Podcast: Financial Hardship & COVID-19

Keturah:

Welcome everyone to Nicholes Family Lawyers podcast. I’m Keturah Sageman, a Senior Partner at Nicholes Family Lawyers. I’m joined by my colleagues, Sally Nicholes, the Managing Partner of Nicholes Family Lawyers. So far in this podcast series, we focus predominantly on the COVID-19 pandemic and its broad impact on our Victorian and Australian community from both a legal economic and social perspective. Today, we’ll be focusing in more detail on the financial impact of this crisis, in particular to Victorian women. You may be experiencing family violence or who find themselves into a precarious financial position. We have two guests joining us today. Our first guest is Jessica Star. Jessica, is the Service Delivery Manager at WIRE. WIRE, stands for Women’s Information Referral Exchange. It’s a not for profit organization providing information support and referral services to women, non-binary and gender diverse people in Victoria. Their service offering is very broad, including clinics and programs related to family law, financial literacy, and job coaching to name just a few of their programs.

Our second guest is Sam Hunt. Sam is the Director of Warr Hunt Financial and Wealth Managers, an independent team of expert financial advisers in Melbourne. Since 2015, Warr Hunt was in partnership with WIRE offering free consult planning and advice to eligible WIRE clients. For many years now, these two organizations have been doing very important work together, seeking to improve the financial literacy of Victorian women. This work become only more critical in the wake of the current pandemic. So, welcome Jessica and Sam, thank you for joining us. Just before we proceed, we have a disclaimer for Sam. Sam Hunt is the Director of Warr Hunt Pty Ltd and an authorized, an accredited representative of WH capital [inaudible]. Any advice from Sam Hunt in this podcast is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice from Warr Hunt project in this information, before making a decision to require financial product, you should obtain and read the product disclosure statement relating to that product. Past performance is not indicative or guarantee of future performance. We might start with a question for Jessica. So, Jessica, how has the pandemic changed the nature of WIRE service delivery, if at all?

Jessica Stott:

Thanks, Keturah. There have been two main changes to the way that we’re providing our service at WIRE during COVID-19. The first change is that we are no longer operating our face-to-face services, and the second change is that we are no longer working without all of sixty volunteers. But despite those changes, we’ve been able to very successfully moved out service delivery to remote teams, and we continue to provide support information and referral to women, non-binary and gender diverse people in Victoria, through our phone support line, at email support and through our live chat function through the website. In addition to that, we are still running some of our most important programs, including property and settlement legal clinic and also our financial guidance clinic. Staffed by an incredible team of very experienced staff members who are ready to support people.

Keturah:

Great. So, a question for Sam. The state and federal government’s to announce a raft of economic measures to hopefully alleviate the financial pressure being exerted on Australian households and businesses as a result of this pandemic. Can you talk us through some of the financial support that is currently available to individuals and business? For example, early access to superannuation.

Sam Hunt:

Keturah, thanks for the introduction. Well, we may live in interesting times, the government’s committed about $189 billion in stimulus packages, and one of these announcements haven’t yet been legislated. But some have and a lot of it goes towards really assisting both businesses and individuals during these times, particularly for businesses that are either slowing down or shutting down and for those that have lost their jobs, or having their incomes severely reduced. So, I’d really want to touch on the first one, which will be of interest, I’m sure, a lot of people are jumping on to government websites such as money smart.gov.au and the big one here is around job keeper payments or job seeker people may have already limited. That’s a payment from Centrelink prior to the current crisis of around about $1100 a fortnight, but the job keeper payment is really for those people that were in employment as of sort of the first of March evaded that they made redundant, laid off for an half of hours or income severely reduced, and their employer can actually apply to the government to get a job payment assistance. So, effectively, it’s $1500 a fortnight that can be paid to the employer, and that employer will then pay that out to the employee if they’re no longer able to offer them or they can pay that to them on the basis to try and soak up the shortfall in their income. If anyone has lost their job or had their income severely reduced, I should be speaking to employer about access to job keeper payments and the payment as I said, its $1,500 a fortnight and run for six months. So that the first payment will probably come into play in April and it looks like it’s going to be back granted for March so some of the employees could actually make a payment now and to find it back for that March period. That’s a really a big one. It seems like a bit of a losing face. So I probably recommend that people continue to look on the moneysmart.gov website because there’s continual announcements and changes there.

