Australian banks are reporting increased levels of personal debt

Australian banks are reporting increasing levels of personal debt and loan defaults.

Australian banks are reporting increased levels of personal debt

Australian banks have made their quarterly ‘confessional’ report, which shows that the level of personal debt hanging over Aussies’ heads is on the rise and doesn’t look like coming down any time soon.

ANZ has reported that home loans more than 90 days in arrears are at their highest level since 2010, and Westpac and many home loan providers also reported a rise in debt defaults.

Although Melbourne and Sydney residents are still exhibiting signs of struggle, it’s the mining towns that have been hit the hardest. Borrowers in South Australia, Western Australia and Queensland, who bought property during the boom, are now feeling the pinch of the mining slowdown.  

Australian households now have higher debt than citizens from any other country, this year overtaking the Swiss as the world’s most indebted, with outstanding debt equivalent to 125 per cent of GDP.

In his farewell speech last week, outgoing Reserve Bank of Australia Governor Glenn Stevens hinted at the problems this could cause.

"Gross public debt, if you add up all levels of government, is about 40 per cent of GDP," said Mr Stevens. "We're rightly concerned about the trajectory of that ratio in to the future, but gross household debt is three times that size, it's 125 per cent of GDP."

According to the RBA, most of the debt that Australians carry is for mortgages, loans and credit cards, which adds up to over $1 trillion. If we’re to look at that number on an individual basis, it would equal just over $73,000 for every Australian adult.

Read more at www.abc.net.au

Opinion: Living beyond our means

While there is a difference between good debt (e.g. home loans) and bad debt (e.g. personal loans, credit card debt) it would seem that many Australians are living beyond their means.

There are concerns that our level of personal debt, and subsequent defaults, will be enough to bring down the banks and create a recession similar to that which was was recently experienced in the US.

Our level of private debt should ring alarm bells. Our gross household debt is currently hovering around 125 per cent of GDP, as Glenn Stevens states, or as high as 160 per cent of GDP, as was reported in The Australian in June. During the Great Depression, our public debt was higher than 170 per cent of GDP. It may be apples and oranges, but still cause for concern. 

Australians’ most common debt is in mortgages, which at least means there’s an asset to back it up. But if the housing bubble bursts, which many predict may happen soon, it will mean that many Australians have a mortgage that is higher than the value of the house it is funding. Many experts fear that banks won’t be able to handle such a house price crash.

In the meantime, low interest rates are providing some short-term relief and an opportunity to repay more on home loans, but once the cash rate increases so, too, may debt defaults.

Still, Glenn Stevens doesn’t seem to think it’s an insurmountable problem – so we can take some comfort in that – as long as we keep paying off our debts.

Maybe the Coalition has hit on something with its credo ‘time to live within our means’. If only our politicians would lead by example. It is worth remembering, though, that in this instance, the Government is not the bad guy. It is we who need to take control of our own finances, limit unnecessary borrowing and spending, and better manage our personal debt problem. That’s assuming, of course, those in debt actually have the means to live a modest existence and repay their loans. This is where banks may be wise to place higher scrutiny on lending, to prevent Australians borrowing too deeply and encourage them to live within their means.

Do you have high personal debt? How are you managing? Do you think this is a problem that can be helped with Government input? Or is it all on us to better manage our finances? Should banks place further scrutiny on lending?

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    COMMENTS

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    Dreamer
    15th Aug 2016
    10:38am
    I have been living beyond my means (a modest super) since I lost my job 18 months ago. I measure this by how much my savings have gone down. At least I am fortunate not to be in debt. 'Reining in' my spending means no new clothes (up cycling old clothes and Vinnies), no new birthday or Christmas presents for anyone (op shop treasures will do), no movies or theatre, no eating out, no unnecessary travel, turning the lights off early and going to bed - a bit of a miserable life but that is what it comes to AND I am one of the lucky ones.
    KSS
    15th Aug 2016
    1:42pm
    Dreamer, I am sorry you lost your job (I've been there - twice) but I have lived pretty much all my life doing most of those things. We all make choices in how we live our lives and where we spend our money. I chose to save by living like this so I could buy my own home. Now I do, I make no apology for being a home owner. I still don't have holidays (well I had one last year for the first time in over 20 years), eat in restaurants, go to the theatre or movies, get take-away, buy new clothes and shop in op shops etc etc. Nothing wrong with that. And I have no personal debt - except for a very small mortgage that will be paid off in about 2 years well before I retire.
    KB
    15th Aug 2016
    11:09am
    It would be a good idea if banks did not hand out loans willy nilly to people as this encourages people to fall into debt. You can take out a loan for anything .Instead banks should encourage people to save for their short term goals such as holidays cars and weddings.
    moke
    15th Aug 2016
    2:45pm
    Hand out loans is just what they do, we have a credit card it was originally $1000 but over the years with out a request from us it has been built up to $6000. Fortunately it is very seldom if ever used and paid off before required time. If we used it as the bank seemed to think we might as pensioners we would never be able to pay it off. It is I think going mouldy from lack of use and we are happy that way
    motaleon
    15th Aug 2016
    4:16pm
    Yes, KB. The banks have pulled out all stops to accommodate hopeless cases for home loans - even to the extent of altering applications. They don't need to worry. They can make the customers pay by increasing fees and not passing on Reserve Bank interest rate downgrades in full. What a pity we missed out on a Royal Commission.
    Old Geezer
    15th Aug 2016
    11:19am
    Home loans are not good debt. Good debt is debt that you use to make money. A home costs you money so any debt on it is bad debt.
    Anonymous
    15th Aug 2016
    1:31pm
    What rubbish!!! Home loans can be excellent debt if people plan sensibly. One's own home provides security, and it is often far cheaper to buy than to rent. Going quite heavily into debt to buy a home was the best financial decision I ever made. I know many who would be far better off in retirement if they had borrowed to buy a home.
    Old Geezer
    15th Aug 2016
    4:01pm
    Not going heavily in debt to buy a house was the best decision I ever made. I'm glad I paid rent until I had over 50% of the cost of a house and then I paid it off as fast as I could. From memrory I did it in about six months as they put my interest rate up to 9.5%.
    Retired Knowall
    15th Aug 2016
    4:22pm
    If the asset purchased by a loan is not generating an income sufficient to service the loan repayment, then it is a BAD DEBT.
    It's easy to see why the people not understanding this basic principle posting their "Poor Me" stories and blaming the Govt. for their financial woes.
    Old Geezer
    15th Aug 2016
    5:17pm
    Agree Retired Knowall. It shows that people don't even have the basic understanding of debt and how to use it for their benefit and thus remain slaves to debt providers. They also fail to take the blame for their own problems and look for someone else to blame ie the government. Hello folks you are the government.
    Rae
    15th Aug 2016
    5:34pm
    Exactly Retired Knowall.

    A home is a financial liability. It usually costs far more than you can get from selling it is you add in interest charges, rates and insurance.

    It is great to own you home in retirement but it is still a liability regardless.

    Positive gearing is the appropriate means of purchasing investment property. It always has been. Saving tax but paying interest is not particularly clever.

    A lot of property speculators may come badly undone but as that is nothing new hopefully they will learn from the experience.
    A tough lesson but often the only way a lesson sinks in.
    Anonymous
    17th Aug 2016
    8:07am
    What utter crap! A home is NOT a liability if it is generating savings that can be spent or invested elsewhere. Yes, a home becomes a liability in retirement, thanks to STUPID pension rules, but it's NOT a liability when it is enabling you to get by on 30% less income because you aren't crippled with high rent.

    I went into debt because I was paying almost half our income in rent for a run-down dump. I bought a run-down two-bedroom + sleep-out 30-year-old home that was solidly built. Repayments on a 110% loan (managed with the help of generous relatives who loaned me the deposit and legal costs) were exactly equal to the rent I'd been paying. With rates and insurance, I was struggling, but within 4 months, rents went up 5% and wages increased. Within two years, I was paying 20% less than rent and starting to spend on renovations. Ten years later, my repayments were less than 1/2 what I'd have paid in rent for a far less comfortable home. By the time I was planning retirement, repayments were $25 a week compared to $350 a week average rent in my area.

    And in my twilight years, I have an asset of considerable worth that, if I'd rented, I would have paid off for someone else.

