Australians rack up record debt
Australian households are in record levels of debt, and for the first time have surpassed American levels.
Reserve bank figures show household debt - the combination of personal and mortgage debt - is equivalent to Australia’s GDP.
That means every adult owes an average of $74,000.
Analysts warn that the financial crisis that rocked Main Street in America could well hit Australian families in 2010.
Economics Professor Steve Keen at the University of Western Sydney says it is a sign that families are under financial stress.
“We now have an enormous proportion of income that has to be devoted to paying back interest payments,” he said.
“Even if you leave aside the interest payment fact, if you want to reduce your debt now where it would have taken you on average for Australians back in 1990 it would have taken just a few months, now it would take them a year to get back down to the zero mark.”
However the Council of Social Service says there is already a debt crisis and it will only get worse unless the Federal Government steps in, with the numbers of new families asking charities for help set to increase next year.
The council’s director, Alison Peters, says the Government needs to boost its support.
“We think there needs to be more support given to organisations like local neighbourhood centre like the major charities to be able to assist those people who are really desperate for assistance,” he said.
“A number of our organisations have already reported to us and indeed to the Government that they are seeing not only new families coming forward seeking assistance but many families are coming back again and again for assistance because they really are struggling.”
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