Australians are in debt like never before.
The Sydney Courier Mail reports (“Debt Level Enters Danger Zone”, Nick Gardner, December 26, 2009) that due to spending and borrowing by Australian families leading up to Christmas and on and Boxing Day (2009), for the first time ever the total of household debt will exceed the annual Gross Domestic Product (GPD) of the nation.
Reserve Bank figures, which are only complete up to the end of October, show that personal debt was already 100.4 percent of Australia’s annual GDP.
This means that all of the money made from Australia’s entire economy in a year, before any deductions are made for any expenses or costs, would not cover the total of personal debt racked up by Australians up to the end of October 2009.
From the Courier Mail: “It’s the first time household debt has cracked the 100 percent of annual GDP and it is a terrible, terrible sign,” said University of NSW economics professor Steve Keen. It shows we are living way beyond our means.
There is a staggering $45 billion (US billions, being $45,000,000,000) in direct credit card debt alone, with a further $90 billion in other non-mortgage related personal debt.
Christmas season spending, which is the five weeks starting four weeks before and including one week after Christmas, is not over yet; and is not even included in the above numbers.
According to Fujitsu Consulting research, the typical Australian household is now committed to putting aside 39 percent of its income to service non-mortgage related debts.
From a search of the Australian Bureau of Statistics (ABS) site I found that the average household weekly income is $1,305 after tax. The Fujitsu research tells us that $500—being 39 percent—of this has to go towards non-mortgage related debt repayments, leaving about $800 a week free for the mortgage and ‘everything else’. The ABS also indicates that the average mortgage is $2,122 per month, which is $494 per week. So—based totally on averages—after taking out the mortgage, the average household is left with $306 per week for food, power, phone, registrations, insurance, and such.
For the first time ever Australians now carry more debt per person than do Americans.
P.S. As a matter of interest, or not, the average Australian household is 2.5 people.