Exploring the impacts on financial wellbeing and food insecurity 

In July 2024, Thriving Communities Australia brought together two leading experts in financial wellbeing and food insecurity to examine the latest data and key themes surrounding the cost-of-living pressures faced by people in Australia. The guest speakers for this important discussion were Natalie Paine, Social Impact Research & Reporting Lead at ANZ, and Ian Laing, General Manager of Strategic Partnerships at Foodbank Australia.

The webinar provided valuable insights into emerging data, including findings from the latest ANZ Roy Morgan Financial Wellbeing indicator. This data revealed a notable 3.9% year-on-year decline in financial wellbeing between March 2023 and March 2024. Additionally, Foodbank shared critical information on the growing issue of food insecurity, emphasizing that the rising cost of living remains the primary reason many Australians are struggling to afford adequate food.

Participants had the opportunity to connect, learn, and contribute to this vital conversation about the ongoing challenges related to financial wellbeing and food insecurity in Australia. 

Watch the recording or read the transcript below:

Transcript:

Please note that the below transcript has been slightly refined and paraphrased for enhanced readability while preserving the original meaning and context. 

VISUAL: Ciara Sterling CEO of Thriving Communities Australia is on a Zoom video call, wearing a blazer and sitting in a home office. Ciara’s video appears each time Ciara speaks throughout the webinar.

Ciara Sterling, TCA: We've got ANZ leading the way in understanding financial wellbeing in Australia and New Zealand, with various research pieces and the ANZ Roy Morgan Financial Wellbeing Indicators released quarterly. Today, we'll delve into these indicators and also hear from Foodbank, another one of our remarkable partners. I often refer to Foodbank as the "canary in the coal mine" because when people can't afford to eat, it's a significant indicator of the hardships they face. According to their Foodbank Hunger Report released at the end of last year, 3.7 million households ran out of food last year, reflecting the severe human impact they witness daily.

I'll start with you, Nat. Could you provide more details about the ANZ Roy Morgan Financial Wellbeing Indicators and how you hope they will inform others?

Natalie Paine, ANZ: Absolutely, thanks, Ciara, and thanks for having me today. I'm eager to share our insights and hear from Ian at Foodbank about their ground-level observations. We've been examining financial literacy, capability, behaviors, and recently, financial wellbeing for over two decades. This research underpins our community programs, customer strategy, and offers a clear picture of Australians' financial health. We assess whether people can meet commitments, feel financially secure, and have resilience to handle setbacks. The indicators, developed in partnership with Roy Morgan in 2019, use their extensive dataset from speaking with around 65,000 Australians annually. This data allows us to analyze insights at a granular level and track financial wellbeing over time, including how major external factors impact people.

Ciara Sterling, TCA: Thanks, Nat. We find the indicators incredibly useful. Your updates provide valuable foresight into current trends and upcoming needs. Regarding the latest June quarterly update, what key trends and insights have emerged?

Natalie Paine, ANZ: Financial wellbeing has significantly declined, particularly since the cost of living pressures began in early 2022. From March last year to this year, there's been almost a 4% decline in financial wellbeing, with a 0.7% drop in the first quarter alone. This score is based on factors like meeting everyday commitments, feeling comfortable about current and future financial situations, and resilience to setbacks. The decline has been driven by increased uncertainty about financial situations and reduced ability to meet commitments, with resilience declining less as people draw down saving.

For instance, the proportion of people struggling to meet everyday commitments has increased from 38% in March 2022 to 45% in March 2024. Similarly, the inability to pay bills or running short of money for essentials like food has risen. The percentage of the population considered to be struggling, with a financial wellbeing score below 30 out of 100, has more than doubled from 10.5% in January 2019 to over 20% currently. Financial wellbeing has dropped to a series low of about 53.6 out of 100, indicating a long-term impact on people.

