The unfinished business facing Australia’s new treasurer

From The Conversation.

When Australia’s new treasurer walks into the office on Monday morning, a stack of unfinished business awaits. A quick scan of the Treasury website reveals four major inquiries begun in the past 18 months that are still in progress – the Financial System Inquiry, the Competition Policy Review, the Tax White Paper and the Northern Australia Insurance Premiums Taskforce.

The outcomes of these processes open up the possibility of bold decisions that would uplift the outlook for the nation’s economic growth and longer-term prosperity. It is worthwhile to delay a rush to judgement, and consider a framework and narrative that incorporates and informs all of these areas of inquiry.

The most obvious piece of pending business is the government response to the Financial System Inquiry led by David Murray over the course of 2014. The government response, which had been promised for a few months now, appeared ready to be issued this week.

Indeed, close observers have been left wondering whether there would be much “response” in the response, in light of pronouncements that have already been made. Banking regulator APRA has issued guidance on bank capital (with significant market impacts this year); the government has drafted new legislation on superannuation governance that has been released for public consultation; the decision has been made to not impose a deposit insurance scheme; ASIC’s capability and funding model are currently under review; and the RBA has conducted a payments review including interchange fees.

Off the back of these reviews, other mini-inquiries and consultations have emerged. The Assistant Treasurer Josh Frydenberg in August announced a regulatory review of the payday lending industry. The review of retirement income stream regulation that took place last year is still pending outcomes, and perhaps partly rolled into the Tax White Paper process.

The Northern Australia Insurance Taskforce is examining ways in which the government’s balance sheet can be used to reduce insurance premiums in specific regions of Australia – perhaps without the rest of the Australian community fully appreciating the knock-on impacts this could have for other policyholders. Also under-appreciated are other changes in the insurance industry, such as how the Medibank privatisation is redrawing the regulatory landscape on health insurance.

Yet, one wonders whether the two core positions in the FSI report have been lost in all of the noise: the need to enable efficient funding of the economy by removing distortions, and the ability to promote competition and innovation through appropriate policy settings.

Removing distortions and enabling competition including through innovation in the financial system are both absolutely critical; they are the engine of sustainable financial sector growth. And there is a lot of work to be done.

What does sustainable financial sector growth look like, and why is it important? What is the policy framework that surrounds it? The narrative that will explain this to the Australian community needs to be developed and communicated. Without it, the bold policy choices that are yet to be made are likely to come across as tedious, intangible and maybe just too hard.

The story is straightforward, but is not told often, or well. When we hear from politicians about our economic future, the focus is usually on the goods-producing sectors – mining, agriculture, food, specialised manufacturing. In services we focus on easily-understandable cross-border movement in people – tourism and higher education. We rarely hear boosterism applied to financial services.

Yet, financial services is the largest single industrial segment in the Australian economy by gross value added. It is the largest contributor of corporate tax to the Australian government. It is a major employer in most states, and dominant in NSW and Victoria. It is also probably the largest single services export from Australia to the rest of the world, as ACFS detailed in a recent report. Its above-average rate of productivity growth over the past decade suggests that Australia’s financial sector is innovative.

Of course, the financial services sector also plays an important role in intermediating funds that support growth and innovation through the rest of the economy. The financial services sector runs the payments system, the credit system and the capital markets system that both funds business activity and provides wealth management products for households. Financial services also manage risk through insurance.

What the government has done thus far with the FSI report is fine, but there is potential to go a lot further. The need for this can be seen in the gaps where the financial system has been found wanting: credit to small business, generation of venture capital, creation of a broader suite of retirement income products, the high cost of insurance in some sectors.

Creating supports for clusters for innovation in finance, writing legislation that would enable digital identities while protecting personal financial data, forcing greater access to and use of data so as to level the playing field for competition – these are proactive and forward looking recommendations that may not be easy but must be done. Push the financial sector into the digital age, and the rest of the economy will follow.

And then there is the infrastructure. The NBN may be on its way, but what about data storage in the cloud? This has become essential infrastructure that allows financial firms to store their data at lower cost. Enabling this functionality while protecting firms from cyber crime would be a whole-of-economy advance in Australia’s global competitive position.