    Don't tell me my mortgage was a ''bad debt'' because it didn't generate income! How stupid! It was a brilliant debt, because it saved me bucket-loads that would have otherwise flowed in someone else's pocket and kept me poor.

    PLEASE stop misleading people to make unwise financial decisions!

    A home loan is brilliant debt if it is properly planned and managed. It's only ''bad'' debt if you can't afford to pay it back.
    Old Geezer
    17th Aug 2016
    11:17am
    A house costs money and depreciates so to me it is bad debt and a liability. Good debt is something that I borrow to buy that makes me money.

    A housing loan therefore should only be temporary and paid off as quickly as possible. So if you think a home loan is brilliant debt then you are very wrong.
    ex PS
    18th Aug 2016
    6:10pm
    Bought a home for $90,000 lived in it for 20 years and paid no mortgage or rent for five of those years, sold it for $250,000, yes what a bad debt that was. Considering if I didn't put extra money in to pay it off quickly I would have been paying less to pay it off than if I was renting, how can you say it is bad debt?
    Debt that leaves you better off over the long term is good debt, anyone who can't grasp that simple principle should not be allowed to manage their own money as they are a little short on mental capacity.
    Old Geezer
    18th Aug 2016
    7:21pm
    Even at 7% return your $90,000 house should have been worth $360,000. Property usually grows at 10% per year over the long term so you house should have been worth close approximately $700,000.

    At $250,000 less costs it is at best a marginal investment.

    That's why Sydney and other capital cities are having a real estate boom. It is merely catching up to the long term averages.
    Anonymous
    18th Aug 2016
    11:06pm
    How DUMB, OG. Sorry! But that's ridiculous nonsense. He didn't HAVE $90,000 to get 7% on. He had to borrow it and pay it off. And if he hadn't spent on paying the mortgage, he'd have had to pay rent - so UNDER NO CIRCUMSTANCES WAS THERE EVER $90,000 TO INVEST.

    Of course the home was a great investment. It not only appreciated in value, but it saved a fortune that would have otherwise gone into a landlord's pocket. (Or maybe in your non-existent utopic world, people are all supposed to live in tents? Apparently they are not supposed to have any level of comfort in old age unless they lived a life of privilege.)
    LiveItUp
    19th Aug 2016
    8:53am
    OG is not talking about investing money he is saying that over the long term property doubles every 7 years. So $250,000 is below par for a property that cost $90,000 20 years ago.

    Owning a house to me is a liability as it costs me money not like other assets that make me money.
    Anonymous
    19th Aug 2016
    9:03am
    So you are agreeing, Bonny? If property doubles every 7 years, then buying a home rather than paying 1/3rd of your wages in rent is an EXCELLENT investment.

    You MAKE money through buying a home by NOT having to give huge lumps to someone else to pay off THEIR asset.
    ex PS
    19th Aug 2016
    9:24am
    OG, Bonny, your theory only holds up if you put the money that you would pay in paying your mortgage into an investment. most people don't because they have to have a place to live and end up paying dead money in rent. If I had payed rent for twenty years how much money would that money have produced for me.
    The other part of the equation that you both failed to hit on is the fact that I am now retired and spend nothing on rent, if I was on a pension this would increase my standard of living greatly as it would give me more disposable income.
    It is so easy to prove a point if you leave out half of the opposing facts. Rainey is correct, you may be able to earn more money by investing the $90,000.00 in other ways, but only if you have that amount to start with, try just investing the monthly equivalent of the mortgage payments starting with $0.00 and see what the result would be over the same 20 year period, and don't forget to factor in the years that produced zero or negative growth.
    Adrianus
    19th Aug 2016
    9:51am
    I think the comparison is better served by asking the question, If I borrowed $90k 20 years ago would I have been better off financially investing in another asset class? Of course you need to place a value on rent, paid or not paid, as well as other variables. My head hurts just thinking about it, but the more you drill into that question the more you wonder why the same tax incentives are not available to the home owner on the principal place of residence? And why residential property can be purchased by non residents?
    ex PS
    22nd Aug 2016
    4:59am
    Frank, the way I look at is the government is saying that upon retirement it would like to take the family home as some sort of surety and use its value to pay for your pension. If this happens the family home is transformed into a retirement investment, it should be treated the same way as Super, the salary used to pay for the mortgage should receive a 15% rebate and be redeemed from the tax office annually. Rates, insurances and maintenance costs should also be redeemable.
    The government can't have it both ways the family home is either a place for private citisens to live in, bring up their families and provide a place to live out ones retirement year or it is an investment tool that will replace or supplement the pension. The government needs to make up its mind and not try to steal property that it is not entitled to.
    As far as trying to place a value on renting verses buying, as long as the values/variables are constant for each the principle should hold out, in other words if rent is 20% cheaper than mortgage payments taking into account rates, insurance and maintenance it would not matter what the actual figures used the variables would be much the same as long as that 20% variable was factored in. By the way 20% is a figure that I plucked out of thin air in order to make a point, I have no idea what the actual figure would be.
    ex PS
    23rd Aug 2016
    4:59pm
    So Bonny, if a home is liability, how can you justify adding to an Assets Test?
    floss
    15th Aug 2016
    11:29am
    We have no debt and have been that way for forty years , if we can,t pay cash we do not purchase the product.
    particolor
    15th Aug 2016
    11:48am
    Same here !! But its becoming a STRUGGLE to live on the Old Age Pension ! Without taking a Peek at getting a Credit Card :-( I haven't done it yet, Hoping for an Increase in the Old Age Pension at Least ??? :-) But I think in counting My Chickens with this Mob !! :-( :-(
    Troubadour
    15th Aug 2016
    11:34am
    Too many are living on their credit cards these days and the young seem to sadly want
    bigger and better everything. We tried to teach our kids to start small and then build up to the bigger, better home, don't start with a huge mortgage, no matter what the bank tells you.
    The only one who listened is our grand-daughter!
    We cannot afford luxuries anymore, and a holiday is a big stretch, haven't had one for years - but we are NOT in debt.
    Anonymous
    20th Aug 2016
    7:55am
    Our daughter asked me to fly 1000 km to be with her when she went house-hunting and while she was negotiating a loan. Both of us argued extensively with bank managers who insisted she should be borrowing more and buying a flash new home instead of the modest, very solid and practical 30-year-old home she chose. We had to almost bully real estate agents to show us what we wanted to see. The moment they learned she earned professional wages, they insisted she really wanted something twice the price she had budgeted. Thankfully, she stuck to her guns and bought sensibly.
    ex PS
    22nd Aug 2016
    5:04am
    Rainey, your daughter will obviously do well for herself and family, I have a sneaking suspicion that as a seller, my home was treated in the same way, possibly used to get buyers into the office with a view to selling the buyer a more expensive home.
    It makes me wonder how many reasonably priced properties are out there that are not being shown to prospective buyers?
    Grateful
    15th Aug 2016
    11:39am
    Here we go again blaming the VICTIM. Let's start looking at the CAUSE and no one can tell me that mortgage repayments on what are really basic houses is not the absolute prime problem and that naturally leads to the over use of credit cards to pay for the essentials that mortgage repayments used to pay. It is a catch 22 vicious circle!!! And what is THE CAUSE???
    Artificially inflated home prices stimulated by too generous taxation benefits for negatively geared property investment. PERIOD!!!
    And don't let anyone tell you otherwise. The FACTS are there for ALL to see, but, there are none so blind that will not see i.e. the vested interested politicians themselves who won't touch this political hot potato!!!
    This sociological and financial disaster started at the turn of this century when desperate politicians did desperate things to retain power, massive taxation benefits for superannuation and property investment and now all of us have to pay the price, mainly young families.
    Add to that the extraordinary historically low interest rates due to pathetic financial mis-management here and world wide because no one wants to make hard decisions not wanting to lose power AND those low interest rates further encourage investors to buy property and that Catch 22 disaster worsens.
    Heaven forbid if we have an interest rate increase or a recession with job losses, this country's social fabric will be torn apart and shredded even further and just watch the effect that that has on families and marriages.
    Gutless, power hungry, politicians ARE THE CAUSE and we saw Julie Bishop GLOATING on the weekend that they had WON!!!?? What an arrogant display of selfish huberus. Let's see who WINS in the next 3 years and I BET that it won't be families and the aged and disabled!!!
    I guarantee that age pensioners who's sole income is that pension, especially those that have to rent, are not over spending and instead of "living beyond their means" are actually living in POVERTY!!!!
    If there is some blame to share it is all of us who put up with this situation by not demanding that action be taken and penalizing those that do have the courage to try to do so. No wonder we have the politicians that we deserve and nothing will change until the voters do.
    Old Geezer
    15th Aug 2016
    12:16pm
    The cause is low interest rates and too much money circulating around the world. I had a fellow ring me last week to offer me some money. So I thought I'd ask him how much at and what interest rate. I was shocked at the amount they were prepared to offer me and the interest rate had me falling of my chair. He couldn't believe that I wanted to think about his offer. If the interest rate offered doubled I would be in big trouble. That would bring it in line with what are major banks are offering.
    Anonymous
    15th Aug 2016
    12:31pm
    I hear you Grateful and totally agree that if you did not have a freehold house that life would be really tough as a pensioner. I also agree that the RBA and politicians are keeping the real estate market running hot as they need people to feel they are rich so they keep borrowing beyond their actual means and spending more as their wages are not growing enough to assist the economy.

