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More calamity than crisis

Through our experience in behaviour change we know that everything we do is influenced by the context in which we do it. Context shapes the processes in our brain – from visual perception to social interactions – which determine how we act and react in different circumstances. Understanding the current context under which we live, work and operate is key to how we can help, support and lead our organisations and communities.

Over the past nine months there has been no more pressing issue than the cost of living calamity. Food, energy, petrol and rent prices have skyrocketed around Australia and the world. Add in the rising inflation rates and stagnant wage growth, and you don’t need to be an economist to see things are looking pretty dire.

This isn’t just a crisis – other factors are making it a calamity.

Inflation doesn’t affect people equally. Like most other economic and financial burdens it significantly impacts those already under financial strain more:

  • The poorest 10% of households now spend up to three times more of their family budget on food and energy bills as compared to the wealthiest 10%, according to the Resolution Foundation.
  • This disparity is even more prominent in housing affordability where the poorest 11.5% of households spend 30% to 50% of gross income on housing costs, with another 5.5% spending 50% or more – which is well above housing distress levels.

It’s more than financial.  It has huge impacts on a range of mental health issues across the population.

  • Research shows that financial distress and poverty nearly triples the chances of someone being diagnosed with anxiety and depression. 
  • There’s plenty of research that shows that mental health issues caused by financial stress can also result in domestic violence – in both intimate partner and elder abuse – with physical forms of violence concentrated in areas of higher socio-economic disadvantage.
    • An additional layer of complication caused by the cost of living calamity is that it means people escaping from these abusive relationships will find it harder to leave, as it’ll be harder to find accommodation and harder to find the finances to set up a new life.

Short term pain – long term PAIN.

For those Australians who are about to retire, or are planning retirement, the cost of living crisis means significant implications on their superannuation:

  • Those with smaller balances may have to work longer than they planned as drawing down on their super may not be sufficient to cover rising costs (including interest rates if they still have a mortgage).
  • The uncertainty in the market means super balances have not performed as well in the past year in terms of investment returns, and therefore those who are ready to retire may wait for the market to bounce back before accessing their funds.

What in the world are we doing?

A number of countries have already started to tackle some of the key issues. 

Spain:  Policy intervention to tackle rising energy costs

  • Public buildings which use heating cannot be set above 19º Celsius
  • Air conditioning should not be set below 27º Celsius
  • Doors will need to be closed so as not to waste energy, and lights in shop windows must be switched off after 10.00pm.

Germany:  Social norming to campaign for renewables

  • By showcasing the scale “80 Millionen gemeinsam für Energiewechsel” (80 million together for energy change) to normalise the behaviour of caring about the environment and using renewable energy.

UK:  Communications to build capability

  • Channel 4 partnered with a number of companies to use the adbreaks to provide money saving tips and helpful resources to combat the cost of living crisis.

Australia:  Policy intervention to ease the pain of electricity costs rising more than 55%

The Shannon Company:  As one example, we are using communications to enable Australians to make informed choices when it comes to choosing a superannuation fund with good long-term performance – a fund that will ultimately help them live a dignified retirement.

  • In late October, we launched a timely new evolution of ‘Compare the Pair’- a campaign we have been running for Industry SuperFunds for over 17 years. In a societal context of financial stress, this year we felt it integral to arm the public with knowledge and reassurance of the positive long term financial benefit that Industry SuperFunds have provided their members over the past 20 years. For the first time, we also directly targeted young Australians with this important message.  View the campaign creative here.