A framework that removes distortions and enables competition and innovation – this speaks to the agile, innovative, creative future that Prime Minister Malcolm Turnbull articulated in his victory speech on Monday night. Build the narrative around the inquiries, and good outcomes are sure to follow.

Author: Amy Auster, Deputy Director, Australian Centre for Financial Studies

No Sovereign Credit Impact From Australia PM Change – Fitch

The change in Australia’s premiership following a Liberal party leadership vote held on Monday will not have an immediate credit impact for the sovereign, says Fitch Ratings. Frequent changes in leadership, with four prime ministers governing the country over the past five years, have made little difference in core economic policies so far. There is no sign that this latest transition will lead to deterioration in policymaking effectiveness.

Notably, there is cross-party consensus at the federal level in favour of fiscal consolidation – there is much less appetite in Australia relative to some other high-grade peers for abandoning efforts to reduce deficits. Recent leadership changes, including the vote against incumbent Tony Abbott on Monday, have been driven more by personality and social or constitutional issues as opposed to differences over economic policy.

Political volatility will, in general, only have a credit impact if it were to result in tangible economic policy changes, loss of foreign investor confidence, reduction in policymaking capacity and/or if it impaired the authorities’ ability to respond to a crisis. But in Australia’s case, there has been little to no signs that the recent frequent changes in power have had any such effects.

Beyond the leadership issues, Australia shares some of the long-term challenges of other high-grade sovereigns, including an ageing population and the need to foster productivity growth. The Australian economy is also facing immediate challenges linked to its reliance on commodity exports, particularly to China. High personal indebtedness – over 150% of disposable income – also means households are more vulnerable to higher interest rates and any substantive worsening in the job market. Incoming Prime Minister Malcolm Turnbull has placed some weight on the need to address long-term economic challenges in his public statements, although it remains to be seen whether this will lead to concrete policy changes.

Any further deterioration in Australia’s macroeconomic position may require more politically difficult policy decisions to keep fiscal consolidation on track. As such, continued political volatility, while not a significant issue thus far, could yet impair authorities’ ability to implement policies should economic conditions deteriorate further.

Turnbull, the minister for communications, defeated Abbott as leader of the Liberal party in a 54 to 44 vote by Liberal MPs on 14 September. Turnbull was sworn in as Australia’s 29th prime minister on 15 September.

Auction Clearance Rates Still Holding Up – CoreLogic RP Data

The latest from Corelogic RP Data indicates that auction clearance rates are still holding up pretty well. So far this week, 2,127 capital city auction results have been reported to CoreLogic RP Data, resulting in a preliminary auction clearance rate of 72.1 per cent across the combined capital cities. There were a total of 2,615 capital city auctions held this week. This week’s result indicates that clearance rates are no longer tracking higher than they were one year ago, when the final auction clearance rate over the
week was 72.3 per cent across 2,080 auctions. Over the previous week there were 2,297 auctions with a clearance rate of 73.2 per cent. Whilst Sydney and Melbourne were well above 70%, Adelaide, Perth and Canberra were lower.

RP-Auctions-Sep15-2015Whilst the combined average house price was up 10.9% in the past 12 months, mortgage application activity appears to be a little lower now.

Data indicates the recession is effectively here; it’s what policy makers do next that counts

From The Conversation.

The latest economic figures released by the Australian Bureau of Statistics (ABS) have fuelled the debate on the future of the Australian economy and prompted many to ask: “Will Australia go into a recession?”

This question is legitimate, but off the mark. In fact, the data tells us that we should not be worried about going into recession.

What we should worry about instead is how to get out of the recession. Because, like it or not, the recession is already here and the sooner we acknowledge the problem, the sooner we can start the recovery.

So, what does the data say?

According to ABS, trend Gross Domestic Product (GDP) growth in Australia in the second quarter of 2015 was 0.5%. This was only marginally below the rate observed in the first quarter of the year (0.6%). The implied annual growth rate of GDP is therefore around 2%.

