The impact of the global financial crisis on social services in Australia

The current global financial crisis and its likely impact on the Australian economy will have an acute impact on the most disadvantaged members of society, as well as pushing increased numbers of low and middle income earners to seek the services of welfare agencies. Even during the recent period of buoyant economic conditions, agencies were reporting growing demand, and the emergence of a new clientele of 'mid—stream' wage earners facing severe financial stress. This has been mirrored by academic research into new indicators of disadvantage. Instability in the financial sector and its flow—on effects to the rest of the economy, can only exacerbate these problems, putting an even greater strain on what are already overstretched social services. The years immediately before the crisis were characterised by a combination of easy credit conditions, low risk premiums, aggressive lending practices and less disciplined risk management and underwriting standards. The collapse of the sub—prime housing market in the United States has been followed by a global credit crunch, and falling asset prices, with serious implications for the real economy. There is reduced household wealth, Australia's terms of trade have decreased, and business and consumer confidence has been eroded. Economic growth will inevitably slow, the extent to which is uncertain. Unemployment will rise, if not perhaps to the levels of previous recessions. Despite declining interest rates, it is likely that housing costs will remain high, particularly for those in rental accommodation. The impact will vary across different segments of society, with the unemployed and other vulnerable groups particularly hard it. The demand for social services is already rising and will rise substantially in the short-term. In many areas — examples include residential aged care, housing, homelessness and family relationship services — demand already outstrips the capacity of agencies to offer assistance. The services most immediately affected by deteriorating economic conditions are in employment, housing, financial and general counselling and emergency relief. In addition to being the response of a genuinely civil society, high quality, social services are an integral part of a productive economy. Investment in such services is a benefit not just to those in such desperate need of services, but also reduces long term social costs and enhances the overall productivity of the economy. Investment in social services and social infrastructure should therefore be considered as an essential part of further fiscal stimulus measures,download.