Tale one: The big picture

  • Since 1996, the Australian economy has grown 3.5% on average per annum. Growth is expected to comfortably exceed 4% this year.
  • Australia is experiencing near full employment. Only 4.3% of the workforce is jobless, with many wondering how future job vacancies are going to be filled.
  • At 2.4%, the inflation rate is well under control. The Treasurer soberly characterised this as “consistent” with the Federal Government’s targets.
  • Interest rates remain low — 6.25% — with yesterday’s job figures lowering the chances of another rate rise before this year’s federal election.
  • The resource boom continues to drive employment, fill government coffers and supply handsome returns to investors.
  • Despite concerns about the household budget, The Australian reports that “Consumer sentiment remains relatively strong, buoyed by a raft of solid economic fundamentals including a stable interest rates environment and falling petrol prices…”.
  • The Australian sharemarket continues climbing north. The All Ords has risen 1400 points in 12 months (from 4,943.80 on 13 July 2006 to 6,400.10 on 9 July 2007). The S&P 200 has followed suit, climbing from 4,966.10 a year ago to 6,363.40 on 9 July 2007.

Tale two: You and me

  • Under-employed part time workers: 483,900
  • The most recent national data (March quarter 2007) shows that the average housing mortgage repayment to household income (for first home buyers) ratio is 30.7%.
  • More than a million households — or 16.3% of all Australian households — are now over the rental or mortgage “stress” threshold, which is defined as spending 30% or more on housing costs. In 2001, the figure was 11.6%. (Incidentally, the Coalition holds six marginal seats with more than 16.3% of households experiencing household stress, and another seven marginal seats with more than 13% of households experiencing housing stress.)
  • The most recent data (March quarter 2007) shows that the total household debt to disposable income ratio was 158.7% nationally in seasonally adjusted terms. It has risen 117.4% since March 1997.
  • Australian Bureau of Statistics figures show that in the 10 years to March 2007, average full-time wages rose 47%. Over the same period:
    • food prices rose 41.3%
    • petrol prices rose 61.3%
  • The Courier Mail reported yesterday: “Wages have increased 13.8% in the past three years, but have been left behind by soaring supermarket bills, which skyrocketed by a massive 28%.”
  • According to the Sydney Morning Herald:
    • Interest payments now soak up more than 11% of all household income, about 2 percentage points more than in 1989 when mortgage interest rates were 17%.
    • Those in financial difficulty can apply to withdraw cash from their super account if they are in acute financial need. The amount released for this purpose jumped from $70 million in 2005 to $135 million last year.
  • According to the Insolvency and Trustee Service Australia:
    • Total personal insolvency activity (31,964) increased by 16.9% in the 2006-07 year.
    • 6,572 new bankruptcies in the June 2007 quarter, an increase of 15.2% against the June 2006 quarter (5,705). Overall, new bankruptcies increased by 13.2% during 2006-07.

Sources: The Australian Institute for Social Research – The University of Adelaide , Australian Bureau of Statistics, HIA.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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