    Australia is all about houses and holes - the holes are not producing the revenue any more - we are down to keeping speculation in houses. It's still working so far.

    On the housing front - I keep my kids grounded and tell them to keep saving for a house and to not panic like their peers. As Lord Keynes once said - a market can stay irrational for longer than you can stay solvent.

    Even though everyone seems to think the housing market will now keep going up forever - reality says nothing does - be it interest rates, the share market, commodities, or whatever. Markets always return to the norm eventually - they can't defy gravity forever - even despite Australian's love of real estate.

    The most dangerous words in the world are 'This time is different'. You hear this more and more often in relation to the Australian housing market going up forever now - going sideways at worst - but probably up slightly in reality.

    Boomers are heavily in the market helping their kids to take on high mortgages and no doubt exacerbating the continual rises along with OS buyers.

    At some point the speculators hope for a greater fool to sell to down the track will come to an end and the Ponzi scheme will fail and many more mortgagees will fall over.

    And when it does - it becomes a buyers market - and then you can have some fun - admittedly with other's misfortunes - but that is life and how speculation in all markets works.
    Old Geezer
    15th Aug 2016
    12:57pm
    Problem with houses is that people don't want to sell for less than they paid for it. So only the desperate will sell and housing supply will dry up with the buyers. Go back to 1992 which was a good time to buy a house in Sydney. It was about 10 years before houses started to move up again. Same thing will happen after this boom.
    Anonymous
    15th Aug 2016
    1:13pm
    And the more desperate sellers there are eventually - the better.

    It re-prices the market accordingly and the attentive investor speculators then start to panic and the faster ones sell as they realise their interest only loans will unlikely ever deliver the price increases they need to make up for the low rent they previously accepted and they are financially going backwards at a great rate of knots.

    The cycle then perpetuates re-pricing as more speculators panic and it goes on.

    All markets work the same eventually when they are in bubbly territory.
    KSS
    15th Aug 2016
    1:26pm
    The 'cause' Grateful is that people spend more than they have, pure and simple. Personal loans and credit card debt are wholly in the hands of the debtor. It is they and they alone who are responsible for taking out loans and over spending on their credit cards. You can blame everyone else but ultimately people are taking out loans they cannot service. The banks and other lenders may have relaxed lending rules but it is the borrower who decides whether to take the money or not, and when doing so also knows they have to pay it back.

    With mortgages, recently the lending institutions moved to make it harder i.e. a 20% deposit and look at the outcry that caused. People complaining they couldn't get a mortgage. Well maybe that was because they just couldn't afford it.

    We can't always have what we want when we want it. It has always been that way. Its just that today, people don't think that those well worn lessons apply to them and then paint themselves as a victim of anyone but themselves (Government, banks, big business, the next door neighbour) when it all goes pear-shaped.

    If things are this 'bad' when interest rates are at all time historic lows, just think what is going to happen as soon as they begin to rise. Listen out for the yelling and screaming then.
    Old Geezer
    15th Aug 2016
    1:29pm
    It will take quite awhile for speculators to panic as the smart ones are now refinancing at 2% interest. Remember interest rates were about 20% last time the Sydney market bubble burst.
    Anonymous
    15th Aug 2016
    2:15pm
    NOPE - as a property investor/speculator you can't even get 4% at an LVR of 80%. Higher again if you want to lock in for 3 years.

    As there is no sensible ROI on rent - investors need prices to go up forever.

    Once they stagnate - investors sell and go to the asset that is making money - be it shares or whatever.

    It is the velocity of money and a greater fool that speculators chase in bubbles.
    Old Geezer
    15th Aug 2016
    2:50pm
    I have been offered money at 2% interest to buy investment property at 100% LVR so it is available if you know where to look. Would I do it? No not at this part of the cycle. Problem with property is the costs of getting in and out. I can buy $1 million worth of shares for very little cost but $1 million worth of property the stamp duty alone is now nearly as much as a normal deposit.
    Anonymous
    15th Aug 2016
    3:12pm
    Sorry OG - but in a word - your 2% - is 100% CRAP!

    You don't seem to understand the present cost of banks' money including overheads - their high profits strongly indicate they don't lend at a loss.

    Best you do some factual research before posting silly numbers.
    Old Geezer
    15th Aug 2016
    3:31pm
    Most property investors borrow wholesale not retail. A group of property investors are currently borrowing their money at 2% with 100% LVR. I know this because I have been offered the same deal myself. If an offer has been made to me then I consider that as being factual.
    Anonymous
    15th Aug 2016
    3:43pm
    Oh! You should have said it was WHOLESALE money - that makes far more sense.

    Wholesalers (banks) can always borrow money at 0% - then profitably lend it out at a high risk LVR of 100% - for just 2% - to special people like you.

    OG - I think, that you think - people on this site are a bit financially naive.
    Old Geezer
    15th Aug 2016
    3:51pm
    The majority of people are very naïve when it comes to most things. I used to teach people to think outside the square and now it's second nature for me to want to help others do the same.
    Anonymous
    15th Aug 2016
    3:57pm
    I used to teach at one point in my working life - and one of the first things you learn is that you will be seriously caught out and have no ongoing credibility - if you bullshit the audience.
    Old Geezer
    15th Aug 2016
    4:03pm
    Exactly but once they realised that what you had to say made sense you had friends for life.
    Anonymous
    15th Aug 2016
    4:13pm
    OG - do you bother to read what others write - or review your own responses?

    I am not totally sure why bullshit would suddenly turn into blindingly good logic and lifelong friendships.

    I think you like having self-confirming conversations with yourself.
    Old Geezer
    15th Aug 2016
    4:28pm
    Maybe that why some people become wealthy while others struggle in life. They are too blinded by their beliefs to see through them.
    Anonymous
    15th Aug 2016
    5:57pm
    Yes OG - April comes before June - except during your Martian leap year.
    Old Geezer
    15th Aug 2016
    6:42pm
    June comes before April if it is already May so it depends on what part of the year we are in. See there is a different explanation even for that one.
    Anonymous
    15th Aug 2016
    7:13pm
    You win - have a safe trip back to Mars.
    Snowwhite
    15th Aug 2016
    11:40am
    Is it time the banks reined in their high interest rates on credit cards?
    KSS
    15th Aug 2016
    1:04pm
    The high interest rates on credit cards have not deterred people from using to fund a lifestyle they cannot afford. What do you think would happen if the interest rate were lowered? I suspect that a few would use the difference to pay down their cards but many others would simply take the difference and spend it. Much like the situation in the housing market. Some have got ahead on repayments whilst others have simply used the low interest rate to borrow more.
    Retired Knowall
    15th Aug 2016
    4:31pm
    A Credit Card is designed to be used by Financially Savvy people.
    You are specifically advised the term of the credit, usually 30 days, sometimes longer. If you breach the term of that period, you deserve to be paying whatever interest is applied to that Card.
    If you have half a brain you Pay The Balance Before the Due Date, if you are brainless you default and pay the added interest then complain about the interest rate.
    Old Geezer
    15th Aug 2016
    4:39pm
    Old fashioned merchant accounts used to follow the same principal. Pay by the due date or get slugged with added interest.

