Media Release

 

FOR RELEASE: 18 August 2020

Young people facing debt tsunami as they borrow from their future to make ends meet

New consumer data released today by the Consumer Policy Research Centre (CPRC) investigates the experience of consumers during the three months from May to July and raises serious alarms about the debt tsunami facing young people (18-34) as they try to make ends meet during COVID-19.

  • 70% of young Australians are now concerned about their financial wellbeing.
  • Compared to the general population, young Australians (18-34) were three times more likely to have taken on a loan from a payday lender or consumer lease in July and twice as likely to have taken out a personal loan just to make ends meet.
  • Young people were the most likely group to have missed payments across every household bill and at a rate of 2-3 times the general population.
  • Housing affordability remains a key concern for young people, with over half (52%) of all young renters and just under half of young people with a mortgage (45%) concerned about their ability to make payments in July.
  • Across the general population, 4.7 million Australians are now very concerned about their financial wellbeing – jumping from 19% in May to 24% of the population in July.

CPRC’s new research initiative Consumers and COVID-19: from crisis to recovery is collecting and analysing the experiences, behaviours, expectations and challenges of Australians throughout the COVID-19 pandemic with monthly quantitative surveys from May to October.

Results from the three months from May to July have painted a picture of concern for young people in particular, as they are increasingly turning to loans or borrowed money from loved ones to stay afloat.

“What concerns us most about these most recent results is that we’ve seen a spike in young people turning to high cost and high-risk credit products just to make ends meet. Over 300,000 young Australians right now are taking out payday loans to manage basic household expenses,” said CPRC CEO, Lauren Solomon.

With increased concern around housing affordability and managing household bills, young Australians have been more active in reaching out to providers for help, with around 30% getting in touch to switch plans, ask for payment assistance or access concessions.

However, negative experiences with essential service providers are on the rise across all sectors with over 30% of consumers reporting some type of poor experience with at least one provider in the previous 4 weeks. Telecommunication providers, landlords and property managers were outed as offering the worst levels of support.

“Disappointingly, we’ve seen spikes in consumers reporting problems when reaching out for assistance across every essential service market. The message to companies, and landlords is simple: this burden must be fairly shared. It’s crucial they step up to the mark and provide the hardship support that consumers have a right to access,” said CPRC CEO, Lauren Solomon.

The recent data has also revealed startling consumer distress across the general Australian population, as anxieties about the future run high.

Jumps in concern about ability to meet basic household expenses have been seen for every household bill:

  • half (49%) of Australian renters are now concerned about their ability to pay rent (up from 37% in May)
  • more than a third of Australians are concerned about energy bills (34% in July, 27% in May)
  • and almost a third (29%) are reporting affordability concerns when it comes to groceries (25% in May)

Today’s release will be followed by monthly updates on the Australian consumer experience of COVID-19 through to November 2020. Through rolling monthly quantitative surveys, CPRC is collecting and analysing the experiences, behaviours, expectations and challenges of Australians from May to October.

The CPRC’s foundational report Consumers and COVID-19: from crisis to recovery presents building blocks for policymakers and businesses supporting consumers on an uncertain path towards recovery, where policy choices made now will have long-term consequences.

Download Consumers and COVID-19: from crisis to recovery

Consumers and COVID-19 Monthly Briefings will be available at www.cprc.org.au.

-Ends-

For more information: For further information or interviews with CPRC CEO, Lauren Solomon:

Darren Saffin – darren@progressivepr.com.au / 0411 089 209 or Jodie Artis – jodie@progressivepr.com.au / 0414 699 186

Key Survey Findings May – July 2020

• Young people (18-34) in July were:

  • three times as likely to have taken out a loan from a payday lender or consumer lease in July than the Australian population.
  • twice as likely to have taken out a personal loan from a bank.
  • twice as likely to have borrowed money or resources from family and friends.
  • twice as likely to have accessed assistance from a community organisation or emergency relief agency.

• Young people were also among the most likely group to have missed payments across every household bill and at a rate of 2-3 times the general population:

  • 10% missed a rental payment (5% Aus population)
  • 7% missed a mortgage payment (3% Aus population)
  • 10% missed an energy payment (5% Aus population)
  • 7% missed a telco payment (3% Aus population)
  • 8% missed a credit payment (3% Aus population), and
  • 6% missed an insurance payment (2% Aus population)

• Housing affordability remains a key concern for young people, with over half (52%) of all young renters and just under half of young people with a mortgage (45%) concerned about their ability to make housing payments in July.

• The good news is that the word about the support available appears to be getting out. Young people have been far more active than the general population in reaching out for assistance in managing household bills, contacting providers for payment plans, switching plans or providers or accessing concessions:

  • 32% with rental payments (22% Aus population)
  • 37% with mortgage repayments (22% Aus population)
  • 30% with energy bills (17% Aus population)
  • 31% with telco bills (18% Aus population)
  • 28% with credit repayments (13% Aus population)
  • 31% with insurance bills (16% Aus population)

• It’s now crucial that essential product and service providers step up to the mark and ensure that consumers can access the support they need. Negative experiences have been concerningly on the rise for consumers across all sectors, with around over 30% of consumers reporting some type of poor experience with at least one provider in the previous 4 weeks

• Telecommunication providers, landlords and property managers were outed as offering the worst levels of support, with 21% of all renters reporting they had some kind of negative experience with them in July.

• The number of negative experiences reported jumped dramatically for those consumers seeking payment assistance – 85% of consumers that sought payment assistance from telecommunications providers reported a negative experience and 73% for those engaging credit providers.

Across the Australian Population

• A startling picture of consumer distress has been revealed today by the Consumer Policy Research Centre (CPRC)’s Consumers and COVID-19: from crisis to recovery research initiative.

• Anxieties about the future are running high, with 4.7 million Australians now very concerned about their financial wellbeing – jumping from 19% in May to 24% of the population in July.

• Jumps in concern about ability to meet basic household expenses have been seen for every household bill:

  • Half (49%) of Australian renters are now concerned about their ability to pay rent (up from 37% in May).
  • More than a third (35%) of Australians are concerned about mortgage payments (up from 27% in May).
  • More than a third of Australians are concerned about energy bills (34% in July, 27% in May), likely due to elevated bills due to working/staying at home.
  • Concern about affordability of groceries is becoming more widespread – with almost a third (29%) reporting concerns – across both the metro centres and regional Australia.
  • Jumps in concern were also found for insurance (25% to 31%), credit (22% to 26%) and telco (internet and mobile) (20% to 25%) bills.
For more information:

For further information or interviews with CPRC CEO, Lauren Solomon:

Darren Saffin – darren@progressivepr.com.au / 0411 089 209 or Jodie Artis – jodie@progressivepr.com.au / 0414 699 186