­Financial counsellors to come up empty in federal budget

The government will disappoint ­financial counsellors by opting not to ­respond in the federal budget to a funding review.

Social Services Minister Paul Fletcher. Picture: AAP

The government will disappoint ­financial counsellors by opting not to ­respond in the federal budget to a funding review of the industry launched on the recommendation of royal commissioner Kenneth Hayne.

Social Services Minister Paul Fletcher said the government would respond “in due course” to former competition watchdog deputy chair Louise Sylvan’s review of funding for the financial counselling sector.

The sector had been expecting an increase of up to $65 million a year, which would double the number of full-time employees to 1000 legal and financial assistance workers across the country.

Josh Frydenberg, who will hand down his first budget tonight, launched an immediate review of the sector’s funding in early February after Mr Hayne said the “desirability of predictable and stable funding for the legal assistance sector and financial counselling services is clear”.

After a quickfire consultation, Ms Sylvan handed her findings to the government last week. However, the Treasurer will not use the budget to respond to the findings due to concerns about overlapping roles between the federal and state governments.

“This is a complex area where the commonwealth and the states play a role,” Mr Fletcher said. “The government will respond in due course, once these issues have been carefully considered.

“While Commissioner Hayne made no recommendation in regard to a review of financial counselling, the Coalition government recognises that it is a vital service used by thousands of Australians every year.”

The Department of Social Services has provided $64.2m over the past 4½ years to financial counselling services.

The department’s grants for ­financial counselling, including for the National Debt Helpline, were due to expire at the end of last year.

There has been no inflation-linked increase in the Department of Social Services funding since 2015, meaning funding in real terms has shrunk.

Financial Counselling Australia chief executive Fiona Guthrie said the sector was chronically underfunded and needed to be given certainty. “If not now, when,” she said.