Young people are finding it extremely difficult to develop themselves as independent adults.
Irresponsible lending practices jeopardize this even more.
For Tash Drujinin, things have been going well lately.
The 29-year-old landed a stable job in the financial services industry a few months ago. She got a permanent job while several thousands were laid off because of the pandemic, and the protection meant that she could eventually pay off the $20,000 she owed in credit card bills and personal loans.
That had been coming for a long time.
Although the country enjoyed economic growth for almost three decades in a row, Drujinin went into debt in her early 20s to fund her escape from family abuse.
Although Centrelink rejected her application for welfare, her bank was willing to accept a $15,000 platinum credit card for the “barely employed” university graduate with a 19 percent interest rate. The debt ended up costing her thousands in interest payments and a decade of her life, as she sees it.
She says that her “lost decade” had slowed her whole life down as she had to find a way to repay the money.
“It’s really hard to explain to people what that feels like,” Drujinin says. “It’s not like the condition you’re in has a tag. There’s no disorder that says why it’s like this in your life.
You’re not going to stop worrying about that.
Anxiety is produced and it becomes crippling.
Every single aspect of your life is affected. You get in the car, the engine light is turned on, or the gas light is switched on. Then you begin to negotiate with yourself over what should be your priority.
“And you know, a lot of people out there have it worse than I do.”
‘One of the fortunate ones’
Drujinin feels like one of the lucky ones today – especially now that the Morrison government is talking about rolling back responsible lending laws.
In September, by making it easier for individuals to get loans with less restrictions, the government announced it would finance economic recovery through debt. The step will coincide with other moves to scale back economic aid and restore payments for social security to levels far below the poverty line.
For those now entering their 20s, Drujinin says that means bad news.
“It made me so angry when I first read about it,” she says. “I almost personally took it.
It was like we had learnt nothing from the global financial crisis. From the Royal Commission, we did not learn anything.
I’m now in a great place, but what about the other 20-year-old young women who are coming along now? ”
Treasurer Josh Frydenberg – and the Reserve Bank of Australia – touted it as a step to ‘remove red tape’ when the easing of lending rules was revealed last September.
“As Australia continues to recover from the Covid 19 pandemic, it is more important than ever that there are no unnecessary barriers to the flow of credit to households and small businesses,” Frydenberg said.
“Maintaining the free flow of credit through the economy is critical to Australia’s economic recovery plan.”
Massive household debt for Australians
The National Consumer Credit Security Act will be amended under the government’s plan to encourage lenders to lend money without carefully determining whether the borrower can afford to repay the loan.
The plan explicitly contradicts the initial recommendation of the Royal Banking Commission, which called for the clause to be left alone in order to avoid the same predatory lending that originally led to the investigation.
“The NCCP Act should not be amended to change the requirement to assess impropriety,” the study said.
Australians are now among the world’s most indebted individuals.
Recent OECD statistics show that the ratio of Australian household debt to net disposable income is 217%, which indicates that the average household owes twice the sum it receives in a year.
The Bank for International Settlements positions Australian household debt at 119 percent as a percentage of GDP – second only to Swiss debt.
Although much of this debt is triggered by the housing market, for young people, the situation is more complicated.
Many are burdened by a constellation of personal financial agreements that are less likely to own assets – credit cards, overdrafts, Z