CANBERRA, Australia – Latest statistics revealed that Australian households had increased finances in the June quarter despite the COVID-19 crisis repercussions.
In the latest statistics presented by the Australian Bureau of Statistics (ABS) for April, May, and June, Australian households significantly increased their finances despite the pandemic. The statistics gathered from the recorded social security payments reveal that Australian households had at least 2.2 per cent higher income in this quarter than the previous months.
The COVID-19 pandemic caused countries globally, including Australia, to fall into economic recessions. This crisis caused millions of lost jobs, closed industries, cancelled businesses, and many other adverse effects. These outcomes directly affected families and households, especially in the working-class sector. However, despite the economic decline, households still had boosted personal finances by the end of June.
A significant factor that contributed to the stable household finances is COVID-19 relief packages offered by top banks. In recent parliamentary committee proceedings, the Finance Committee has asked the big four banks to present their enacted COVID-19 responses. In the reports presented by these banks’ chiefs, an extensive set of relief packages and efforts were available for customers during the pandemic.
These COVID-19 relief packages included loan deferrals, waived off fees, interest cuts, approved loans, and superannuation withdrawals.
In the data presented, banks have billions in their mortgages for home and personal loan deferrals alone. At the onset of the pandemic, banks have already issued and approved loan deferrals for customers for up to six months.
The Australian and New Zealand Banking Group alone had approved loan deferrals for 85,000 home loans amounting to 31.3 billion dollars, 43,000 business loans, and thousands of personal loans from unsecured accounts in March to August alone. The Commonwealth Bank also provided loan deferrals for 159,000 home loans amounting to 55 billion dollars, 21,000 personal loans at 339 million dollars, 72,000 business loans, 19,000 credit card payments.
The National Australian Bank also had 35 billion dollars in home loan deferrals approved for 86,000 customers and 20 billion dollars for 38,000 customers. On the other hand, Westpac also allowed 52 billion dollars of mortgage balances for 138,000 deferred home loans.
These deferrals allowed customers to postpone loan payments without increased interest rates or late payment fees, allowing them to preserve their finances for other needs.
Although the six-month deferrals are already set to end in the following months, many banks already expressed further help for customers who will still have struggles in their finances. The Australian Banking Association (ABA) alone has already mentioned that COVID-19 loans are held up to March next year. The bank has also already started communicating with customers with ending deferrals to ensure that further support for financial decisions will be given.
Apart from loan deferrals, part of banks’ relief packages was approved loans, especially for small businesses, for business continuity and more job opportunities. In total, Westpac reported 258 million dollars of lending amounts for over 2,100 small businesses, as supported by the SME Guarantee Scheme of the national government. The bank also has a total business lending balance of 9.5 billion dollars. The scheme also allowed the Commonwealth Bank to approve 9,000 loan applications amounting to 830 million dollars.
The national government has also been active in partnering with the country’s banks to provide support measures to affected citizens. One scheme developed and legislated by the government is the early release of the working citizens’ superannuation funds. The superannuation system is a government-mandated distribution of employers to employees’ accounts, which will be accessible for retirement purposes. Employers are mandated to pay specific amounts directly to the superannuation accounts, on top of their regular payments, so that working Australians will have sufficient retirement funds. These funds only become accessible upon retirement, or in some emergency cases for eligible account holders.
As part of the government’s COVID-19 response, superannuation withdrawals were already allowed for eligible accounts. Some Australians even took the opportunity to zero out their superannuation balances.
In recent data presented, Commonwealth bank released over 170,000 superannuation withdrawals under this scheme. Westpac also processed and approved 200,000 withdrawal applications totaling to 1.68 billion dollars. According to the Australian Prudential Regulation Authority (APRA), the superannuation early release scheme has now reached 33 billion dollars. This number comprises 4.4 million applications from over 3.2 million Australians. The funds released in this scheme were also vital factors that increased household finances.
The head statistician of ABS also attributed the stable household budgets to other government regulated measures and subsidies such as JobSeeker and JobKeeper. The government also allowed social assistance payments, including the 550 dollars supplement and the 750 dollars payment for economic support. These bank and relief efforts have greatly helped in the 41.6 social support payment increase by the end of June.
Data from ABS also shows that Australians are now more concerned about their finances due to the pandemic repercussions. Statistics reveal that more Australians now spend less and save more of their incomes. In the latest quarter alone, household spending dropped by 12.1 per cent, resulting in the 2.6 per cent household spending decline for this year.
Furthermore, household savings reached its highest since the same quarter of 1974. In this year’s June quarter, household savings reached an average of 6 to 19.8 per cent. In total, net savings had a relevant boost from 42 billion dollars to 59.5 million dollars despite the COVID-19 catastrophe.