Financial abuse costs victims and Australian economy $11 billion

20 March 2022 Consultancy.com.au

In a wide-ranging study commissioned by the Commonwealth Bank, researchers from Deloitte Access Economics have concluded a near $11 billion annual cost to victims of ‘financial abuse’ and the Australian economy more broadly.

The bank engaged the consultancy to examine the prevalence and costs around the often obscured and understudied subject of financial abuse, and the results were staggering. Commonly occurring in the context of domestic family violence, it’s believed over 620,000 individuals were subjected to financial abuse in Australia in 2020 alone, although the figure is almost certainly much greater.

The Commonwealth Bank enlisted Deloitte Access Economics as part of its campaign to raise awareness of the hidden impacts of financial abuse, estimated to hold a near $11 billion direct cost to victims and for the broader Australian economy.

Persons aged 18 years and over experienced IPV, by type of partner violence and sex

Drawing from the Australian Bureau of Statistics 2016 Personal Safety Survey, which measured financial abuse as a subset of emotional abuse, close to every second woman (48 percent) and more one in three men (35 percent) who reported emotional abuse also attested to financial abuse.

It’s estimated that altogether one in forty Australians suffered various forms of financial abuse in 2020, which is broadly broken down into two categories; efforts to control, where the perpetrator withholds or governs a victim’s income; and actions of exploitation and sabotage, which describes behaviours such as a refusal to contribute to household or child-rearing expenses or by forcing liability for joint debts on one partner. Both include the curtailment of employment.

Prevalence of financial abuse alongside emotional abuse

While the report notes that the figures likely understate the true extent of financial abuse due to gendered expectations around household finances, Deloitte’s sums suggest that over a quarter of female victims were left to deal with household expenses alone or otherwise had their income withheld or controlled by an abusive partner, adding up to a combined personal cost of $4.4 billion when coupled with the 22 percent of men who also experienced such actions.

Meanwhile, over one fifth of the female victims were prevented from working, along with around a tenth of the surveyed men, throwing another $5 billion in lost productivity costs and ‘dead weight’ losses (the efficiency loss for government in having to raise additional taxes to cover reduced income or increased expenditure) into the overall economic equation.

Total personal costs from financial abuse

Deloitte also calculated a likely underestimated $200 million in mental and other associated health costs.

While barely scratching the surface of the analysis, the Commonwealth Bank’s aim, as part of its ‘Next Chapter’ initiative, is to draw greater attention to the issue of financial abuse and prompt further action as to support, advocacy and prevention. It notes that while most Australians have become more aware of other aspects of domestic family violence, such as in respect to physical and sexual abuse, fewer understand the nature of financial abuse, including its victims.

“Since we began work on financial abuse in 2015, we now better understand the extent of this issue and the devastating impact it has on victims, survivors and the community,” said Commonwealth Bank’s CEO Matt Comyn.

Prevalence of financial abuse by type

“The Next Chapter will see Commonwealth Bank, our customers and the community come together to help end financial abuse by providing tools, advice and access to support services to help individuals or people they know recover from financial abuse and establish financial independence.”

Wing Hsieh, a Deloitte Access Economics associate director who co-authored the report, noted that there was still much work to be done. “Certainly, the impacts of financial abuse need to be better understood – for victims, those close to them, and for society and our economy more broadly. Our analysis has revealed some startling numbers in terms of both direct and indirect costs. We hope it will help further inform Australia’s understanding of this insidious challenge.”

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