Ciara Sterling, TCA: The situation is indeed stark. The significant drop since COVID was anticipated, but the current challenges are even more severe. The need to afford food is critical, and it's evident from your data. Ian, as Foodbank is Australia's largest food pantry and releases an annual Food Hunger Report, could you provide an overview of the latest trends since your last research?

Ian Laing, Foodbank: Certainly, Ciara. While the annual Hunger Report provides an in-depth look at the state of food insecurity, it's a snapshot from last year’s research conducted around July-August. Given the rapid changes in recent years—from disasters to COVID and now cost-of-living pressures—a more immediate view is crucial. We’ve seen a rise in difficulty putting food on the table from 46% of households in March to over 52% in June. This trend matches the increase in website usage for our find food function, now at over 26,000 people per month, a new high for 2024. Despite stable interest rates for now, inflation is creeping up, affecting food and energy costs. With rising inflation and housing costs, many people prioritize essentials like housing over food, making food a variable cost. This shift forces people to choose cheaper, less nutritious options, impacting both physical and mental health. Over 50% of renters and a third of mortgage holders are struggling to put food on the table, and if interest rates rise further, more people will face severe difficulties.

Ciara Sterling, TCA: We're indeed hearing similar concerns. The potential for further interest rate increases, declining employment rates, and rising costs make for a challenging situation. My own energy bills have already increased by 50% from last quarter. Seasonal factors like a particularly cold winter further exacerbate these issues. It's clear that food prices are impacting people's ability to eat healthily. Ian, you mentioned that many are turning to cheaper, less nutritious food options, which has significant implications for mental and physical health?

Ian Laing, Foodbank: Exactly. We see a shift in shopping behavior where people prioritize discounts and cheaper alternatives, leading to less fresh produce and protein in their diets. This reliance on cheap carbohydrates, like rice and pasta, not only affects physical health but also contributes to mental health challenges. A monotonous diet can be demoralizing, and people’s sense of well-being deteriorates when they have to make do with less nutritious food.

Ciara Sterling, TCA: Natalie, building on Ian’s points about financial pressures, can you share more about what the indicators reveal regarding lower and middle-income households, especially those with children? Are there any insights into spending patterns or common myths about where people allocate their money?

Natalie Paine, ANZ: Yes, absolutely. In our latest update, we examined how the ability to make commitments has declined over the past couple of years, with a more rapid decline in the last 12 months. We looked into questions about financial sentiment, particularly focusing on whether people have recently cut down on their spending. We found that the percentage of people reporting reduced spending increased from about 62% in March-April 2022 to around 71% in March this year. This trend was most noticeable among lower and middle-income families, particularly those with children and dependents at home. Around 82% of households earning less than $100,000 a year with children reported cutting down on spending, and about 80% of households earning between $100,000 and $200,000 did the same.

When we examined the data further, we saw that per capita spending on discretionary items like retail and dining out had fallen the most among households with children. For lower-income households with kids, there were significant declines in categories such as personal entertainment, computing, large electrical expenses like white goods, and clothing and footwear. The only category where lower-income families with children increased spending was on phones. This highlights the importance of these devices in daily life, as they are used for banking, paying bills, and staying in touch with family and friends. Despite the reduction in other spending areas, lower-income families with children are spending more on phones. Conversely, spending on going out has decreased for these families, although middle and higher-income households have seen an increase in their spending on going out. This rise for higher-income groups may reflect higher costs rather than increased frequency of outings. Grocery spending has increased across the board by about 9%, but households with children have experienced a larger increase compared to those without. This might be due to efforts to prioritize healthier food options for children, which can be more expensive. Households with children may be cutting back on these items, while lower-income households are struggling the most.

Ciara Sterling, TCA: It's interesting to hear about new technology trends. I spoke with a Telco last week, and they mentioned that access to devices is a significant issue. For young people, technology and internet access are critical, and the impacts are evident. Can you provide more details about the increase in people experiencing significant financial vulnerability?