    It beggars belief that people are so stupid with credit cards. Then again I was asked to give my views on a course to teach people how to control their finances and I was shocked by the part that told people to use credit cards for emergencies. I wrote that for most people emergencies come around twice a week and was told that I was being stupid. It was left in the course which is today still available and run by a prominent charity.
    Retired Knowall
    16th Aug 2016
    8:38am
    There are two types that use credit cards, those that always pay the full balance by the due date and those that pay the minimum balance .....and complain about the interest charges. Go figure.
    Old Geezer
    16th Aug 2016
    5:07pm
    What interest charges on credit cards? I use credit cards for all my shopping but never pay any interest charges let alone high interest charges.

    Credit cards are just so useful in that I don't have to worry about handling cash and change, I spend the banks money and get it free for up to 55 days while my own money earns interest, I get reward points for a flight every year somewhere for an extra holiday, free travel insurance and lots of other goodies that I never use.

    I can't believe people actually don't pay them off by the due date. Maybe that why I'm yet to find out about those high interest charges. Silly me pays the balance before the due date. No wonder I'm missing out of seeing them.

    Talking about handing cash and change. We were running short on milk so I called into a Coles before I left the fabulous Gold coast to come home this afternoon. So I sorted out all my excess change that was weighing down my wallet and managed to scrap up $2 in change. I fed it into one of those cashier machines that have put our kids out of a job and it only counted $1.95. So I gave the machine a few harsh words and the attendant came over and got my money back out to prove to me that I had put the wrong amount in. Problem was the coin denominations that came out did in no way match what I had put in. So I had a chuckle to myself and handed her 5c. She wouldn't take it and told me that I need to put it back in that machine. So I said it can't count so you better have a go. And sure enough it was another 5c short. So I said forget the receipt and walked out shaking my head. That left me wondering about how many times can't t count one's money.
    Snowwhite
    15th Aug 2016
    11:43am
    Totally agree with all you say grateful!
    Adrianus
    15th Aug 2016
    11:49am
    You don't need to look far into the report to know there is a problem. Sure the CBA has paid a yearly dividend of 5.5% fully franked based on todays share price, but can this continue?
    The report shows a drop in credit card debt, but an increase in personal loan debt? Is this a result of churning cards into personal loans? If so do those borrowers still have their credit cards? Are they still at a nil balance?
    Old Geezer
    15th Aug 2016
    12:02pm
    Banks are headed into some rough weather but they will do what ever they can to keep their profits and dividends. Cutting a dividend is seen as failure by the directors so they avoid it if they can.
    Adrianus
    15th Aug 2016
    12:30pm
    We saw what happened to BHP's share price some years ago when they stopped paying dividends through the restructuring period. Now they are raising debt to pay dividends. BHP was Australia's biggest taxpayer now I think that crown would be passed to the CBA. The ignorant lefty bank bashers would do well to remember this.
    Crimmo
    15th Aug 2016
    12:14pm
    The issues here are bank's irresponsible lending practices (which gave us the GFC, courtesy of the Americans) and massive credit card interest rates. Also the Coalition Government's refusal to recognise and do anything about the property affordability issue. It is no good having assets to back up the mortgages if most people can't afford to buy the assets. You might ask what about the responsibility of the individual person. People are bombarded these days by glamorous and false advertising; marketing; social pressures and an education system that has been failing people for the last 30 years.
    KSS
    15th Aug 2016
    1:33pm
    Crimmo people are still buying houses and most are no longer first home buyers. If people just refused to pay 'inflated' housing prices, they would fall. As it is whilst there are more buyers willing to part with ridiculous amounts, then house prices will continue to rise.

    People have always been subjected to advertising of goods and services they cannot afford since the dawn of the printing press, radio and TV. In the past people saved for what they wanted. Today its all about instant gratification so they stick it on their credit card, take out a loan or add it to their mortgage to 'worry-about-later'. Well guess what, later is here NOW.
    Old Man
    15th Aug 2016
    12:34pm
    This article is all about figures yet there are no figures given for the increase in borrowers falling behind in their obligations. Sure, there are "more" but if the original number was, say 10,000, another 5 would be "more". Articles such as these make for interesting headlines but can have an adverse affect on readers who may decide to slow down purchasing and damage our economy even more.

    I disagree with the categorising of "good" and "bad" debt. I agree that a house purchase can be classified as "good" debt because it can lead to owning a home by the time retirement comes around and reducing expenditure on a fixed income. I disagree that personal loans are "bad" debt as they should be used to purchase smaller items that are needed such as household purchases. They should also be used for car purchases as these types of loans should be paid off before the car is disposed of. Home loans become "bad" debts when redraw facilities are allowed. The argument that a borrower can use the cheaper rate is false as the term of the redraw can some times mean that three or four cars are still being paid off at the one time. If redraw facilities are available, it can also mean that a large debt is still outstanding when retirement is due. Loans should have a determined amount and time.
    Old Geezer
    15th Aug 2016
    12:52pm
    Buying a car using debt is buying a depreciating asset which is very bad debt. I only ever use good debt which is debt that makes me money. I would never borrow to buy a house, car or any other depreciating asset. I have no problem having redraw facilities on a house as I use that to make money by buying more appreciating assets. Most people have debt back to front and use it for the wrong things. If it doesn't make money and can't be written off your income it is bad debt.
    Anonymous
    15th Aug 2016
    12:58pm
    An asset produces an income and is GOOD debt - your own home fails that category and - but is required to live in - especially when retired - but still gets categorised as bad debt by definition of an asset.

    But there is most certainly good and bad debt.

    Depreciating consumer items like cars are great example of BAD debt without a shadow of doubt - your own house has a chance of appreciating - consumer junk has no chance of appreciating and will go backwards. A car loses around 30% when you drive it out the showroom and is a great example of bad debt.
    Old Geezer
    15th Aug 2016
    1:06pm
    Buying a house is a lifestyle choice but is still bad debt that needs to be paid back ASAP.
    Anonymous
    15th Aug 2016
    1:41pm
    A home loan is EXCELLENT debt if sensibly organised.
    Old Geezer
    15th Aug 2016
    1:45pm
    Yes it can be excellent debt if structured so that all the interest is tax deductible but not many people do this. I have done it many times.
    Anonymous
    15th Aug 2016
    2:04pm
    The interest does NOT have to be tax deductible and won't be for most buyers. Please stop misguiding people, OG. First you spruik NONSENSE about accommodation bonds in aged care centres - which, if not paid in a lump sum (which will be approx. equal to the value of a family home) have to be paid in very expensive instalments ON TOP of 85% of the pension. Now you babble rubbish about home loans being bad debt. They ABSOLUTELY ARE NOT.

    We borrowed 110% for our first home and it took 30 years to be mortgage free, and it was the BEST financial decision we ever made. I made the choice because repayments (on a very modest run-down house) came out at exactly what we were paying in rent, but rents were rising annually. Repayments stayed static until years later when interest rates started to rise.

    We renovated and sold at a profit and then owner-built and sold at a profit and bought again and renovated and sold at a profit and so on until we achieved the home we really wanted. Had we continued to rent, we would have been paying more and more in accommodation costs every year and had nothing to show for it, no security, and much less comfortable accommodation.

    Even if one does not capitalize on the home and trade up, it is usually far more sensible to buy than to rent because you put your money into an asset instead of someone else's pocket, and there's a strong incentive to improve the asset and increase it's value rather than spending extra cash on consumables.
    Anonymous
    15th Aug 2016
    2:35pm
    Agree on rent Rainey.

    I have done spreadsheets comparing owning as opposed to renting on a couple of houses we have owned.

    The only way renting works out financially similar or better is to rent with at least 3 other parties where they equally share all costs.
    Old Geezer
    15th Aug 2016
    3:39pm
    Gosh Rainey I would never have done that myself. Unless you can write off the interest to me owning homes is a bad investment and I've only done it once and paid out the loan as fast as I could.
    Retired Knowall
    15th Aug 2016
    4:39pm
    I think people need to understand that a house DOES NOT appreciate in value, THE LAND on which the House stands DOES. (unless you spend more money and renovate.
    Anonymous
    18th Aug 2016
    11:15pm
    Obviously you know nothing about finance, OG. If I hadn't done what I did, I'd now be living in poverty and begging for rent assistance. Owning a home is the BEST investment most people can make. Only the filthy rich would ever claim otherwise - because they don't know what it is to have to struggle to put a roof over your children's heads.
    Old Geezer
    22nd Aug 2016
    7:39pm
    Ha ha Rainey that's interesting you say I know nothing about finance.
    SuziJ
    15th Aug 2016
    1:13pm
    Hi Leon, this should have *Reign, not rein :)
    Anonymous
    15th Aug 2016
    2:48pm
    You are dead wrong. "Reign" is to rule, have or exercise sovereign authority. "Rein" is any means of controlling or directing, to check or restraint. Leon is correct, Turnbull is wrong. Get it right, girl!
    particolor
    15th Aug 2016
    3:12pm
    Horses have Reins :-) Dictator's have Reigns !! :-(
    Anonymous
    15th Aug 2016
    3:21pm
    Turnbull has rains.