Now, for anyone that is on a job seeker or is already receiving things like pension is a temporary income support payment that is now payable and will come through on the 27th of April, which will be an additional $550 on top of the payment you’re already receiving. There’s also some increasing prices payments, so if you needed to self isolate if you’re in severe financial hardship and you’re illegible for income support, and maybe some additional payments available to use again, check on the website. Now, for those that are in receipt of centrelink entitlements , you should have or will receive a $750 economic support payment, and they’ll be two payments. You receive one between 4th of March and the 13th of April, there will be another one coming for 13th July. So that’s if you’re on centrelink entitlements which include the education or you go to veterans tab, and there’s another payment coming through. In terms of access to super, if you qualify for the job seeker or job keeper, you’re likely to qualify for access to super and effectively you can access up to $10,000 in the first payment and that further $10,000 next financial year from your super fund, probably think long and hard as to whether you do really need access to that super, because taking money away from what will be your future retirement saving is a very big decision to make, but understandable in the current situation. What you need to do there is basically check the eligibility through the ATO or the MoneySmart website.

If you are receiving payments, you should be able to get access to that $10,000 and once the ATO’s will grant you, that you can get access then you will aquire to your super fund.It’s one of those things where devil is the detail and detail is not available as yet. It’s coming out even faster on a daily basis. so there two really big announcements that have come through which I think are really positive measures, enabling people to get a supplement to their existing income. Some talk around casual employees do a little research around casuals, provided that you’ve been with one employers for more than twelve months, you’ll be eligible but it doesn’t look like if you haven’t been with employer. If you’ve been with employer for less than twelve months, you may not be eligible for that job keeper payment, but that doesn’t necessarily preclude you from the job seeker payment. Job seeker, job keeper, they may be able to get get better names. One thing that job keeper to keep in mind though is that it’s actually taxable. So, your $1500 a fortnight but potentially tax will be made to be deducted from that payment either via your employer or your tax return at the end of the financial year, which is quite different to the job seeker payment. There was a discussion they looked at is job seeker is $1100, and job keeper is$1500 but once taxable and one isn’t so that should all work out in the wash. Did you have any further questions here?

Keturah:

Well, I think they’re great. They’re great options for people in need and it’s great support that the government’s providing. Don’t you think, Sally?

Sally:

Yes, I think that’s really, really great points for Sam to make, because many of the clients that, Jessica, that you would have would be wanting to know the answers to those questions because many would be suffering, best of times, stress and financial hardship. But if you notice those trend at the moment that your clients are more than ever seeking help from your response data in relation to financial hardship, has it increased?

Jessica:

Absolutely, yes. Everyone who we’ve spoken to is talking about the impact of COVID-19 and that it has impacted people in many different ways. There’s been a lot of loss of income and a lot of uncertainty about what is available to remedy this, and how to access it as well. It’s interesting to note that the job keeper allowance is not available to people who are migrant workers.

Sally:

Yes.

Jessica:

And that something that has come up for us at WIRE. A lot of the work that we do at WIRE is exploring options, and in this environment where the service system is changing very rapidly, a lot of what we’re doing with people is exploring their existing resources and it could be community resources, because government resources can’t always be relied upon, particularly for marginalized groups during this time.

Sally:

I guess the other thing to keep in mind is that as Family Lawyers that were very mindful of the impact of this crisis on women and children who are self-isolating, and particularly women who are separating. We’ve had a number of calls of women who feel that they are almost in a state of paralysis, and can’t necessarily take that step forward to seek remedies or help. Family violence, for example, comes in many forms and economic abuse is one of those forms, and it’s important to keep in mind that there is still access to child support even if you are separated. Keturah I thought you might want to even comment on that. If you are separated, they’re still under the same roof. There’s still the ability to actually seek child support.

