ability to safely and securely access and share data created about them through their interactions with their service providers. This includes, for instance, information about their spending history and saving habits held by their banks. By giving consumers the ability to use this data, the CDR encourages innovation in financial technologies which can contribute to positive financial outcomes among consumers. Examples could include apps to help people set budgets and understand their finances, or services that recommend better products to consumers based on their actual spending habits and saving needs. The CDR can also help consumers share their data with certain professionals, including financial counsellors and financial advisers, reducing the administrative hassle of receiving informed financial help. Understanding one’s own financial situation is one of the objectives of this Strategy, and the CDR can assist individuals to make more financially capable decisions reflective of their broader financial situation.
Australia’s Digital Economy Strategy	The Strategy complements the priorities outlined in the Digital Economy Strategy to support digital inclusion and efforts to improve digital literacy, which are increasingly important for engaging with financial services.
Australian Curriculum	The Australian Curriculum (Foundation to Year 10) includes financial literacy concepts, largely as it relates to business, economics, civics and mathematics. The Australian Curriculum Assessment and Reporting Authority (ACARA) is currently undertaking a review of the curriculum. The new curriculum is expected to be published, subject to endorsement by the Commonwealth and State and Territory Education Ministers, in 2022.
2021-22 Women’s Budget Statement	Women’s economic security is one of three priorities in the 2021‑22 Women’s Budget Statement. Increasing women’s financial capability can increase their financial security and help ensure women are in control of their financial lives.
National Plan to Reduce Violence Against Women and their Children	Financial abuse of women is a form of domestic violence and women’s safety and financial capability are linked.
National Agreement on Closing the Gap	Enhancing the financial capability of Aboriginal and Torres Strait Islander peoples has the potential to contribute to progress on a number of the outcomes under the 2020 National Agreement on Closing the Gap and contribute to the National Roadmap for Indigenous Skills, Jobs and Wealth Creation.
National Plan to Respond to the Abuse of Older Australians (Elder Abuse) 2019‑2023	The National Plan provides a framework for action over four years, to respond to abuse of older people. It sets out the commitment of the Australian Government and each of the eight state and territory governments to undertake research, provide services, and develop policy and law reforms to address a complex problem in need of a comprehensive response.
*Implementation of Government response to the Countervailing Power: Review of the coordination and funding for financial counselling services across Australia* (the Sylvan Review)**	The Government funds financial counselling services, which offer independent, free and voluntary services to help eligible people address their financial problems, make informed choices and build their financial capability. The Sylvan Review recommended a raft of measures to ensure the long term viability of the financial counselling sector. The Government is currently implementing its response to the Sylvan Review.

Processes complementing financial capability to achieve financial wellbeing for individuals

Beyond financial capability, Treasury has policy responsibility for other issues that affect financial wellbeing, such as regulation of financial and credit products and services, consumer protection and the taxation system.

Financial capability plays a complementary role to many of these other processes. In the case of consumer protection in financial policy, the regulatory system creates the environment under which individuals make their decisions, while their level of financial capability influences whether they make the optimal decisions for their own individual circumstances within that environment.

This Strategy is focussed on financial capability and not the other factors that affect the environment in which an individual makes their decisions. However, there have been significant steps in these complementary areas in recent years and moving financial capability to Treasury ensures that financial capability will be considered in future complementary reforms. Some of the reforms and reviews completed or announced in recent years are outlined below.

Government reforms and reviews
Government response to the Financial Services Royal Commission (FSRC)	The Government response to the FSRC has included a number of reforms that improve consumer protections. Below are some of the reforms that directly affect the information or pressure a consumer faces when making financial decisions. Strengthening anti hawking provisions for insurance and superannuation products to prevent pressure selling to consumers. Introducing a Deferred Sales Model for add on insurance to ensure that consumers are not pressured into buying add on insurance products they do not need. Replaced the duty of disclosure regime with a duty to take reasonable care not to make a misrepresentation. This ensures that consumers’ claims are not declined where they may have inadvertently failed to disclose their past circumstances. Extended unfair contract terms provisions to insurance contracts. Standard form insurance contracts offered to consumers and small businesses on a ‘take it or leave it’ basis are now unable to include terms that are considered unfair.
Payments System Review 2021	The payments system plays a key role in the economy by facilitating Australia’s economic activity by providing a safe, efficient and effective way for Australians to exchange money for goods and services. The payments system review made a number of recommendations to ensure Australia’s regulatory architecture of the payments system remains fit for purpose and able to respond appropriately to change. Through its response to the review on 8 December 2021, Government committed to implementing the majority of the recommendations of the review, including recommendations: that consumers and businesses should be at the centre of policy design and implementation that the Government should set strategic direction of the future payments framework by developing a Payments System Strategic Plan to modernise the regulatory framework governing payment systems to modernise the existing licensing framework for payment service providers to provide increased education in relation to payments for consumers and businesses.
Design and distribution obligations	The DDO regime will help consumers obtain more appropriate financial products by requiring issuers of financial products to determine an appropriate target market for their products that considers the likely financial circumstances and needs of consumers. Issuers and distributors will then be required to take reasonable steps to ensure that products are distributed accordingly.
Financial advice review	The Government has committed to a review of the effectiveness of measures implemented by the Government, regulators and financial services entities to improve the quality and affordability of financial advice. The Government released draft terms of reference for consultation between 16 December 2021 and 4 February 2022.
Retirement Income Covenant	The Government is introducing a retirement income covenant to codify the long standing expectation that superannuation fund trustees consider the retirement needs of their members. By requiring trustees to increase their focus on the retirement phase of superannuation, member outcomes will be improved while enabling choice and competition.
Scams	The Government is working to protect Australians from scams. The Australian Competition and Consumer Commission (ACCC), the independent statutory authority responsible for administering the Australian Consumer Law, publishes guidance to assist consumers to avoid scams (www.scamwatch.gov.au) and enforces the consumer protection legislation.

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National Financial Capability Strategy PDF