    15th Aug 2016
    1:56pm
    This just proves the stupidity of pension policies that punish savers and reward the irresponsible who over-spend.
    Old Geezer
    15th Aug 2016
    2:01pm
    If you qualify for the pension you are have not been a good saver anyway. If you were a good saver you would be maxing out your threshold and using the super system to receive everything else tax free. Far superior to anything welfare has to offer those who are good savers.
    Anonymous
    15th Aug 2016
    2:08pm
    Once again, CRAP, OG. Lots of people who struggled to save from low incomes or who faced unexpected costly challenges ended up with insufficient to be fully self-supporting - but with enough to suffer unfairness under cruel new rules that ignore the realities of today's economy.

    And hundreds of thousands of my generation had no super. That doesn't mean they didn't save! What a POSITIVELY IDIOTIC and ill-informed statement. Why don't you stop focusing on yourself exclusively and actually investigate the reality for the majority of Australians?
    Old Geezer
    15th Aug 2016
    11:22pm
    More excuses Rainey. As I said anyone that really saved would not be effected by the changes to the pension asset test. They simply would not be focused on getting the pension but focused on replacing their job with passive income which would be above what the pension pays well before pension age. Most would not have much super as super simply has too many strings attached to it and it is far better to pay tax instead.

    If people had all the challenges you talk about then they too would not be effected either simply because they would not have had the capacity to save much at all.

    The people you are talking about are those that want the pension at any cost and will do whatever they can to get it. Now they whinge because they have to make further changes to their affairs so that they don't lose it.
    Anonymous
    17th Aug 2016
    8:13am
    You really display your arrogance and ignorance with the idiotic rubbish you spruik, OG.

    You have NO IDEA of reality.

    Thousands who saved are affected by the pension asset test changes, and many are very unfairly and severely hurt. You are just too ignorant and arrogant to consider that maybe you don't know everything about everyone. Stop being so rudely and selfishly judgmental and working on wild, totally unsubstantiated assumptions about people you know NOTHING about.

    It's no wonder this nation is in a mess when the privileged can't investigate and consider that not everyone in the world has lived their privileged life. If the people making decisions stopped working on wild, self-serving BS assumptions and started talking to the people who are hurt by their policies, we might have some hope of fixing the economic and social problems people like you are greatly exacerbating.

    YOU ARE FULL OF IT, OG. You have absolutely no idea what you are talking about.
    Old Geezer
    22nd Aug 2016
    7:50pm
    Me thinks I have got it right and hit a raw nerve.
    Anonymous
    22nd Aug 2016
    9:03pm
    You did not get anything right, OG. You showed your total ignorance and arrogance and lack of respect. Clearly you are so ignorantly judgmental that you are incapable of learning.

    15th Aug 2016
    2:37pm
    I believe banks are making too big of a profit and this is because they are either charging too much for services or there are too many services being charged for, or maybe a little bit of both. It doesn't seem that they will rein in any charges to a great degree without being made to by government intervention, and we know that is not going to happen because the banks are great supporters of their own greed and guarantee it's existence and growth through contributions to the incumbent political party, and we all know that. The only way to expose banks' practices for making these exorbitant profits is to have a Royal Commission into ALL charges the banks are making for credit cards, loans, interest rates, over-the-counter (face-to-face) services, ATM usage, bank statements, and ALL auxillary services such as insurance, financial planning, etc. Once the facts are to hand and comparisons made between the different institutions in regards to parity or disparity they can be acted upon by ALL government political parties and independent monetary bodies to bring about legislative changes and ensure there is a transparent window through which to view the new rule book rather than the opaque one the government would rather have us use. There are skeletons in financial institutions' closets and the government doesn't want us to know about them, the secrets giving political parties greater ability to put into place their financial policy whilst keeping their "slush" funds topped up. Fairer deeming rates and better savings accounts/term deposits interest for Age Pensioners would, hopefully, be two of the many money saving results for the majority to come from a R.C. It's time for the lights to go on in the financial sector for all of us to see what has been going on, not just the select few in that arena and federal government offices. We, the taxpayers, are being treated like the proverbial mushrooms and it is time that stopped.
    Adrianus
    15th Aug 2016
    3:53pm
    If you were making 3% you wouldn't complain about making "too big of a profit."
    Anonymous
    15th Aug 2016
    4:09pm
    Frank, that would be great, but still not up to the government's unrealistic 3.25%. Bastards.
    Adrianus
    15th Aug 2016
    4:13pm
    Fast, your statement "I believe banks are making too big of a profit...." then doesn't make sense.
    Anonymous
    15th Aug 2016
    5:11pm
    Frank, I was referring to the deeming rate of 3.25%. Sorry, mate.
    Old Geezer
    15th Aug 2016
    5:22pm
    Deeming rate of 3.25% is actually a bit too low in that if you invest your money properly you will do a lot better than that.

    So what do people do. Give their money to the bank at a cheap rate and let the bank make the profits they should be getting on their money. Then they blame the bank for making big profits. Making no sense to me at all.
    Anonymous
    18th Aug 2016
    11:12pm
    You really do live in la la land, don't you OG? What an dense ill-informed statement. People do the best they can with what they have. Contrary to your wild judgmental assumptions, that brand everyone but you lazy and useless, people do the best they are able to do given the opportunities they've had in life to acquire knowledge, confidence, trust, health and mental competence.

    The system is supposed to be designed to cater to HUMAN BEINGS, not robots or silver-spooners. PEOPLE. We once used to be a decent, caring society. Sad how arrogant, selfish and nasty people have become.
    Adrianus
    19th Aug 2016
    7:08am
    Rainey, you will see whatever it is you wish to find.
    LiveItUp
    19th Aug 2016
    8:46am
    People have had it too easy for far too long. Just put your money in the bank and it paid a decent interest. So what happens when that fails they spend their energy whinging instead of finding a better way to invest their money. It is not that hard. Also it is very dangerous to have all your assets in one asset class. You need to spend it among different asset classes so that if one fails the rest will make up the difference fot it. Infact putting your money inthe bank is not investing as after inflation and tax you get a negative return for most years. That wont help your money last for 30 years.
    Adrianus
    19th Aug 2016
    8:57am
    Bonny, I agree with your assessment that our money needs to work harder than it did in the past. But I also agree with Rainey's view that for the most part Australians are ignorant in basic financial matters and just do the best they can. It's all too hard for them and as they age it becomes harder.
    Anonymous
    19th Aug 2016
    10:03am
    Good to see someone showing some humanity and understanding of reality, Frank.

    Bonny, SOME people have had it too easy for too long. The people I refer to who struggle with achieving decent returns are people WHO'VE NEVER HAD IT GOOD - EVER. And there are out there in the hundreds of thousands.

    We don't all live in your utopia and we weren't all born with silver spoons. Only the privileged have had it too easy for too long. Many of us have had it VERY VERY VERY HARD for ALL of our lives, and between trying to keep a roof over the family and food on the table despite miserable wages due to lack of opportunity and education, and struggling to try to give our kids a bit better go at life than we had, learning about investing money we NEVER BLOODY HAD was the last priority on our list!

    When we suddenly find, after the kids leave home and the mortgage is finally paid off, that we are able to save a little for old age, the stinking government persecutes us and the rich and privilege ridicule and condemn us.