Keturah:

Yes, absolutely. We had quite a few queries since I expect WIRE has in relation to women who are caught in a situation where they are essentially separated under the same roof with their partner and their finances are cut off. If you are separating, you can certainly get in touch with Centrelink and with DHS child support and seek to complete an application for child support, and so long as you can establish that you are separated, you don’t have to be separated physically, you can be separated while living under the same roof, and so long as you can establish what the arrangements are for the children moving forward, their child support can look at making an assessment for child support. That is periodic child support each fortnight or each month subject to the payments that are made and there are certainly other options. If women are caught in a situation where they can’t access funds, and there are spousal maintenance options that they can apply for. It does sometimes mean applying to the court and the family court for spousal maintenance. That’s certainly something they should seek advice about. We’re happy to provide advice in relation to their options in that regard, and it does mean that they don’t have to be influenced or feel like you have no options in relation to your rights and entitlements, and you can keep moving forward once you know what your entitlements are. The family court is still open, and they’ve obviously got some measures that are restricting their ability to have face-to-face hearings, but they are in certain situations providing that and also telephone hearings. So I think that there are options that are available to those clients in need, and I expect Jessica, you’d have been receiving some further questions from clients in that kind of vulnerable situation. Is that right?

Jessica:

Absolutely. It’s interesting that people who are abusing power in their relationships are finding way, new weird and wonderful ways to do that, and taking advantage of the uncertainty that is happening for everyone during COVID-19. We’re encouraging the people who contact our service to continue with seeking legal support and also family violence support, and these services are still open and available, because to have clarity around what your options really are is especially important at a time like this. We’ve had some examples of perpetrators being particularly pressuring of ex-partners to agree to their property settlement during this time, because they’re taking advantage of the fact that the ex-partner has lost their income due to COVID-19. So, the importance of standing your ground and continuing to pursue the advice that you need to be aware of what your rights are so that you can get a fair property settlement is really important at this time.

Sally:

We’ve had the same queries, absolutely. People feeling under pressure to actually at all steamrolled into a property settlement. We’ve explained that you can separate but unlike in actually quite a few of the US states, where I think a lot about TV programs actually do have shows on divorce and in maybe US states, you actually can’t divorce unless you’re basically separated property. So I think there is this myth that you need to actually separate property to separate yourself or to obtain a divorce. So maybe that’s where it comes from. But I do think it is literally a form of financial abuse and taking advantage of this current penny, and the fact that property valuations have gone down, people can actually use or even in flight the crisis. It is, as we hoped, temporary. It is catastrophic. But obviously, it is not the time as it seemed to be really looking at separating property. You’d really want people to think to buy time at a moment like this, obviously, then it is sold out whatever the interim situation is and to make sure that everyone takes advantage of all the subsidies and relief. It’s possible for both individually in businesses, but to actually try to make financial and long-term financial decisions right during the crisis period would be very difficult for any of your clients.

Sam:

Yeah, I think that’s right. So, one of the things that’s probably important to highlight too that words like simply you’re actively encouraging people to go online. So you don’t physically go to any of those offices now, and all that information is available to people to sort of read through and digest, even if it’s on a mobile device. You can apply for one of these benefits or at least read online and have a direct bank account, and whether the individual in that situation got their own bank account, maybe that is another thing that we looked at, but if those payments are going to joint bank account with an individual bank account can be opened up or separated, and I’m seeing in terms of payments, like superannuation, so that needs to be paid to the individual and generally you’ll find that super accounts can’t pay to a joint bank account. So it would need to be a bank account in the individual name to receive that payment Again, that hasn’t specifically been clarified, but I know that pre Covid-19 If you were to make a payment from your super fund, it has to go specifically into a bank account with the individual name, so that separates it from that point of view. But really, for everyone, because it’s such a moving piece and all of these announcements have been made, details still yet to be finalized or passed Royal Assent within the parliament, just really to encourage people to continue to look maybe on a daily or at least a weekly basis as to what is available.

The state government here in Victoria, it will now serve a raft of economic survival package there are calling it, which really targets businesses, but things like job keeper and businesses also apply to people who are self-employed so if you’re running your own business, and you’re a sole trader or actually part of a family business, you are eligible for all these things which people may or may not be aware of, they may just look at it purely from the point of view of, “I don’t work for a corporate small business or a family business. I’m not eligible”, and that’s not actually the case you are a corporate to be available. There’s a raft with things available to small businesses, probably the biggest one really is applying to the federal government in the first instance for a boost to cash flow, and they give you a boost anywhere between sort of 20 to 100,000 depending on the size of the business, which business can then use to fund and pay for the bills, utility bills or help also recover the cost over and above job keeper to retain the key staff members, which is fantastic. Here in Victoria, that state government city to refund payroll tax for businesses, the annual taxable wages under three million. All the qualifying criteria you can look at and figure out big one too is the land tax is the potential peril land tax. So if you haven’t paid recently, you might be able to apply for referral of that payment, which is usually quite a large one for people. Also this one’s against government data, but grants for small businesses that have an asset package of 500 million will be available for small businesses where they can apply for up to $10,000 which is on top of the federal governments in $20 to $30,000, which can be used to employ people and grow your business.

