Queensland Council of Social Service (QCOSS) has launched a campaign calling on the state government to fund community organisations that offer no interest loans to their clients.
“When people are having a hard time, community organisations provide crucial support,” says QCOSS CEO Aimee McVeigh.
“As we experience the worst economic downturn since the great depression, Queenslanders will need more financial support and assistance. Community organisations must be properly funded to provide this support.”
The No Interest Loan Scheme (NILS) is delivered by over sixty community organisations across Queensland and provides people with access to small loans. Loans can be used for essential items like white goods, furniture, paying for medical expenses, car registration and repairs, and more.
Currently, organisations providing this service do not receive any funding from the state government to do so. As a result, the scheme is not widely known about and many Queenslanders instead turn to consumer lessors and payday lenders, paying exorbitant interest rates and fees, and in some cases falling into unmanageable debt.
“QCOSS is calling on the state government to provide $3 million per annum to community organisations that provide NILS,” says Ms Mcveigh.
“Without adequate funding, organisations can’t afford to dedicate more than a few hours a week to providing NILS services and many organisations have reported having to turn away clients who need assistance.
“Our concern, and the concern from the community sector, is that these people then look to payday lenders for assistance and end up in a debt spiral.
“We are very worried for the hundreds of thousands of Queenslanders out of a job and are concerned about what will happen after September when government supports start to be wound back at the same time that essential services supports are due to end or phase out.
“Frontline organisations from across Queensland have been contacting us since March with stories of their clients being aggressively contacted by payday lenders and consumer lessors.
“Last year, 300,000 payday loans were taken out in Queensland, and our concern is that this could rise substantially this year due to the COVID-19 crisis.”
Some payday loans and consumer leases can attract fees that are equivalent to an interest rate of more than 800 per cent. It is estimated that up to 15 per cent of people who take out payday loans find themselves in unmanageable debt.
“There are two solutions to this. Firstly, the Federal Government should properly regulate small credit lenders, to protect people from these high cost loans and leases,” Ms McVeigh says.
”Second, the Queensland government must fund community organisations to deliver on-the-ground services and outreach to provide better access to NILS.
“The current system is failing those who are most vulnerable by not protecting them and is instead pushing them into further financial stress and unmanageable debt,” Ms McVeigh says.
Find more information on the campaign here.