    15th Aug 2016
    2:57pm
    In regards to saving, anyone can do it, regardless of their income. It's like anything else you want to do. Compare it to giving up smoking which may be slowly killing you, costing you a fair bit of money, making you smell, etc and has NO positive effects. If you are weak you will continue, if you are strong you will quit. If you don't want to save you will not be rewarded by the things savings will make possible. The choice is yours. Winners MAKE it happen and losers LET it happen. Simple, IF you are strong enough.
    Old Geezer
    15th Aug 2016
    4:42pm
    There is an old saying that says spend 95c and save 5c of each dollar you earn and you live in luxury but spend $1.05 of each dollar earned and you live in poverty.
    Retired Knowall
    15th Aug 2016
    4:44pm
    Correct Fast Eddie.
    I see idiotic statements that it's far smarter not to save so you can get the Pension or part thereof, this the typical mantra of a LOSER.
    The astute will make it their mission in life to be beholden to no-one and do whatever it take to be self funded.
    Anonymous
    17th Aug 2016
    8:19am
    The point, Retired Knowall, is that the government is making policy that makes it APPEAR smarter not to save, and vast numbers will respond to that policy by not saving.

    Many tried hard to be self-funded, but due to unexpected crisis or just the fact that the economy tanked so badly and investment returns crashed, they didn't quite make it. Now they are being punished for saving as much as they did, while those who saved less are being given more. It's DUMB POLICY.

    The issue isn't what is smarter. It's what most people will do in response to IDIOTIC policy that doesn't support doing what is smart.

    If only people would wake up to reality, stop harping on their superiority and moralizing, and recognize that government policy needs to be made based on the REALITY of life, not on the IDEALS of the smarter or more privileged, we might have a hope of implementing a sensible system.
    Oldman Roo
    15th Aug 2016
    3:26pm
    The major problem are low interest rates , which do only assist with picking up the economy for a while but like everything that is based on borrowed money ,it leads to economic trouble further on when the chickens come home to roost , including cutting Pensions and also increasing many because the returns are too low .
    Successive Governments have used the low interest ill strategy to keep the economy going like simply treating a very sick person only with pain killers .
    The hard decisions have to be made and belts tightened on all , including Government and foreign aid and not just a selected few while the gravy train keeps going for the top end in the wealth class .
    morrowj1122
    15th Aug 2016
    3:55pm
    Simple! Reintroduce "layby".......get a "regulated" Bank eg the good,ol' Commonwealth circa 40 years ago ( I mean deregulate banking )...AND we need a STATESMAN as PM.......remember them??
    morrowj1122
    15th Aug 2016
    4:00pm
    Sorry...old Age.."regulate Banking"
    Adrianus
    15th Aug 2016
    4:07pm
    Royal Commissions don't work and are a waste of money and time. We saw it with the Trade Union Corruption Royal Commission. On the other hand there were hundreds of charges and a few went to gaol I suppose?
    morrowj1122
    15th Aug 2016
    4:13pm
    HMMMM Have a look at "The Greatest Story Never Told"......a certain person sorted out some "banking" problems in the 30's.
    ex PS
    18th Aug 2016
    6:20pm
    Problem is the government has realised they can't prosecute the alleged bribe takers and not touch the bribe offerors as both activities are illegal. They would have to upset their main contributors. So we have the government wasting tens of millions of dollars with no result.
    mike
    15th Aug 2016
    4:40pm
    The cost of housing in Sydney has gone through the roof, and I worry about our children getting in over their heads in debt trying to pay of their housing loan. I understand its the Chinese, with too much money pushing up the prices, whilst our bloody government is too busy lining their own pockets to worry about our next generation.
    Old Geezer
    15th Aug 2016
    5:25pm
    Same thing happened back in the late 80s and early 90s where houses in Sydney went through the roof. The desperate sold and then houses stagnated for about 10 years. If you look at a long term graph of Sydney houses prices they are not that high today. Problem with houses is that their growth in very concentrated in small time frames so if you buy at the right time you get a lottery win.
    Anonymous
    15th Aug 2016
    6:06pm
    Mike - your kids have to look at it this way - nothing defies gravity for ever - not even houses.

    The government and RBA will not be able to get people to borrow excessively forever, the Chinese will not have excess borrowing capacity forever - and neither will the Boomers.

    It's a pain for our kids in the meantime - they just have to be patient and wait for it to unwind.
    ex PS
    22nd Aug 2016
    5:12am
    Houses or any commodity for that matter are only ever worth what people are willing to pay for them, once the housing market reaches a stage where no one is buying the prices will drop.
    I agree with Reasons, patience and a willingness to start modestly are required.
    Aquarian
    15th Aug 2016
    5:53pm
    My wife and I have always lived within our means. So now we are retired we have no mortgage and no loans to repay. We DO NOT use credit; instead we use a debit card. We find that our government pension plus a modest allocated pension look after us nicely. However the WA Government need to learn some lessons regarding this. A new football stadium that most people will never visit and the very expensive Elizabeth Quay project. Now they are virtually broke ! Can't even afford to look after hospitals !
    Not Senile Yet!
    16th Aug 2016
    12:47am
    What a lot of Crap!! More Propaganda to try to reign in the debt created by No wage rises above 2% for 20yrs while everything else increases at an average of 5 to 10% on everything!
    Privatisation promised lower costs....but the reverse has happened as Corporations get greedy in the name of Shareholders (Wealthy)!
    Even the State & Federal Governments have tied their costs to annual CPI increases that are well above Wage increases.....which simply diminishes people's ability to pay for day to day living costs! 10% GST can be claimed by Business but not your average wage earner!
    Now they double the price of a stamp and lock in Fines Rego and TAC to above wage increases....and let's not talk about Gas & Electricity....nor the extra Taxes on Fuel Alcohol and smokes!
    Shrinking the economy is about squeezing the average household's spending power!
    Let's face it ......screw the workers ability to save/spend/buy and you screw your Countries economy!
    Meanwhile we have Party Puppets living fat off the taxpayer and laughing their faces off at the average citizen while they do it......why?
    Because no one seems to realise that they are Bought and paid for by their Parties to do as they are told....for their Party....Not for the Country or the people!
    Time people woke up and voted ALL the Cardboard Cut-outs OUT!!!
    Rae
    16th Aug 2016
    7:06am
    The level of wage stagnation and inequality we have now has always , historically, resulted in a Depression.

    Look about and notice the retirees spending up big in cafes etc, getting rid of that extra they can't keep now. When that stops the economy will tank. They are in buying new fridges, new cars etc and this was a policy of the LNP.
    Heaven knows what they plan for next year when that money is all gone overseas with the rest of the money disappearing off shore regularly.

    Companies are borrowing blithely as well to pay for dividends they didn't earn and share buybacks to boost bottom lines and justify continuing large senior employee bonuses.

    These Ponzi schemes always collapse in the end. It is only a matter of time.
    Old Geezer
    16th Aug 2016
    9:30am
    Gee we are a gloomy lot.
    Adrianus
    16th Aug 2016
    9:40am
    That's only because we are not looking forward to paying for Labor's spending spree. In hindsight, I wish I didn't get those pink batts.
    Rae
    16th Aug 2016
    11:34am
    The truth will do that OG when the stuff up passes the fixable point.
    Grateful
    16th Aug 2016
    1:54pm
    Very disappointing reply there Frank. I am no apologist for ANY political party, but, the pink batts are not what is causing what we are now facing. In fact, those infamous pink batts and school halls and cash payments placed us above ALL other leading economies throughout the world. Australia is the only one that didn't go into recession during the GFC and came out of it with its credit rating still at AAA.
    BUT, we are now heading straight for a recession, head first, and if you take an open minded look at recent history, you will certainly find the REAL cause(s). From 2000, all historically "normal" economic processes took a huge U turn which have not been addressed, for obvious political reasons, and has inevitably caused all of the potentially disastrous situation that the entire world now faces.
    In Australia, it is seriously exacerbated by the out of whack ratio of government spending to its income. Australia's income was "manna from heaven" during the mining boom and cash was pouring into the government's coffers. The government of the day, wishing to take full advantage of that largess and be popular with the electorate, handed out massive, unprecedented, taxation benefits which have been totally exploited and which we no longer can afford as that "manna" from heaven has stopped, big time.