While considerably below the long-term average of 3.25% a year, trend growth is still positive, which means that Australia is not technically in a recession.

Economists technically define a recession as a period of at least two consecutive quarters of negative GDP growth. This occurs rarely in an advanced economy like Australia.

The last time Australia was technically in recession was 24 years ago, when trend growth turned negative in the third quarter of 1990 and did not go back to positive until quarter four of 1991.

Before then, trend growth was negative for five quarters between 1982 and 1983, for two quarters in the middle of 1974, and for four quarters between 1960 and 1961.

However, while not being technically in a recession, Australia today shows most of the symptoms of recession.

Reload: what does the data say?

First of all, trend GDP is by construction smoothed. However, recessions (and expansions) are cyclical phenomena that are better represented by seasonally adjusted GDP.

In the second quarter of 2015, seasonally adjusted GDP in Australia grew by a mere 0.2%, sharply down from the first quarter when it grew by 0.9%. That is, seasonally adjusted data suggests that the country is much closer to the beginning of a technical recession.

Second, seasonally adjusted Gross Domestic Income (GDI) showed negative growth of -0.4%. This is particularly worrying because GDI is statistically more reliable than GDP as a predictor of the cyclical fluctuations of the economy.

Third, and probably even more importantly, indicators of an individual’s welfare are taking a turn for the worse. The second quarter of the year saw a negative growth in GDP per capita (-0.2%) and net national disposable income per capita (-1.2%).

These negative income dynamics add to persistently weak labour market performance.

The ABS labour force survey shows that in July 2015, seasonally adjusted unemployment reached 795,500 units. This is the highest level since November 1994 and approximately 125,000 units higher than at the peak of the global financial crisis (June 2009). The corresponding unemployment rate was 6.3%.

In the same month of July 2015, youth unemployment increased to 13.8%. This was the first monthly increase since the beginning of the year.

Perhaps this is not technically a recession, but certainly it looks, smells, and feels a lot like one.

Intervention needed

The government, however, seems to be in denial.

Finance Minister Mathias Cormann is reportedly “very optimistic about the outlook moving forward”. Treasurer Joe Hockey recently said that “the Australian economy is showing a deep resilience that people in Canada and elsewhere would die for.”

Unfortunately, the fact that Canada is in a technical recession and other resource intensive countries are suffering from falls in commodity prices does not make the situation of Australia any better.

Conversely, the business sector seems to have understood the reality of the situation. This is evident, for instance, in the declining levels of business confidence and conditions reported by the NAB Monthly Business Survey of July 2015.

The good thing about recessions is that, generally, they end. The bad thing, instead, is that their effects are felt proportionally more by households at the bottom end of income distribution.

Another bad thing is that the consequences of a recession (in terms of unemployment, reduced welfare for instance) tend to outlive the recession itself.

For all these reasons, some form of intervention would be desirable; but how?

In Australia’s case, the empirical evidence clearly indicates that fiscal stimulus works: for each dollar spent by the government, GDP increases by more than one dollar.

In fact, already now, what has prevented the country from recording negative GDP growth is good old Keynesian spending.

Government final consumption grew by 2.2% in the second quarter of the year and 4% since the beginning of the year. Public gross fixed capital formation increased by 4% in the second quarter.

Without this extra public spending Australia would have probably experienced its first quarter of negative growth.

Certainly, Australia also has structural problems that condition its longer-term performance and that a fiscal stimulus will not solve.

But the stimulus will improve the short-term outlook, restore confidence, and create favourable socioeconomic conditions to undertake structural reforms.

To get there, however, an initial step is required: the government must get past its denial of the problem. Let’s hope that this happens sooner rather than later.

Author: Fabrizio Carmignani, Professor, Griffith Business School at Griffith University

Lending To End July 2015 – Investment Housing Still Strong

The ABS released their finance statistics to end July today. Investment housing flows made up 38.2% of all new fixed commercial lending in the month, and 29% of all new commercial lending. Overall lending for housing was more than 44% of all new bank lending in the month. Investment lending remains strong, and after recent bank’s loan reclassification, was higher than previously reported. The tightening of lending criteria for investment loans was yet to work through into meaningful outcomes.

