SUBJECTS: MoneySmart teaching
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ROSS GREENWOOD:
I'll tell you one thing that happened this week and that is the Federal Government has come out with an initiative that I think is long overdue. It's basically through ASIC, the Australian Securities and Investments Commission, and you know that they now have pretty much full charge trying to educate people about their finances. The ACCC also does a good job, in particular with scams. Well, the research that they've put out shows that it's really young people, those coming out of school aged between 18 and 24, who have got the lowest levels of financial literacy which we frankly should be ashamed of. It means it's something that has been missing in our schools and even though there's been a lot of programs gone through the schools, ultimately it's still producing kids that don't fully understand the implications of credit, of trying to balance their banking, of being able to even to work out the way in which mobile phone plans work and that means that people come out of school wasting money with massive debts potentially from credit cards and HECS debts over their heads. Well, the man who launched it this week is Bernie Ripoll, the Parliamentary Secretary to the Treasurer, who joins us now on Sunday Business. Hi there, Bernie.
BERNIE RIPOLL:
Good day, Ross, how are you going?
GREENWOOD:
Good thank you. Here is the interesting thing about it is that if kids still are coming out and being forced to wait until they are in the workforce to learn about finances and to actually get their own personal situation under control, it makes it almost a lack of productivity for Australia overall.
RIPOLL:
Look that's completely right, Ross, but it also sets you up for a lifetime of making the wrong decisions, not understanding what your financial options are and placing yourself at a disadvantage compared to others who are a little bit more financially literate and just understand what it means to, you know, have compounding interest or to, you know, have a good savings plan or how much money they should be putting into superannuation. Critically important that we start as young as possible and that's what we're trying to do with this particular program.
GREENWOOD:
The interesting thing is that there have been initiatives in the past like the Financial Literacy Council that Paul Cliteroe did such tremendous work with and he is still working with ASIC and its MoneySmart site and so forth, but the truth is that it needed something from a whole-of-government point of view to be able to try and get the curriculums right so the people knew when they were sending their kids to school, they would be taught to read, to write, to play music but also to learn about money and finance.
RIPOLL:
Yes, that's right. This is the first time right across the country that schools will actually be embedding into the national curriculum, financial literacy. It doesn't mean there's anything new added to the curriculum because let's admit it, I think our kids are learning plenty these days and they are working really hard and you can't fit anymore in to the curriculum. But if you embed the principles of financial literacy into what they are already learning, then that works really well. They are really powerful tools. They are a really powerful way of doing it. We've got all the states and territories on board. The program is up and running and we want to train 6000 teachers as quickly as we can to be able to provide this service, this added financial literacy service, in our schools.
GREENWOOD:
So just to explain: that is not 6000 new teachers, that is 6000 existing teachers who are given additional skills to be able to teach these types of programs.
RIPOLL:
That's exactly right, Ross. And look at this stage it's a handful of schools in each state and growing, but what we'd like to see over a period of time as the program develops, it's every single school right across the country. Everyone wins if you know more about finance, about your options. It's empowering. It gives the consumers more choice. We've made a number of legislative changes to empower consumers to make sure that they've got more rights, particularly in terms of let's say, credit cards or being able to switch accounts and a whole range of things around their finances. But the most powerful tool you'll ever have is yourself. It's knowing that if a deal is too good to be true, than it normally is. It's knowing what it means to, you know, get a cash advance on your credit card and what that's really going to cost you and how to pay your debts properly because more and more money is invisible. When you and I were a lot younger, it was simpler. It was all cash. Now everything is done via the internet or it's done electronically. It makes it really complex for young people when they never physically hold money in their hands.
GREENWOOD:
No, that's actually quite a true point that you make. However, I like one thing and that is that as you went through the various curriculums the one thing that kids will be taught is the values of money through pets. Now many kids love pets and you know, really idolise their pets. In Year 6, their pet is very much almost everything to them, so by being able to try to work out the things that might influence the price of their pet is not a bad way to actually get to their pockets also.
RIPOLL:
Yes, look it's a great idea. It's just that, it's an easy way, it's a good way to connect with young people, with kids at that age. It gives them a practical example of what does it really cost, how does that work, what's the liability for me, what are my responsibilities on something that's real, on something, you know their pet, that's with them every single day. I keep complaining about this, and you made the point earlier Ross, that it's almost a national tragedy that 18 to 24 year olds are the least financially literate which means that we haven't really given them the skills at a young age. But it really is, the problem is that it just means that they make a lifetime of mistakes and if you make a mistake at a young age, whether it's borrowing money for a car or getting a loan or getting a credit card or even a mobile phone plan, it can take you sometimes years and years and years to recover or you're paying way too much interest for a very long time.
GREENWOOD:
It's so true and the other great stat that I've always got in the back of head is that the most common person to go bankrupt in Australia is a young man aged under the age of 27. You know, and that really says everything about the competency and the literacy. How easy was it to get all the states on board with this?
RIPOLL:
Look, we always have to work hard with the states. The COAG process, which is the Coalition of Australian Government process, is always a challenge but it's a good one. It's a good challenge and it's a great process because it means we can work together. That's our goal. Federally, we want to work with the states and territories. We're happy to provide funding. We're happy to provide programs but we can't do it on our own. We need the cooperation of the states and I think on this particular issue, on financial literacy, everyone wins out of it and is something that I know is well supported. And we just need the states to really get on board more fully in terms of allowing through the pilots that all the schools get involved in.
GREENWOOD:
Now I was going to tell you that they should get a kick in the backside because it is a genuinely good program. You know, it's something that cuts across all politics and it's a very sensible thing that Bernie Ripoll has done, the Parliamentary Secretary to the Treasurer. The ASIC MoneySmart teaching packages. Now if you're in one of those areas where this is being rolled out and your kid who might be 12 or 8 or 10 comes home and starts lecturing you about the way you're dealing with your finances, you know that they are being taught this stuff inside the schools. Bernie Ripoll appreciate your time.
RIPOLL:
Thanks very much.