    Yet, all political parties are too gutless to do what is patently obvious and that is to severely restore the expenditure/income ratio to a sustainable level.
    Income now can only be increased by taxation, but, expenditure can be VERY significantly reduced, like most of us have had to do during our life times, and the government should take note of the heading of this particular discussion. "Are we living beyond our means"??
    Yes they (we) are, but, not everyone is benefiting, far too many are receiving the vast bulk of the government's (OUR) expenditure with these massive taxation benefits which have artificially raised the cost of housing and drawing so very heavily on the government's coffers from those benefits and receipt of "welfare" payments when they clearly do not NEED them.
    BUT, as soon as one party starts along those lines they get murdered at the next election!! So, until WE accept what HAS to be done and not punish that government that takes those essential and courageous decisions, it will only get much worse and the end result will be catastrophic.
    But, it MUST be done NOW as, to far too many, the damage is already done and irreversible!!!
    Adrianus
    16th Aug 2016
    3:34pm
    "those infamous pink batts and school halls and cash payments placed us above ALL other leading economies throughout the world."- Grateful.
    I put it to you the situation is worse now than when those idiotic stimulus packages were rolled out.
    Yes Grateful, a small part of the community became very wealthy at taxpayers expense. Where do you think that money came from? Now we need to pay for it. By the way my pink batts are not working the way researchers suggested.
    Anonymous
    17th Aug 2016
    7:51am
    It's a pathetically small mind that keeps harping on the comparatively minimal cost of school halls and pink batts (some of the cost of which represented very beneficial investment).

    The LNP promised to ''repair'' the economy. Instead, it persecuted the most disadvantaged, exploded the deficit and debt, and all it can now talk about is tax cuts for those who need them least - at the further expense of people who are living in poverty.

    Put a sock in it, Frank. Pink batts and school halls are ancient history, and the portion of their cost that represented waste was a drop in the bucket compared to the extravagance and mismanagement we've seen in other areas. Let's see the LNP actually DO SOMETHING CONSTRUCTIVE AND FAIR that results in positive outcomes.

    (My mother's pink batts reduced her heating and cooling bills by 20%. She was over the moon at having them installed. And the local school is enjoying massive benefit from the lovely new school hall it was able to have constructed.)
    Old Geezer
    17th Aug 2016
    11:23am
    Did you know that the government paid those for their excess stock after the pink batt scheme was pulled and they were told to just dispose of them as they wished? Many people then got their batts for the price of the freight to their houses.
    Adrianus
    17th Aug 2016
    11:49am
    "those infamous pink batts and school halls and cash payments placed us above ALL other leading economies throughout the world."- Grateful.
    or...
    "It's a pathetically small mind that keeps harping on the comparatively minimal cost of school halls and pink batts..."

    Which was it? Did the pink batts thrust us into the limelight of exemplary economic management? Or was it a minimal and therefor inconsequential cost?
    Anonymous
    19th Aug 2016
    9:05am
    The Labor Party thrust us into the limelight of exemplary economic management by guiding the nation through the GFC so successfully - by comparison with other nations.

    Sadly, the LNP understands nothing except the Sheriff of Nottingham approach of taking from the poor to give to the rich, and the consequences are being seen both in growing social problems and in increasing debt.
    Adrianus
    19th Aug 2016
    10:07am
    hahaha!! Thanks Rainey, I've been having a morning of problems, I needed that laugh. :-D
    Old Geezer
    19th Aug 2016
    7:05pm
    Rainey we are now suffering form Labor's exemplary economic management in that they didn't allow the excesses to be flushed form the system. They just kicked the can down the road and we are quickly catching up with that can. That is why we have the problem we have today which has nothing to do with LNP at all.
    Adrianus
    20th Aug 2016
    8:28am
    Old Geizer you are absolutely correct!!
    What will Labor and the Unions do now??
    They are great at kicking the can down the road but do they have the courage and political will to do what is right for the Australian people regardless of their whinging about relative poverty. Labor got us into this mess and they should at the very least admit their failings and help get us out!
    ex PS
    22nd Aug 2016
    5:27am
    OG, Frank, if you were not so party politically brainwashed you would understand the perfectly valid point made by Rainey. It was not the amount of money that was spent on the pink bats or the school hall projects that made the difference. It was the fact that the government of the day realised that in order to save tens of thousands of jobs, money had to be injected into the economy and it needed to be done quickly.
    By doing so it saved many small to medium businesses from going broke, as it is readily recognised that once businesses of this size go down they hardly ever recover, this saved the tax payer billions in welfare payments. Like it or not most of the other first world nations who went through the GFC are wishing they handled it as well as Australia did.
    It is your right to be one of the party political herd if you wish, but you lose credibility if you constantly ignore any positive attributes of opposing political groups for purely party political reasons.
    Adrianus
    22nd Aug 2016
    8:12am
    ex PS, I'll ignore your insults and just put it down as ignorance from an ex Public Servant who knows very little about free enterprise and the circulation of M1 in a micro economy when a macro economy is failing it.
    We would have been far better off by paying a minimum wage from Centrelink. You fail to understand that the directive for the so called stimulus packages came from the extraordinary G20 meeting, in which Swan and Rudd were instructed by the IMF and other interested stakeholders. Labor panicked and merely followed the crowd which benefited manufacturing / export countries like China and USA. Our government purchased pink batts and big screen TV's. Remember, this happened in the middle of a global resources boom.
    The 10,000 jobs created by the pink batts lasted 6 months and cost 4 lives. It's main objective was to buy political capital not prosperity.
    ex PS
    23rd Aug 2016
    5:10pm
    Frank I know enough to understand that Australia did not follow the crowd, it spent what was needed to head off recession and by not skimping saved us from a much worse situation, those who skimped and did not spend enough did not do so well. As for the pink bats it was not meant to be a solution that lasted forever it did what it was meant to do which was to keep businesses afloat through the worst of the GFC. It did cost lives and that is down to the few business owners who were in it for a quick buck and did not train their staff properly.
    Again it is a shame to see who I suspect is a reasonable man being influenced by flock mentality. Petty politics should not take over from reason and logic.
    Dukki
    16th Aug 2016
    7:10am
    I always enjoy reading other peoplples point of views but I do have ti agree with Grateful. The banks are very greedy n if they didn't have such high rates of interest then people wouldn't have to struggle s o much to pay them off...
    Dukki
    16th Aug 2016
    7:10am
    I always enjoy reading other peoplples point of views but I do have ti agree with Grateful. The banks are very greedy n if they didn't have such high rates of interest then people wouldn't have to struggle s o much to pay them off...
    Dukki
    16th Aug 2016
    7:10am
    I always enjoy reading other peoplples point of views but I do have ti agree with Grateful. The banks are very greedy n if they didn't have such high rates of interest then people wouldn't have to struggle s o much to pay them off...
    Dukki
    16th Aug 2016
    7:10am
    I always enjoy reading other peoplples point of views but I do have ti agree with Grateful. The banks are very greedy n if they didn't have such high rates of interest then people wouldn't have to struggle s o much to pay them off...
    Anonymous
    16th Aug 2016
    7:49am
    You have a tendency to repeat yourself.
    MD
    16th Aug 2016
    10:03am
    This issue re debt has generated a few posts that correlate debt with real estate & thereby the (questionable) value of housing/home ownership. Whether accumulation of money and perceived wealth is any individuals motivational CAUSE to strive for an EFFECT (housing or otherwise) is a matter for themselves. Some are dreamers, some schemers and a good many are simply bloody fools. No amount of crowing, lecturing or self aggrandisement by the select few will have any effect on those attempting to climb the slippery pole of 'success' ?
    Recalling the Kerrigans & 'The Castle' reminds me of a brief conversation between the two sons, Dale & Darryl - (Daryll K): "Dale dug a hole. Tell em Dale." (Dale): "I dug a hole.
    OG's comments remind me of Dale's, so now you're in the picture, keep digging OG! Needless to say; 'A man's home is his castle', regardless of associated costs.

    With the exception of the many and varied instances whereby Banks, Companies, Financial
    Institutions, Ponzi schemers, money lenders and mind benders have bled the 'life savings of poor old pensioners' with a promise of trebling their investment (not sure which party's the fool here), then I'm sorry to say that each and every one of us is personally responsible for our financial predicament, good or bad. Blame can NOT be foisted on any Government (party or policy). The money lenders exist for the sole purpose of generating profit, both in
    good times and bad. If consumers elect to avail themselves of credit with a view to 'Living the Dream' then I'd suggest a ready stock of paracetemol to alleviate the onset of migraine when all becomes nightmare. Ultimate responsibility for decisions (good/bad) rests entirely with the individual.
    To qualify: Retired (although casual work av 6hrs/wk, wife - full time), freehold home owners, Credit Card holder, Super - peanuts, Investments - nil, debt - nil (excepting outstanding CC amount - to be paid prior to 30 day run). Social benefit - nil.

