The Australian social security system has traditionally been an all-or-nothing kind of deal. It has not been designed to help you move up, but rather is almost guaranteed to keep you dependent.

How does it do this? There are many ways, but a particular example is that the system encourages asset poverty. Asset poverty is different from income poverty, which occurs when someone does not have money enough coming in. Asset poverty is when families do not have savings or wealth to fall back on when their income gets cut off.

But if you’re income poor, the social safety net – which is largely the pensions system and Newstart – requires you to also be asset poor. If you have too much in the bank, you’re not qualified, even if you don’t have an income coming in.

Now, that makes sense on the surface. After all, we don’t want millionaires with lots of cash in the bank in the welfare line.

The problem is that we have created a system where people can’t be their own safety net. Maybe they need some income support just for a few months, but they can only get it if they spend down their savings to the point where, if they are cut off for any reason, they’ll flounder. It makes families dependent on social security and unable to move forward. While the amount you can have saved has increased to $5000, this is not much to cover you if you lose your job, let alone experience a financial set-back like a broken down car, a health crisis or a death in the family.

What we need, instead, is a system that helps people get ahead – and that is what asset-building and financial inclusion is all about.

Asset-building is about supporting low income families to develop savings and simple household assets. Research and practice have shown that family ownership of even a few thousand dollars in assets can give children not only a measure of economic security, but also a real sense of possibility and hope for a brighter future.

Financial inclusion programs provide access to affordable and appropriate financial services, including loans, savings and insurance. Financial inclusion programs aim to alleviate and eliminate poverty, reducing reliance on exploitative or unfair lenders and other financial providers.

A particular tool for fighting poverty that brings together financial inclusion and asset-building is emerging – and that is matched savings programs. An example of such a program is Saver Plus, a program developed by the Brotherhood of St Laurence and ANZ.

The concept is simple – a person sets goals, and saves to achieve them. The goals relate to education, their children’s or their own, as education can help people get ahead in life. They get special help working toward those goals – help getting their entitlements, filling out forms or figuring out a budget through participating in workshops. Then, most importantly, every dollar they save goes into a special account that’s matched by ANZ. A single mother saving for a computer for their child puts in $50 at the end of the month, and Saver Plus puts in $50, making a total of $100.
 
The story of Jacquelyn, a Saver Plus graduate, demonstrates its impact. Jacquelyn is a single mother of four children living in the suburbs and working part-time. Jacquelyn joined Saver Plus to get into the habit of saving on a regular basis and to help pay for her further education.

In the past Jacquelyn tried to save but found it difficult. Saver Plus made it easier because of the incentive provided by the matching, as well as the tools and guidance the program offered.

Jacquelyn said the advice and support offered to her was invaluable.

“Initially it was hard to save, but once I got into a regular saving habit it became easier. It was rewarding to watch the money grow,” Jacquelyn said.

During the program Jacquelyn was able to identify some key spending leaks, such as being talked into buying things she didn’t want, often by her children.

“Rather than giving into my children and buying takeaway food or treats when I was at the supermarket, I am now in the habit of putting extra money into my savings account” Jacquelyn said. “The program really enabled me to further my education and increase my knowledge about my personal financial situation”.

Jacquelyn put the money towards studying a certificate and bought a laptop computer for her children. She said that having a laptop has made a huge difference, allowing both her and her children to use it for school projects.

Saver Plus has recently been expanded with support from the Australian Government, acknowledging that we need a support system that helps people get ahead. Saver Plus is now available in 60 communities in every state and territory across Australia.

While this support will help many more vulnerable people build a savings habit, it needs to grow further and be integrated within a broader national financial inclusion strategy, which would build financial literacy, capability and inclusion. Such a strategy should set out policies and programs that:

• provide opportunities to save and build assets;
• improve access to fair and affordable financial services;
• ensure entitlements and support systems are accessible, structured simply and respond to both immediate and longer terms needs; and;
• improve financial literacy and capability.

So often, we in the welfare sector are told that poor people are lazy or unmotivated. It is true that some families face difficulties in becoming more self-reliant. However, many families are dependent on government assistance, not because they want to be but because the system gives them little choice. If we want to end poverty, we’ve got to start championing and supporting policies that work to build families’ assets as well as their income, giving them a softer landing when economic crashes occur.