Australia’s debt levels continue to rise, prompting the International Monetary Fund to call for tighter lending rules for both business and households. So far that hasn’t dented our appetite for taking out mortgages and other credit. Building approval rates are the highest ever and lenders are reporting an overwhelming rush for mortgages. The number of home loans in WA rose by more than 600% in March, while other states are reporting similar astonishing rates.
“A recent Victorian survey noted, for example, that household debt has risen 35 percent over the past year.”
Little wonder then that most commentators agree our debt figures are worrying. A recent Victorian survey noted, for example, that household debt has risen 35 percent over the past year. More than $100m has been racked up in unpaid gas and electricity bills in that state alone.
It has been accepted that the end of Jobkeeper and other financial subsidies challenge some family incomes and contribute to rising levels of stress and anxiety over how to meet essential bills. Add to that, some states and territories recently ended the pandemic-imposed moratoria on rent rises and evictions. NSW and ACT appear to be the exceptions. NSW has a six-month transition period before it returns to ‘normal’ eviction processing rules (the exception is if the tenant has not kept up with a repayment plan). The ACT recently gave tenants until the end of June before evictions can begin.
“The number of home loans in WA rose by more than 600% in March, while other states are reporting similar astonishing rates.”
It is sobering for our industry, as our clients ramp up requests for collections after a year of relatively low activity.
The NSW government is also stepping up and chasing bad debts. Its leniency for renters does not extend to those who dodge mandatory quarantine bill payments. So far, the debt is more than $16m. ‘Enough is enough’, we’re told, and enforcement is set to begin. This week the Sydney Morning Herald newspaper revealed the NSW government’s internal debt collection agency, Revenue NSW, will toughen up and try to recover $16.4 million from 7000 people who quarantined in Sydney. As far back as February, 5264 invoices were more than two months overdue. We’re yet to see if there has been a dent in that eye-watering figure.
Not long after that announcement, the NSW Premier imposed restrictions on gatherings following a COVID-19 infection thought to have started with the return of a traveller in quarantine. So, here we go again in the most populous state.
Next week, the Treasurer will release the budget, some of which has already been announced. We expect to see some tinkering with the rules around insolvency and restructuring, which the AICR will be watching closely.
Yours sincerely,
Brian Carter
Chairman