    So I'll sit back & watch the passing parade till such time as; having shimmied out too far on the tree of life when the twig snaps; (& much as I also expect, home values, shares etc) - I'll fall!
    Ritza
    16th Aug 2016
    2:25pm
    MD.. I hear you. Single income and bought a house by having 2-3 part time jobs ( cashier/ waitress/ nurses' assistant. Now in my 60's I am debt free for the first time in my life. Yippee . Because of my modest super..... which I paid for in 32 years in the same job I do not qualify for anything except the Senior Card and Opal card. Minor investment which pay $70 p/a. if i cannot afford it I do without. I have $35 taken each pay for gas and electricity. Gee and I am a blood -sucking baby boomer preventing the X,Y and Millennial generations getting what they want...... suck it up kids..
    MD
    16th Aug 2016
    5:39pm
    Good for you Ritza, Oz needs more folk of your calibre. Hang in there honey, there's more to life than money - funny or otherwise.
    Radish
    16th Aug 2016
    8:38pm
    LOL...totally agree with you. You and others who went without to get where they are today...good on you all.
    Old Geezer
    16th Aug 2016
    5:59pm
    Here is an interesting article

    http://www.australiannationalreview.com/leading-financial-educator-predicts-interest-rates-decade-extended-property-stock-market-boom/?inf_contact_key=cb39eefac097c456b36b419c791bdc395ec42f1de2f738bc8d124cf43d6964ad
    Radish
    16th Aug 2016
    8:36pm
    Being brought up in the era where credit cards were not around I only bought what I could afford to pay for...went without until I could purchase.

    Watching the way my parents handled money has stood me in good stead and I can honestly say I have never been in debt...except for a mortgage.

    Being debt free means sleeping well at night.
    MD
    17th Aug 2016
    7:10am
    Goodnight indeed Pepe.
    jamesmn
    18th Aug 2016
    11:26am
    its a joke i went to the anz bank in ballarat and wanted to cancel my credit card for a debit card seems very simple except this clown in the bank does not want to cancel the credit card i have already got the debit card but she is refusing to cancel the credit card are these idiots on a commission like all telstra stores the next visit to this anz bank in sturt st ballarat if she does not cancel the card i will be reporting her to anz head office.
    Adrianus
    18th Aug 2016
    12:40pm
    It took me 5 years to cancel a credit card and I didn't use it once during that period. I get around 5 new cards in the mail from banks each year. Its a joke!
    I recently went into the bank to open a new account and they gave me two new accounts. I agree it is becoming more difficult to reduce the number of accounts. You need to put your request in writing then hold them to account on each step of the process.
    Old Geezer
    18th Aug 2016
    7:22pm
    Taking on Debt is robbing yourself of future income.

    20th Aug 2016
    7:47am
    Personal debt is skyrocketing because expectations of living standards have elevated and credit is easy to access. In my early adult life, I received my wages fortnightly in cash. I put $n aside for bills that came in monthly, quarterly or annually, $n into a savings account, and kept $n for spending. When the cash ran out, spending had to stop, so I checked the cash in my wallet and considered how long it was until next payday and what I might need before spending anything.

    When I got a credit card for the first time, I formed a habit of pinning dockets to a bulletin board in the kitchen and writing the new balance owed on a white board next to it. I then divided the balance into two components - bills I had budgeted for, and discretionary spending. I set a monthly cap on discretionary spending.

    Today, young folk just flash a credit or debit card and don't think about the consequences. They EXPECT to eat in restaurants regularly, buy coffee and cake whenever they are out shopping, indulge in exotic foods (I know ''struggling'' families who always have a wide selection of sun-dried vegies, fancy sauces, dips, etc. in their pantry/fridge). Expensive holidays are now ''a necessity''. Homes have to be bigger and newer and much more luxurious than the run-down cottages we thought were seventh-heaven because they were ours (despite the whopping mortgage!)

    The unavoidable costs have also risen. Schools are selecting expensive uniform styles instead of the plain Target shirts and kids now MUST go on expensive excursions regularly. Cars can't be maintained by backyard mechanics because of computerization. There are bans or license fees attached to hunting and fishing for food, and the vast expanses of blackberry bushes and mushroom paddocks that we had free access to as kids are no more.

    There is NO EXCUSE for most young folk to have excessive debt because interest rates are so unbelievably low that the total cost of a home over a lifetime is way, way less than it was for my generation - despite the up-front price tag being higher. And young folk and females are earning far more than in my generation, when wages were a pittance for anyone under 21 and for girls. Two incomes is the norm now, whereas in my generation we got by on one for at least a decade after starting a family.

    What is mind-boggling is that the same folk who are whinging about the young not being able to make ends meet and incurring high debt are quite content to see pensions slashed and old folk, the disabled, the sick and the otherwise under-privileged living in poverty.

    I think it's time to raise taxes on high income earners, clamp down hard on tax avoidance and reduce the scope for minimizing tax, increase aged and disability pensions to at least the minimum wage, remove assets tests (which are grossly unfair - but replace with a more logical deeming test), increase unemployment benefits (but focus heavily on job creation and retraining), and introduce much stiffer regulations on issuers of loans and credit facilities. Higher incomes for the underprivileged would generate increased consumption that would drive higher profits and tax and economic growth. Higher taxes on the rich would merely reduce the flow of money to off-shore tax havens! We should also look at ensuring that low wage earners are paid enough to make their efforts worthwhile, and we can do that readily by forcing reductions at the top end, where salaries are downright obscene.

    Also, some compulsory education in household budgeting and financial management in schools, and perhaps compulsory classes in household budgeting for all expecting parents would be a big step forward.

    It won't happen, of course, because the self-serving power-brokers are only interested in PROFIT FOR THE PRIVILEGED and are quite content to have the country go to the dogs as long as they are lining the pockets. It's been well-evidenced that serious inequality stifles economic growth - but the greedy are just too self-serving to care. They just keep on LYING and robbing the poor to pay more to the rich.
    Old Geezer
    20th Aug 2016
    3:18pm
    Rainey the rich pay more than enough tax at nearly 50c in every dollar they earn. Why do you think our young professionals go overseas to work? They earn more after tax it is as simple as that.

    OK if you want pensions at basic wages then there can't be any benefits for being a pensions. No more cheap scripts, discounts on rates, car rego etc. That would be only fair for those earning the basic wage. One big problem here is that at least those on the basic wage contribute to the productivity of society but pensioners do not. So is that fair we ask some people to work while we don't ask others but pay them the same. I don't think so.

    I love my credit cards. Saves me carrying cash and I can use the banks money for up to 55 days while my own earns interest. I got lots of lovely reward points and get to go on an extra holiday each year with a free flight somewhere. I get free travel insurance and lots of other goodies that I never use with my credit cards.
    ex PS
    22nd Aug 2016
    5:40am
    OG, agree that it is just not feasible to pay Pensioners the equivalent of the basic wage, but to say they don't contribute to the productivity of society is incorrect.
    What a lot of Pensioner Bashers refuse to knowledge is the fact that Pensioners pay GST just like the rest of us, to me this means that they are contributing to society.
    How many Pensioners are looking after grandchildren while both parents work, or cook and freeze meals so that working couples have one less thing to worry about, there are even retirees out there who have taken on the care of their own parents. Maybe people should think before making sweeping generalizations.
    I also agree about Credit Cards, the trick is to use them for your own benefit not the Banks.
    Anonymous
    22nd Aug 2016
    9:10pm
    I get very sick of hearing self-serving egotists rant about pensioners not contributing. Not only do they contribute now, through charity work, child minding, community services, and paying indirect taxes, but they have spent - in many cases - 5 decades serving society. Who are you, OG, to judge the contribution of people you don't know to our society. Some of them fought in wars, volunteered for military service, fought fires, risked their safety to save lives or to keep essential services running through storms and times of crisis. How dare you be so disrespectful as to suggest that they don't contribute and therefore should not enjoy a decent standard of living in old age.
    What a disgusting attitude.


    Tags: finance, money, debt, saving,