A young woman we have been working with on a project here at the Office of the Guardian is setting up house, for the second time. The first attempt didn’t work out and she lost most of the few household goods she had bought. The Transition to Independent Living Allowance of $1500 was spent the first time around. She is 19 and she has no family to help with even a fridge or a bed, some basic furniture and a few creature comforts. She is determined though and without a trace of self-pity.
Children’s Trust Funds (CTF) were launched in the UK in 2005 for all children, although since replaced by Junior Individual Savings Accounts. A CTF was a long-term, tax-free savings account which the government contributed to with a modest grant at birth but with a little more for children from low-income families. Top-up payments were made at some birthdays and with more for those in low-income families. The funds accumulate and mature on their 18th birthday.
A great deal has been learnt about individual trust funds. Contrary to their equalising purpose they can further entrench inequality because parents on higher incomes are more likely to contribute funds and to assist with wise financial decisions post-18. Also, young people who struggled with learning may have benefited from financial support before they turned 17.
With these lessons in mind it is an idea worth exploring further, at least for children in care if not for all children. It could work something like this. On the granting of a long-term care and protection order an account is opened with a deposit equivalent to the amount the child would have received from birth and then topped up each year. An additional lump sum is deposited at 16 years to assist with leaving care costs. A limited amount can be withdrawn before 18 for educational purposes. It could be matched dollar for dollar between Commonwealth and State governments. Financial management skills and assistance would be part of the package.
In South Australia this would be supplemented by the Dame Roma Mitchell Trust Fund for Children and Young People, which provides small grants to children and young people who are or who have recently been in care. This Fund has made a difference to the opportunities young people have for educational attainment and in developing skills and interests. It goes some way to narrow the gap between what the state department can provide and what many other young people get from parents.
What we have in place for young people leaving care is inadequate and a trust fund would only be a small part of the answer, but it could even things up a little among young people who get ongoing family support and those who do not.
What if the young woman I mentioned at the start had a small fund of her own to draw on so that she could furnish her room and pay for her driving lessons which would mean she could safely get home at midnight from the hotel job she was almost offered? Such a fund could transform her new venture into homemaking from a time of anxiety into an empowering adventure with an increased chance of success.