9 August 2012

Opening Address, MoneySmart Schools Teacher Training Conference

Introduction

Thank you Greg.

Chairman of the Australian Government Financial Literacy Board Mr Paul Clitheroe and Board members, State and Territory education officials, teachers, Australian Securities and Investments Commission staff, distinguished guests, ladies and gentlemen.

It's with great pleasure that I officially open the ASIC's first national MoneySmart Teacher Training Conference. Welcome. I'm thrilled to be here with you today.

The benefits of financial literacy education

I'd like to reiterate Greg's comments in his video - increasing the number of teachers who are skilled in MoneySmart Teaching will help build the financial literacy of young Australians into the future.

I believe it's critically important to have a formal structure for consumer and financial literacy education in schools.

Knowing how to manage personal finances is one of the most important and challenging features of everyday life. It's a core skill in today's world. It affects our quality of life, the opportunities we can pursue, our sense of security and the overall wellbeing of our society.

Young people today are interacting with money and making consumer choices from an early age. They are growing up in a fast-paced consumer society where money is increasingly 'invisible', where there is a growing range of choice and complexity in consumer and financial products, including online, and where individuals carry a greater level of responsibility for the decisions they make in these areas.

Our young people now in school will face a number of social, economic and moral challenges in their lifetimes that will impact on their lives and choices.

Effective consumer and financial education empowers students in the face of such challenges. It contributes to students' cognitive, personal and social development, and develops the capabilities needed to address their short-term consumer and financial issues and concerns as well as shape their longer term social and economic futures.

Through consumer and financial education, students will learn:

  • how to manage their money and plan for future needs and wants, now and into the future;
  • how to balance risk and reward to make informed decisions in consumer and financial contexts;
  • they'll learn about the rights and responsibilities of consumers in modern society, and the wider impact of our everyday decisions; and
  • they'll learn the language of money and how to navigate the ever-changing consumer and financial landscape.

It's worth noting that good consumer and financial literacy skills are also a core component of community wellbeing. Indeed, there's a strong correlation between financial health and mental health. No matter how much money people have, a little or a lot, being confident about money matters fosters confidence in one's self and in the broader community.

Conversely, poor financial literacy skills can lead to a lower standard of living. People who have not been taught the basic principles of money management may not be able to fully contribute to society, resulting in financial and social exclusion. The global financial crisis has reinforced to all of us in government, the finance sector and across all parts of education, that consumer and financial education needs to be a priority.

This is even more important today given most Australians are concerned about the cost of everyday expenses like electricity, food and housing. In addition to the range of measures the Government is putting in place to help people make ends meet, financial literacy education has the potential to give people the long-term tools and life skills to better handle cost of living pressures and take control of their lives.

But more than that, research conducted by ASIC last year tells us that there are a number of reasons why it's essential to have a formal structure for consumer and financial literacy education in schools.

Firstly, a number of factors appear to influence people's knowledge and understanding of financial matters, including their attitudes and beliefs about money, their confidence levels, their interest and engagement and their socio-demographic characteristics.

Secondly, people tend to know and understand simple day-to-day money management concepts like budgeting, savings and debt, but struggle with more complex concepts like investing and saving for retirement.

Thirdly, most people rely on a wide range of information and advice services when researching financial decisions and trying to gain financial knowledge. This includes informal sources such as family and friends, as well as formal avenues like financial advisers and accountants.

Finally, ASIC's research found that there is a significant mismatch between what people say they know, and what they actually know. Many people probably think they're more financially literate than they really are. And then, even 'knowing' something is different to being able to apply it in practical situations

It's also worth pointing out that the 2011 ANZ Financial Literacy Report found that it's young people, in particular those aged 18 to 24, who have the lowest levels of financial literacy.

Financial literacy education in Australia

Over the years, financial literacy has been taught to varying degrees in schools across Australia. However, there's been a lack of national consistency and focus.

This variability has meant that many young Australians haven't always learnt basic skills in financial literacy by the time they leave school.

Unfortunately, School Education Minister Peter Garrett can't be with us here today and sends his apologies. I'm sure he would've spoken about the inclusion of financial education in the Australian Curriculum for Mathematics. This will mean that for the first time, students across Australia will benefit equally from a curriculum with a focus on money and financial maths education - a great outcome.

Add to this the alignment of the National Consumer and Financial Literacy Framework and strands within the current maths, science, English and future economics and business curricula, and we have plenty of opportunities to teach using a consumer and financial literacy context. This will give the next generation of young Australians a greater chance to build a stronger future by becoming informed consumers and investors and making smarter consumer and financial choices.

For young Australians, making smart choices with money means shopping around for the most appropriate mobile phone plan; knowing what questions to ask when filling out a super choice form for the first time; and understanding what it really costs to buy and run a car.