Natalie Paine, ANZ: Certainly. About one in five Australians fall into the low financial wellbeing or struggling category. Specific groups are overrepresented in this segment. Approximately a third of renters, 31% of Aboriginal and Torres Strait Islander people, and around 27% of lower-income households are in this struggling category. Women and people aged 35 to 49 are also overrepresented, along with younger individuals aged 14 to 24. Those in the struggling category are often anxious about their financial future and less likely to seek formal support or discuss their financial situation with banks or utility providers. Additionally, the proportion of people with financial wellbeing scores below 50 out of 100 has increased from about one-third pre-COVID to around 44%. Many people are at risk of falling further into financial difficulty.

Ciara Sterling, TCA: It’s tough to hear this information and think about the future. If there is another interest rate rise, what might the flow-on effects be? Could it impact people’s spending, increase job risks, and continue these issues? I see many cars lining up at food banks every weekend. From a data and trend perspective, what are the most concerning issues you’re seeing for people in tight situations?

Ian Laing - Foodbank: One of the biggest concerns is that people are not getting the help they need. We categorize food relief into three main sources: formal food relief services, help from friends and family, and people who receive no help at all. In our annual study, about a quarter of food-insecure people get help from organizations like Foodbank or other charities. Around 30% receive support from friends and family, such as groceries or money. However, 56% of food-insecure people are not receiving any help. This is a serious issue because it means that more than half of those struggling are not getting assistance.

For context, with 3.7 million households experiencing food insecurity last year, nearly 2 million households didn’t receive any help. This lack of support leads people in difficult financial situations to make short-term decisions that harm their long-term budget. They might buy groceries using buy-now-pay-later services or payday loans, which can have immediate and lasting negative effects. A major barrier to receiving help is embarrassment. About 45% of people who need assistance from Foodbank or similar services do not reach out due to shame. It’s a significant mental hurdle for those who haven't faced such hardship before. Another touching but heartbreaking reason people avoid seeking help is the belief that others are worse off. Even those who are struggling may not view themselves as vulnerable, thinking food relief is for people with more severe issues, like homelessness or domestic violence.

Currently, 60% of hungry households have someone in full-time work. These individuals believe they are doing everything right by working and trying their best, but still find it hard to put food on the table. They are often younger, in the $100,000 to $200,000 income bracket, and feel they don’t deserve food relief. The recent rise in costs—rent, bills, and insurance—has pushed them into difficult situations. Since they aren’t visibly destitute, they don’t see themselves as eligible for food assistance. We need to educate the public that Foodbank is available for everyone, not just those who are homeless. We encourage everyone to help spread this message. With 2 million households not receiving help, we have a significant challenge ahead.

Ciara Sterling, TCA: We need to get the message out about the embarrassment people feel and the belief that others are worse off. This sentiment is common across various issues, like natural disasters or family violence. People often go without help because they think someone else deserves it more. And don't get me started on buy-now-pay-later schemes—that's a whole other topic. Essentials are now topping the list for buy-now-pay-later, which is distressing. What is Foodbank working on? You mentioned education—what other responses are you exploring? Foodbank is such an innovative organization; what other strategies are you considering?

Ian Laing, Foodbank: One of the biggest shifts we’ve made is moving towards direct delivery to customers. Before COVID, most of our food distribution was through other charities. However, this didn’t reach everyone in need. During lockdowns, we started drive-through services where people could collect personal care and food hampers without questions. This highlighted the scale of the latent demand for our services. Now, we’re looking at trialing direct deliveries to people’s front doors. The hampers will be in non-branded bags to look like any other delivery. This addresses the challenge of access, especially since many food pantries have limited hours and are not open in the evenings. Another initiative is using Woolworths stores as collection points for our products. This way, people can pick up food while shopping, making it less obvious they are using Foodbank services. We’re trying to remove barriers to access. However, unlocking even a small portion of the latent demand would require us to find an additional 7 to 8 million kilograms of food. The challenge is that our food donations are decreasing. The efficiency improvements from the supply chain squeeze have resulted in less surplus food available for rescue. We’re now partnering with manufacturers to purchase key staple items like rice, pasta, bread, jarred sauces, and personal care items to ensure we stay stocked.

