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Personal insolvencies skyrocket despite families 'never better off'

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WAYNE SWAN MP Federal Labor Shadow Treasurer

Personal insolvencies skyrocket despite families 'never better off'

Growth in personal insolvencies has doubled in the past nine months, Senate Estimates has revealed, in another severe blow to John Howard’s recent claim that working families “have never been better off”.

Chief Executive of the Insolvency and Trustee Service Australia, Mr Terry Gallagher, has told Senate Estimates that bankruptcies grew 12.5 per cent in the nine months to March 2007.

Debt agreements - which are binding arrangements between people who cannot pay their debts - have jumped a massive 32 per cent in the nine months to March 2007.

Across all forms of personal insolvency, total activity has increased 15 per cent, up from around 7 per cent last year, Mr Gallagher said.

“You could go back 10 or 15 years, when bankruptcy numbers were 13,000 a year, and now they are 30,000 a year,” Mr Gallagher told Senate Estimates on 24 May.

The dramatic jump in personal insolvencies echoes recent data from the Supreme Courts of New South Wales and Victoria showing a sharp spike in mortgage default actions.

Land repossession claims in New South Wales have jumped a hefty 75 per cent since 2004 and in Victoria have doubled between 2003 and 2006.

The insolvency data exposes just how arrogant and out of touch Mr Howard has become with his claims that Australian families have never been better off.

The reality that Mr Howard no longer understands is that many Australian families are under mounting financial stress. In particular, many families are struggling to cope with four interest rate rises since Mr Howard promised to keep rates at record lows.

A total of eight back-to-back interest rate rises on Mr Howard’s watch have added around $140,000 to mortgage interest repayments on the average median-priced home across our capital cities over the life of a loan.

This translates to an extra $470 per month that families must find in the household budget since before Mr Howard’s eight rate rises.

Many families are also concerned about Mr Howard’s extreme industrial relations regime which is cutting penalty rates and overtime.

Mr Howard’s failure to act on spiralling petrol prices is also putting strain on family budgets, as are sharp rises in childcare costs, up 12.9 per cent from a year ago.

Mr Howard needs to get off his high horse and start listening to the financial concerns of Australian families.

30 May 2007 Contact: Matthew Coghlan 0415098050