Government urged to put financial literacy on the curriculum

The final report, Women’s Economic Equality: A 10-year plan to unleash the full capacity and contribution of women to the Australian economy, was released by the Minister for Women Katy Gallagher on Monday (23 October 2023).

It flagged that Australian women are much less likely to work full-time than women in many other OECD countries (according to OECD data from 2023) and that the gender pay gap for mean adult weekly ordinary full-time earnings is 13.3 per cent.

Moreover, it cited statistics from the Australian Bureau of Statistics (ABS) that showed that across the first five years of parenting their first child, women’s earnings are reduced by 55 per cent on average (but during the same time men’s earnings remain unaffected).

The average 25-year-old woman today who has at least one child could earn $2 million less over her lifetime than the average 25-year-old man who becomes a father, if current patterns continue, it added.

The report found that the economic cost of women not participating fully and equally in the workforce is estimated at $128 billion each year.

Meanwhile, the median superannuation balance of men aged 65 and over in the 2019–20 financial year was $208,200. This figure stood at $168,000 for women. More action is needed to help level these numbers.

It therefore put forward seven main recommendations, containing a range of immediate and longer-term actions, which should be brought in to “cumulatively drive Australia towards a stronger economy and gender equality over the coming decade”.

The seven main recommendations call on the government to:

1. Provide leadership and accountability for driving economic equality outcomes and embed gender equity into its decision making, budgeting and policy design, implementation and evaluation mechanisms.
2. Invest in policies and programs that recognise the economic importance and value of care work in Australia and help families to better share caring responsibilities.
3. Utilise its legislative, regulatory and spending powers to ensure all Australian workplaces create safe, secure, flexible and equitable work opportunities that support women’s economic participation.
4. Provide women in Australia with lifelong, accessible, flexible and affordable education and skill building. They must also remove existing disincentives and inequities that perpetuate industry and occupational segregation and sustained pay and wealth gaps.
5. Undertake a long-term, targeted and deliberate investment program to ensure women are leading and building the economy in equal measure to men.
6. Ensure that women have financial security across their lives and are increasingly building lifetime wealth and economic equality.
7. Invest in programs to address community attitudes and bias that prevent women’s full economic participation across a lifetime.

Under Recommendation 6, the taskforce recommended that the federal government immediately take action to ensure financial literacy programs are part of the curriculum for all high school students.

According to the group, this would “enable young people to understand the basic concepts of managing personal finances, building personal wealth and the life states and choices that can have a significant impact on economic security”.

Reflecting on the need for specific financial literacy education, the taskforce flagged that “in order to change outcomes later in life, it is critical to make changes at earlier life stages”.

It noted that a National Financial Capability survey found young Australians and women did not perform as well on average on financial literacy and Treasury research showed that 82 per cent of young people reported that their understanding of financial concepts comes from conversations with parents and carers.

“Instilling positive financial behaviours and habits in young Australians is critical to help them navigate ‘financial firsts’, such as a first job, first major purchases and moving out of home. These behaviours can provide the foundation for future financial decisions and can set up young Australians for future financial success and resilience,” the taskforce said.

The WEET also urged the government to co-design a comprehensive financial support program for victim-survivors of domestic and family violence that enables them to leave violence, re-establish safe and stable housing and focus on recovery without incurring financial losses (which would build on the trial Escaping Violence Payment program).

Other, longer-term actions focused on improving female financial security include:

• Requiring banks and financial services to continue to develop financial products and services specifically for the needs of women across their life course, which are free or very low-cost. “This includes for women escaping domestic and family violence, buying a home, experiencing divorce and/or retirement planning,” the taskforce added.
• Introducing regulation and/or initiatives to ensure the needs of women are protected when using specific financial services, including those that have harsh penalties and consequences, such as buy now, pay later schemes.
• Removing the Child Support Maintenance Income Test (MIT) from the Family Tax Benefit Part A (FTBA) calculation, to establish certainty of FTBA payments for financially vulnerable families and to prevent child support from being used as a tool of financial abuse.
• Reducing the financial penalty from caring responsibilities, such as carers’ tax offsets upon re-entering paid work, and pausing indexation on HECS-HELP debts for periods of time away from paid work.
• Reviewing the taxation and transfer systems with a gender lens to identify negative gender biases and examine options to address the high Effective Marginal Tax Rates (EMTRs) experienced by women.

Outside of finance, other notable actions that the government has been urged to implement immediately include legislating to establish and invest in universal, high-quality and affordable early childhood education and care and legislating the payment of superannuation on all forms of paid parental leave.

Sam Mostyn, the chair of WEET, commented: “We have arrived at a moment of consequence where a genuine commitment to respect women, and valuing and nurturing their economic contribution by removing systemic barriers, is vital.”

Ms Gallagher thanked the taskforce for its report, stating: “Led by Sam Mostyn AO [former president of Chief Executive Women], the WEET has identified the barriers that women face in the Australian economy and provided government with practical advice on how to address these issues.

“The government will consider these recommendations alongside the analysis and policy directions of the Employment White Paper as we continue to develop a National Strategy to Achieve Gender Equality that will be released in 2024.”

Find out more about how the financial services industry could create an inclusive workplace that empowers women, come along to the Women in Finance Summit 2023.

It will be held on Friday, 10 November 2023 at The Star, Sydney.

Click here to book tickets and don’t miss out!

For more information, including agenda and speakers, click here.

[Related: Business training key to empowering women in finance]