Nation-Building Through Education: Financial Literacy for All Australians

Nicholas Drew, Menzies Foundation Fellow, Y20 Brazil

Executive Summary

Australia has failed to build strong foundations in the area of financial literacy across the generations. Studies confirm financial literacy amongst 15-year-old Australians has declined, with most young people learning about money and budgeting at home (De Zwaan & West, 2023; Singhal, 2017). The current Australian National Curriculum does not recommend personal finance as a subject area (at best, financial literacy is considered in an interdisciplinary context) and consequently, Australia is failing those from non-affluent households and adding further barriers to disadvantaged young people.

This gap results in increased debt, financial stress, and economic vulnerability, with long-term negative consequences for individuals and the broader economy (Reserve Bank of Australia, 2024). If the low levels of financial literacy in Australia remain unaddressed, the consequences will extend beyond individual hardships. It has the potential to affect overall economic stability by contributing to rising household debt and lower overall economic growth (Reserve Bank of Australia, 2024).

In response, this policy paper recommends financial literacy concepts to be integrated directly into the Australian National Curriculum. Essential concepts such as savings, loans, credit cards, insurance, investments, and superannuation need to be taught not just as mathematical calculations, but as real-life skills. This issue impacts all of society; merely offering after-school or broader community information sessions falls short of a comprehensive response. Improving financial literacy skills in young people secures personal freedoms and decision-making abilities for generations of Australians to come.

Specifically, the recommendation proposes integrating ‘personal finance’ as a mandatory content area within the National Curriculum’s ‘Economics and Business’ compulsory subject for Years 7 to 10. The Department of Education, in collaboration with the Australian Curriculum Assessment Reporting Authority (ACARA), is positioned to create initiatives that provide consistent and comprehensive financial education to all students. The projected cost for this initiative is $15 million over 2 years. Following the establishment period, an annual $2 million will be deployed through ongoing program monitoring, evaluations, and updates. A major risk is curriculum ‘integration challenges.’ By removing current content descriptors from 7-10 in the ‘Economics and Business’ subject, and adding ‘Personal Finance,’ teachers will have to redevelop lesson materials.

Problem Identification

Australians continue to rank poorly in financial literacy, with recent studies showing over a quarter of Australian participants struggle to answer simple questions about interest rates, inflation, and investment risks (Hendry et al, 2021). The 2020 Household, Income and Labour Dynamics in Australia (HILDA) survey of 17,000 people highlighted, compared to the 2016 survey, a significant decline in financial literacy among Australians under the age of eighteen (Collett, 2023; Murray, 2020).

Students are not learning personal finance concepts such as where money comes from, budgeting, investing, and financial planning (ACARA, 2022b). These skills are essential for ensuring individuals can effectively manage their personal and professional lives. The Australian Government has recently allocated $11.2 million in adult financial literacy programs, indicating the presence of a systemic issue and a clear foundational gap in the nationwide approach to financial education.

In summary, because Australia’s National Curriculum does not mandate a dedicated personal finance content area, many young people, especially those from economically disadvantaged backgrounds, are granted a limited exposure to sound financial education. Failure to include this content area further promotes pre-existing gender gaps with 34% of Australian women, compared to 16% of Australian men, being determined ‘financially illiterate’ (De Zwaan & West, 2023: Wood, 2023). Going forward, it is essential that Australians are equipped with these foundational skills from an early age; ultimately mitigating the future need for upskilling initiatives which results in long term cost savings for all levels of government and community education initiatives.

Context

Policy Recommendation

References

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