Australian businesses and households now confront the exponential consequences of a nation under creeping restrictions. The way we live and work has changed and will most likely continue to do so regardless if or when borders open. Unfortunately, this also means that the term ‘pandemic-related debt’ will be a constant. It is an issue we must deal with innovatively and sensitively so that we effectively and responsibly operate in this climate of uncertainty, risk, and fear.
That means that to be effective and sustainable, debt recovery professionals must continue to be mindful of the pandemic-induced financial pressures that confront organisations and individuals. This is the only way we can reach what is commonly called, ‘mutually beneficial solutions’
“Any celebrations about the recent low rates of unemployment – the lowest since 2008 – were quickly abandoned when further analysis revealed that actual work hours had dropped in the previous month.”
We will be tested, though. Each day, those of us in NSW learn of COVID-19 infection rates that are regularly described as ‘eye-watering’. We are told that on the soon-to-be-reached horizon are four-digit daily numbers of infections. That is, thousands of people will be afflicted each day. In the meantime, carrots are dangled in the form of some lockdown restrictions being lifted when vaccination rates increase.
It is a race. But the finish line is not yet clear.
‘Vaccine hesitancy’ is another term that has crept into the lexicon. But as the images of kilometre-long queues of people of all ages lining up for ‘the jab’ reveal, much of that has been overcome as the reluctant are scared into action. Thankfully government agencies have re-calibrated communications to counter fake news and fear-mongering that has literally cost lives. Messaging that was not fit for purpose for, or easily understood by, ethnically diverse communities as well as Indigenous people has been re-calibrated.
We have had to do the same in commercial recovery. Throughout the pandemic our industry has concentrated on being hyper-vigilant to the circumstances of those who are genuinely struggling. We’ve referred many to financial counselling services that are themselves barely coping under pressure of increased demand. We’ve devised innovative approaches and suggested clients consider debt holidays and payment schemes that have stretched timelines, but have at least brought some certainty. Some of our clients – themselves facing cash-flow issues, including frustration at the well documented delays in the promised government assistance packages – have flinched at advice to delay recovery. Most, I am pleased to say, have shown extraordinary restraint. But for how long?
Any celebrations about the recent low rates of unemployment – the lowest since 2008 – were quickly abandoned when further analysis revealed that actual work hours had dropped in the previous month. Abandoned retail outlets, closed cafes and silent pubs illustrate what most of us know – that Australians worked 3.1 million less hours than they did the previous month. That is 3.1 million less hours of pay in pockets. Worse still, is that a sizeable group of people appear to have given up looking for work and dropped off the radar. The loss to the economy is around $2b a week. And, we are told, it will get worse.
Last year energy, water and gas providers, as well as the finance sector, and state and local governments all did their best to provide some sort of relief to stretched household incomes. They reduced rates, halted collections, provided moratoriums on fees and charges, and even allowed generous mortgage holidays. Some Councils continue to cope with record levels of unpaid rates and service fees. Playing catch-up is looking increasingly fraught. How long can this continue? Certainty – the secret sauce of any economy – is not a given in these times.
So how do we as a collection industry function sustainably in this environment? The AICR is looking at new ways of helping our clients manage debt recovery, whilst ensuring we adhere to our obligations to the communities in which we operate. Your ideas and experiences are always important, and I appreciate any thoughts you have as we lead the way to ethical and responsible recovery.
Please do not hesitate to reach out at info@aicr.net.au with your valuable thoughts and suggestions.
Yours sincerely,
Brian Carter
Chairman