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New report highlights Australia’s financial literacy gaps


New report highlights Australia

New global research has highlighted opportunities for Australia’s schools to improve how they teach young people about money.

The report, International Approaches to Progressing Financial Capability, by Social Ventures Australia (SVA), looks at international trends in financial literacy and capability, and identifies key ideas and approaches that may be relevant to the Australian context.

This includes the widespread development and adoption of National level strategies, with the report stating that “more than 70 countries and economies worldwide, including the majority of G20 nations, were designing or implementing National Strategies for financial literacy” as of 2020.

However, in contrast to many OECD peers, Australia’s National Financial Capability Strategy is currently inactive.

Caroline Stewart is the CEO of Ecstra Foundation, which commissioned the report. She says despite the efforts of a broad range of stakeholders focused on financial capability activities, Australia’s financial literacy levels are not improving, particularly among younger people.

“There is a risk we could fall behind globally if action is not taken,” Stewart said. “This is particularly concerning against a backdrop of cost-of-living pressures, as Australians are navigating multiple challenges, economic inequality and the continued proliferation of financial scams.”

Louise Campbell, director of SVA Consulting, said the organisation’s environmental scan and analysis shows these challenges are not unique to Australia and there are tangible ways to address a range of issues.

The research identified five key opportunities for Australia: recommit to a National Strategy, map stakeholders and funding, convene stakeholders for collaborative action, ensure quality financial education in schools, and engage in international financial capability initiatives.

“National strategies are complex, long term public policy projects,” Stewart said. “Given the many drivers of financial capability, the range of players involved and policy intersections, government leadership is critical for setting a clear, unified vision and roadmap.”

Campbell agrees that the role of strong leadership cannot be understated when “the complexity of stakeholder coordination was raised as the greatest challenge across all jurisdictions.”

“Clear leadership and effective coordination of activities and policy alignment is a success driver for better financial literacy outcomes,” she said, adding that many countries have already taken “simple, effective actions”, including mandating dedicated financial education in schools.

In the U.S, 35 states now require students to take a personal finance course to graduate from high school, while the New Zealand government recently announced its intention to make financial literacy compulsory in schools from 2025.

This follows trends in many Nordic countries, where financial education is mandatory and higher overall financial literacy rates have been achieved.

“Ecstra runs the largest face to face financial literacy program offered in schools across Australia however a whole systems change approach is needed,” Stewart said. “We reiterate our call for the government to lead a national financial capability action plan that includes elevating the importance of financial education.”

Stewart said there are many stakeholders working on financial capability and wellbeing.

“This provides a strong base for championing a renewed approach to building financial capability to improve the lives of all Australians.”

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