MORE Sydney families are being pushed to the wall

from BSN
MORE Sydney families are being pushed to the wall by financial pressures despite a three-decade low in unemployment.

There were 6940 bankruptcies, debt agreements and personal insolvency agreements in Sydney last financial year, an increase of 16.4 per cent on the previous year. Another 5250 were registered between last June and February, suggesting the total this financial year could push towards 8000. That compares with just 4544 in 1999-2000.

Labor has used the figures from the Insolvency and Trustee Service Australia to highlight a rising trend in personal insolvency over the past six years.

The number of personal bankruptcies and debt agreements across Sydney rose by more than half between 1999-2000 and 2005-06. Parts of western Sydney have been hardest hit with a rise of 99 per cent in Blacktown and 70 per cent in the outer west. A slump in property prices since 2004 and relatively high rates of unemployment in some parts of west and south-west Sydney may have contributed to the surge in bankruptcies and debt agreements.

The jobless rate in both Fairfield and south-west Blacktown was above 10 per cent — more than double the national rate — in the December quarter, figures published by the Department of Employment and Workplace Relations show.

However, some of Sydney’s wealthiest areas have also registered big increases in insolvency. Sydney’s inner west had an increase of 83 per cent between 1999-2000 and 2005-06 while there was a 74 per cent on the northern beaches and 60 per cent in the eastern suburbs.

The shadow treasurer, Wayne Swan, said the figures showed many families are under significant financial pressure.

«Household budgets are being hit by rising petrol prices, high child-care costs and spiralling mortgage repayments caused by eight consecutive interest rate rises, despite John Howard’s promise to keep rates at record lows,» he said.

Roger Mendelson, the chief executive of debt collection company Prushka, said easy access to credit was contributing to the rise in bankruptcies and debt agreements.

«These people are not normally the high-flyers and the total amount owing to creditors is often not all that large, it’s just beyond their capacity to repay,» he said.

The total debt burden on Australian households has reached almost $1 trillion and the ratio of household debt to income has reached 160 per cent, one of the highest in the world.

Interest payments now soak up more than 11 per cent of all household income, about 2 percentage points more than in 1989 when mortgage interest rates were 17 per cent.

Labor has also highlighted Government figures showing a record amount of superannuation savings has been released to individuals early to assist with financial hardship.

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, Government answers to Labor questions on notice show.