There’s a lot of measures out there to support small businesses during these difficult times. So, a lot of that information is available on the bigdog gov website. The big government also talked about setting up programs to employ those that have lost employment, which they haven’t clarified the detail, but it looks to me that a subsidy and businesses that are actually going by a specific government website. So it’s sort of like the government’s version of seek that lots of jobs available, whether they’re government jobs or non-government jobs, and depending on the qualifying criteria for those businesses, though may be eligible for state government support, employing people through their side. There are plenty of options available and just really jump online as much as you can and try and disseminate the information and work out what you’re eligible for. But credit to the government, I spent a lot of time reading IT websites and other bits and pieces, and usually in sort of legal aid is quite difficult to digest, but now it’s actually quite clear around eligibility criteria. Now you’ll get and click the next link to take you through the application process, it should be pretty straight forward from there.

Sally:

Sam, it’s just wonderful way you sum that up so succinctly, and the fact that there are always subsidies, it will be really helpful for people who are being subjected to the type of economic abuse that Jessica was talking about, where they’re being put under pressure to maybe rushing it or steamrolled into settlements without to their advantage. What we’ve found is that, typically, women might be told “Well, it’s all disastrous, a whole pack of cars is going to fall down”, and this environments now been put in front of them as well. We’ve had cases for example, where one partner is not actually paying their tax returns for years, almost an obstructive, deliberate sabotage type way and they’re trying to draw the other partner into that carnage that sabotage and there are ways of navigating women out of that situation. We’ve even gone to court to actually seek orders that, that public officer pay those tax returns if it that reckoning, and that honors in here I can imagine, if one business isn’t taking advantage and does qualify for all of these amazing subsidies just to get it through, and they’re deliberately not doing it. Perhaps just to try, and keep those down or to paint a picture that’s really dire to try and force a settlement, then there are things that we could actually do about it. And accountants should be working together, parties if they are separated, if that’s one of the issue, at least now that anyone listening to this podcast will think, knows the information to ask them, those can be now informed about what’s out there. I think that’s really, really important, rather than being overwhelmed by the catastrophe in your life for the moment. I think that’s really, really valuable. So, thank you.

Sam:

Well one of the ones we didn’t touch on it briefly is around, you know, negotiating with the bank. A lot of the banks now providing flexibility around the repayment of interest only or principal interest loans and that can be deferred up to a period of six months. So, typically what will happen on an interest only loan is that you might not make repayments for six months and then interest will be capitalized for six months. So it does form part of your overall loan, but makes sure you have some cash flow over that period. And with principal and interest loans, it’s worth having a look on your bank’s website and you chatting to your banker, but most of the information seems to be online, the majors anyway, around the ability to postpone the mortgage repayments for a period of six months. And how that would work is the interest on a principal interest loan tends to be waived, just check the criteria and the principal component that you would have paid over that six month period will may form a balloon payment at the end of the term. So if you’ve got another twenty years to go on your mortgage at the end of that twenty years, that might be an additional lump sum. I wish we can measure it with the amount prior to the six-month period. If you need relief, which is probably the main thing really is that it should be available to you via your bank, individual clients or whether your business client as implies.

