Making ends meet: fostering security and dignity in tough times

How has the cost-of-living crisis intersected with long-term drivers of financial stress?

At a glance

Over the past five years, Australia has faced increased uncertainty, worsening underlying inequalities. This has left many households having to cut back spending or take on more work just to stay afloat, with many going backwards. Many are experiencing financial stress – some for the first time.

To better understand financial stress in times of crisis, we interviewed 43 low to middle-income people across urban, peri-urban and regional areas. Most reported multiple indicators of financial stress. We used a combination of interviews and surveys to elicit details about income, credit and debt, how they managed money from day to day, and subjective feelings of financial wellbeing. This provided insights that can inform policy reform that fosters security and dignity.

Dive deeper

The cost-of-living crisis has collided with the existing long-term drivers of financial stress, such as insecure work and inadequate income support. Soaring costs and unaffordable housing expose low and middle-income households to a web of intersecting risks. Those most exposed include people relying on uncertain incomes, those experiencing unemployment, as well as those locked out of the labour market due to ill-health, disability or caring responsibilities.

Key points arising from the study

‘Now everything is expensive’

• Rising costs have added to existing pressures for low-income households.
• People live in fear of losing their homes.
• Cheaper housing comes at a financial and personal cost.

Employment fails to protect against financial stress 

• Uncertain hours of work mean uncertain incomes and increased stress.
• People are faced with tough choices, doing what they can to keep going and look after their children.
• Ill-health and disability can push people into poverty.

Inadequate income support undermines security

• Income support payments have not kept up with the rising cost of essentials.
• Payment conditionality and complex administrative arrangements leads to confusion and the risk of debts.
• Older people remain stuck on JSP long term.

Stuck in survival mode 

• Insecure employment, inadequate income support, and the challenge of managing childcare and health needs left people feeling stuck.
• Unexpected costs magnify risks and increase pressure.
•  People are taking on more and more debt to cope with the rising costs
• Living in financial stress long term can lead to shame, anxiety and hopelessness.

Our findings highlight that people trapped in insecurity cannot budget their way out of poverty, no matter how hard they try. Indeed, constant belt tightening takes a toll, limiting social participation, affecting health and wellbeing, and leaving many without hope. An alternative approach is needed – one that ensures that the foundations of economic security, like affordable housing, decent work and a fair and adequate social safety net enable all Australians to live with security and dignity.

Ways forward

Decades of piecemeal policy changes have failed to meaningfully address the drivers of financial stress. Some progress has been made, but the challenges are urgent and need bold action across and between a range of systems including taxation, housing, employment and social security.

While systemic change will take time, our report presents a range of urgent actions that can be undertaken now.