When I was a teenager, learning about money was a lot more straight-forward. My generation didn't have to contend with PINs, automatic transfers, mobile banking and so on. These technology-driven innovations are great when we use them correctly. But they may make it harder for young people to conceptualise the true value of money, which for the most part is something unseen.

Research shows that skills that help young Australians make informed financial choices in day-to-day life need to be taught at a young age. And those skills can last a lifetime.

MoneySmart Teaching

This knowledge is an essential part of preparing for adult life at work and running a household. Now thanks to the MoneySmart Teacher training initiative, every student will get this valuable education.

As part of this program, the Gillard Government is investing $10 million to provide a comprehensive suite of teacher training modules.

  • First, there'll be face-to-face professional learning, linked to the Australian Curriculum, for a minimum of 6,000 teachers in Australian primary and secondary schools. This professional development training will build teachers' capacity to integrate consumer and financial literacy education into the new Australian Curriculum. And this is why you're here today to receive this training through the MoneySmart Teaching package.
  • Second, we're providing a suite of online professional learning modules linked to the Australian Curriculum to supplement the face-to-face professional learning.
  • And third, the package includes a range of online and digital resources for teachers and students that will support the consumer and financial literacy content in the Australian Curriculum and help teachers engage students in 'real world' financial literacy situations.

The Australian Government is extremely proud to be driving this important initiative. We're also delighted that five states and territories - New South Wales, Victoria, Western Australia, South Australia and the ACT - have entered into a National Partnership with ASIC to deliver the necessary professional learning to teachers and to establish MoneySmart Schools.

The work completed so far has been the result of a strong collaborative approach from education officials with the shared goal of supporting our teachers and students. While some states and territories were unable to partner with ASIC, thanks to positive working relationships, ASIC has been given permission by education departments in those jurisdictions to work directly with schools and teachers so that we have a fair and consistent national approach.

International developments

Internationally too, it's encouraging to see more and more interest in this space. For instance, financial literacy has been a growing focus in the work of the Organisation for Economic Cooperation and Development, or OECD, over the past decade. The OECD has been encouraging countries to invest in financial literacy education at school and continues to undertake work in this field.

The OECD has said that "younger generations need a high level of financial literacy to take responsibility for their current and future financial decisions". In recent years, both developed and emerging nations have experienced shrinking welfare systems, shifting demographic profiles, including increased longevity, and wide-ranging developments in the financial marketplace. This has raised concerns about the financial literacy of both adult and young people.

In 2009, the Secretary-General of the OECD announced that there would be a financial literacy component in the 2012 Programme for International Student Assessment, or 'PISA', underscoring the critical importance attached internationally to financial literacy education in schools.

This is a great development and for its part, ASIC has actively supported and funded the inclusion of consumer and financial literacy in PISA 2012.

PISA 2012 will establish the first international benchmark on the level of financial literacy and on the financial behaviour of students. It will provide key data and analytical tools to assess gaps and needs in consumer and financial literacy, and will also allow for international comparisons.

The PISA field trials were conducted in Australia mid-2011 and the Main Study started in July this year with the results to be published by early 2014.

The Australian financial literacy framework

Here in Australia, we're well prepared for PISA thanks to the extensive research and planning that ASIC has carried out, and the structures we have in place with the National Financial Literacy Strategy, MoneySmart Teaching initiative, and ASIC's National Reference Group, made up of key education and consumer affairs agencies.

The Strategy, together with the updated National Consumer and Financial Literacy Framework, aims to help Australians improve their financial wellbeing.

For our educators, the framework also provides guidance on how consumer and financial education can be structured to support learning through the school years from Foundation to Year 10.

MoneySmart Teaching is a key ASIC priority and the cornerstone to bringing about long-term generational change in knowledge, skills and behaviours.

It's worth noting that the MoneySmart teaching package is also supporting the work done by the Australian Curriculum Assessment and Reporting Authority, or ACARA, on a new national economics and business curriculum. The draft paper, Shape of the Australian Curriculum: Economics and Business, is currently open for public consultation and ACARA will use feedback on the paper to guide the writing of the draft Australian Business and Economics Curriculum later this year.

Conclusion

So as you can see, consumer and financial literacy is not just about the core skills of basic arithmetic. The skills that our children will develop under your guidance will hopefully last a lifetime and lead to positive behaviours and actions.

This is important work. And the most critical aspect of this will be the role that you as teachers play in making this happen. I'm confident the MoneySmart Teacher training you'll receive over the next two days will increase your confidence, knowledge, skills and capacity in this important area.

Thank you all for attending the conference and taking the first step in guiding the next generation of financially literate Australians.

Thank you.