There’s been some talk about rent in the past, It seems to me that what’s been targeted at the moment is around commercial leases, and hasn’t had a lot of discussion or agreement about what’s going to happen on a residential basis. So, I’m aware of the requirement that allows a tenant to not pay their rent. However, they need to go back and renegotiate in the Real Estate agent, or the owner of that property, pretty harsh for anyone at this point in time to throw them now, but I don’t think there’s been changes yet, although the state government in Victoria was talking about addressing that very issue, and people may have read about Real Estate agents can pay rent or access superannuation. That’s actually illegal. They’re providing financial advice and their recommendation and that’s potentially civil and criminal penalties if someone is giving you that advice. So, just make them aware that I tell you that and breaking the law, and if it’s in writing, you could potentially take it further should you wish but use the individual need to make a legitimate action, whether it’s appropriate to access your retirement savings to fund things like rent or whether the job keeper or the job seeker payments will be an adventure of what you need to continue to rent and potentially negotiate early rather than later. So if you’re going to be in a position where you’re going to be in arrears, the future just try and address it earlier in light up so they can help the decision process of what happens forward.

Keturah:

Yes, I think it’s a big step to access superannuation if you’re short of funds, and we don’t want clients to get into panic about having to do that. There are other options open to them. WIRE is a great option if you need urgent advice, and I think also just being you’ve got options for clients who are in this situation where they feel a need to do something fairly quickly about their financial circumstances. You can refer them off to set people like Sam and even Family Lawyers, and we do this kind of work to help clients who are in a situation where they feel trapped. It does lead into a widened definition of family violence and that does include economic abuse, which might include where a person controls a family members access to money, or threatens to limit the family members access to money in order to coerce or control that family member. So, Jessica, did you have any further comments on that?

Jessica:

Um… I’ll think of some.

Keturah:

Well, yes.

Jessica:

Probably to reiterate the idea that abuse of power in a relationship will take advantage of any vulnerability and that people are in a state of higher vulnerability at the moment due to COVID-19. Just the importance to not panic and to make a call to somewhere like WIRE, where we can help you to prioritize your needs and explore your options around those needs, and that we support people on any issue at all. Often, people come to us with very complex stories and with COVID-19, their challenges are more multilayered than ever, but the model of support that we use is very effective for unpacking the complex stories, and supporting people to name their own priorities and then explore their options around them in a really creative way. We’ve found that people who have been calling off have been very understanding of the changes in the service system and extremely resourceful and creative about the ways that they’ve been looking at what is available to them. We’re very grateful for people’s resilience, and people have expressed a lot of gratitude at our support, and our ability to really hear their story from their own perspective.

Keturah:

That’s fantastic.

Sally:

Wonderful. Well, it’s been wonderful talking with you, Jessica and Sam, and Keturah. Like I say, from our own point of view, we love supporting WIRE and your clients. Again, it’s lovely to know there are people out there like all the colleagues at Warr Hunt who look after the pro bono clinic, and I can offer this type of support to anybody who’s listening to this podcast. So, we hope people have enjoyed listening to it, and we will probably have some further information down the track. Hopefully some webinars with WIRE that might be a little bit more interactive with the general public, Jessica. But again, amazing work WIRE, the work you do is just incredible for the public, so congratulations to being virtual, for providing such amazing services during this time, and wishing you and all your colleagues to keep safe in this environment. Thank you for being on the podcast today.

Jessica:

You’re welcome. Thank you too, Sally. Thank you, Sam.

Useful links:

Warr Hunt Financial and Wealth Managers: www.warrhunt.com.au/

WIRE Helpline: A free support, referral, and information for all Victorian women (non-binary and gender diverse inclusive) – 1300 134 130 www.wire.org.au/

Kids Helpline: A free, private and confidential telephone counselling service – 1800 55 1800 or kidshelpline.com.au/

Parent line: A state-wide counselling and support service for all Victorian parents – 13 22 89 or 1300 272 736

Safe Steps: A domestic violence hotline service for women and children – 1800 015 188 www.safesteps.org.au/

Relationship Space: An online program to help parents manage divorce – www.relationshipspace.com.au

Online Family Violence Intervention Order Application – https://fvio.mcv.vic.gov.au/

Relationships Australia: www.relationships.org.au/

Disclaimer: Nicholes Family Lawyers intends the information provided in this podcast as general information only, please contact Nicholes Family lawyers if you require specific information and advise in relation to any family law matter. Sam Hunt is a Director of Warr Hunt Pty Ltd and is an Authorised and Credit Representative of WH Capital Pty Ltd (AFSL & ACL 469418). Any advice from Sam Hunt in this podcast is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice from WARR HUNT prior to acting on this information. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is not indicative or a guarantee of future performance.