NWRN has signed a contract with the Australian National University for new independent research, to be conducted by Professor Peter Whiteford and Sue Regan of the Crawford School of Public Policy. The aim is to identify new measures which may help address the poverty traps that arise when people run out of money while they are still excluded from receiving social security payments. While this happens in only a small percentage of cases (when taken as a proportion of the total number of exclusion periods applied) they are a large proportion of our member centre’s casework due to the extreme poverty and hardship of people that result.
When a person receives a redundancy or compensation payment it can result in a long period of exclusion from social security payments. Sometimes, things go wrong and a person runs out of money before the end of their exclusion period. Things that can go wrong may include failed investments, impaired decision making capacity arising from an injury or mental illness, subsequent uncompensated injuries or illnesses, lack of experience in financial management of lump sums, relationship breakdown, addictions, financial exploitation, to name a few. The result is extreme poverty and hardship, particularly for those who have limited support available from family and friends.
In some cases we see (particularly the compensation cases), much of the person’s money was spent on the purchase of a house, or on paying off the mortgage. In this situation, people report that they are unable to obtain a loan where they have a house but no income stream to meet repayments.
The NWRN has therefore commissioned the research to look into existing home equity market options and practical barriers to people on Income Maintenance Periods (IMP) and Compensation Preclusion Periods (CPP) accessing these options. This would include whether an extension of the pension loan scheme to people in severe financial hardship while serving an IMP or CPP might be viable, and any possible pros and cons.
Other topics to be covered include options for use of structured settlements and financial products that might be developed as a tool to help people manage their compensation payments.
Bearing in mind the relative vulnerability and barriers faced by the clients that the NWRN are concerned with, consideration will be given to issues of availability, accessibility, likelihood of uptake, factors influencing uptake, interest, fees and charges, and other incentives.
NWRN has also recently been successful in advocating for the Fair Work Ombudsman to make changes to its website and its template letter sent to people being made redundant to include warnings about the possibility of an income maintenance period being imposed. We have also recently been successful in convincing the Department of Human Services to change its employment separation certificate to include similar warnings.