Ciara Sterling, TCA: And removing those barriers is crucial.  I'll turn it over to Emma our General Manager of Partnerships now. We’re running out of time, and it’s amazing how quickly 45 minutes can go by. Emma, please take it from here.

Emma Martin, TCA: Thank you. We have a couple of questions. The first one is for both of you. Are there any notable differences across the states that stand out to you? Ian, I’ll start with you, then pass it over.

Ian Laing, Foodbank: We don’t see significant state-to-state differences. However, there is a noticeable variance between metro and regional areas. People in rural and regional Australia are about a third more likely to be food insecure compared to those in metro areas, regardless of the state.

Emma Martin, TCA: Thanks, Ian. Natalie, how about you?

Natalie Paine, ANZ: Yes, there is some variation. Nationally, financial wellbeing scores show a slightly higher proportion struggling in country areas—about 22% versus 20% in city areas. Queensland often shows higher rates, and specific regional areas like parts of country New South Wales, Victoria, and northeast Tasmania also report higher proportions of struggling individuals. It’s more about localized regional pockets rather than broad state differences.

Emma Martin, TCA: Great, thank you. Another question, Ian—there is sometimes a concern about food waste. Innovative partnerships are emerging with local food pantries. How is Foodbank addressing the balance between food insecurity and food wastage? What innovative ideas are you exploring in this area?

Ian Laing, Foodbank: Yeah, it's a good question. It highlights a significant issue in Australia where we produce enough food to feed 75 million people, despite having a population of just over 25 million, yet we also face a $20 billion food waste problem. About a third of this waste comes from edible food that never leaves the farm. This is often due to the financial unsustainability for growers to continue investing in the product. We could discuss the economics of farming extensively, but we have a new program called "Surplus with Purpose" to address this issue. With this program, we work with farmers to rescue edible food that would otherwise go to waste. For example, we recently helped an avocado grower with an excess harvest. Instead of letting the avocados go to waste, we covered the costs of picking, packing, and distributing them, allowing us to get $2 million worth of avocados for $50,000. We've also applied this approach to potatoes and plums. This program is just a few months old, but we’re already seeing great results and gaining access to high-quality produce. The biggest problem with food waste is at the consumer level, accounting for nearly 40% of all food waste. Until we address this issue effectively, it will remain a significant challenge.

Ciara Sterling, TCA: We’re almost out of time, but I want to highlight the importance of innovative partnerships. For example, the Brotherhood of St. Laurence’s Save-a-Plus program, which has been running for 21 years, has been life-changing for many participants by helping with education and essential expenses.Partnerships are critical, and we value collaborations here at TCA. I’ll ask both of you for one final takeaway. We have many more questions, but time is limited. What final thoughts would you like to share?

Natalie Paine, ANZ: The key takeaway is the importance of seeking help when struggling to meet financial commitments. It’s crucial to speak with financial counselors, use available tools, and communicate with banks or utility providers when facing difficulties. Reaching out to community organizations is also important. Although it can be challenging and confronting, especially for first-time experiences, talking to providers and coming up with plans early can make a significant difference. Additionally, having a single story to tell simplifies the process for individuals seeking help.

Ciara Sterling, TCA: Thank you, Natalie. Ian, what’s your final thought?

Ian Laing, Foodbank: I encourage people to consider how they can support Foodbank, whether through spreading the word or letting clients and customers know about our services. Feel free to get in touch with me if you’re interested in helping.

Ciara Sterling, TCA: Thank you both so much. We’ve seen an increase in referrals through the One Stop One Story Hub, with many coming from people who hadn’t reached out before. The more we can spread the message about available support without stigma, the better. Thank you again, Natalie and Ian, for your insights. Thank you to everyone who participated. We look forward to sharing these learnings and may send out a communication summarizing them. Stay warm, stay safe, and stay healthy!