Secured lending for owner occupation, including refinance was $18.86 bn (up from $18.71 bn last month) . Owner occupied was $12.6bn (up from $12.5 bn in June) and refinancing was $6.20bn, (up from 6.15 last month).

Housing-Trends-to-July-2015Investment housing was $13.72 bn, (up from $13.69 bn last month), and other commercial lending was $22.22 bn, (down from $22.26 bn last month). Personal finance was $7.48 bn (down from $7.51 bn in June).

All-Finance-July-2015 The total value of owner occupied housing commitments excluding alterations and additions rose 0.8% in trend terms, and the seasonally adjusted series rose 2.2%.

The trend series for the value of total personal finance commitments fell 0.4%. Revolving credit commitments fell 1.0% and fixed lending commitments fell 0.1%. The seasonally adjusted series for the value of total personal finance commitments fell 2.6%. Fixed lending commitments fell 5.8%, while revolving credit commitments rose 2.6%.

The trend series for the value of total commercial finance commitments fell 1.2%. Revolving credit commitments fell 1.7% and fixed lending commitments fell 1.1%. The seasonally adjusted series for the value of total commercial finance commitments fell 2.7%. Revolving credit commitments fell 13.0%, while fixed lending commitments rose 0.9%.

The trend series for the value of total lease finance commitments fell 0.1% in July 2015 and the seasonally adjusted series rose 60.2%, following a rise of 2.8% in June 2015.

Cost of Consumer Leases Can Be as High as 884% – ASIC

ASIC today released a report that found that consumer leases can be a very expensive option for consumers seeking to access common household goods, and that the market for consumer leases is failing many low income consumers.

Consumer leases are a contract for the hire of goods under which the consumer will pay more than the cash price of the goods and where the consumer does not have a contractual right or obligation to purchase the item. Fixed term consumer leases with a term greater than four months are regulated under the National Consumer Credit Protection Act 2009 (Cth) (National Credit Act). Unlike credit contracts such as payday loans, consumer leases are not subject to price caps.

A 2014 report by IBISWorld estimated the value of the leasing industry in Australia as around $570 million for rentals of electronic goods (including televisions, stereos, DVD players and computers) and household appliances (including fridges, ovens, microwaves, toasters and blenders).

ASIC compared the cost of leases from two sources: the advertised prices on leasing 544 products through nine lessors, collected by the Royal Melbourne Institute of Technology (RMIT) in April 2015 on behalf of ASIC; and a review by ASIC of 69 leases provided by two lessors since 2014 to consumers in receipt of Centrelink payments.

ASIC found the market for consumer leases is delivering poor outcomes for many consumers. For similar household goods, ASIC found large price variations both across different lessors and within individual lessors for different consumer segments. In both cases the consumers that are more likely to be charged higher amounts are Centrelink recipients, despite being on lower incomes.

More specifically, ASIC found:

  • the highest price charged by a lessor, expressed as an interest rate, was 884% (for a clothes dryer).
  • that consumer leases can cost as much as five times the maximum amount permitted under a payday loan, where a cap on costs applies.
  • that consumers receiving Centrelink payments are being charged much higher prices than the prices advertised by lessors.

‘As there is no cap on the amount lessors can charge, we found that some consumers can end up paying very high costs.’ ASIC Deputy Chair Peter Kell said.

‘Of particular concern is that the most financially vulnerable consumers in Australia are paying the highest lease prices for basic household goods. For two year leases, half the Centrelink recipients in our study paid more than five times the retail price of the goods.’

The amounts charged by different lessors for the same goods vary significantly

Product and lessor Retail price Total fortnightly rental payments Amount charged above retail price Interest rate
5 kg dryer (lessor 1) $429.00 $488.80 $59.80 25.88%
5 kg dryer (lessor 2) $449.00 $1,582.88 $1,133.88 85.33%
5 kg dryer (Centrelink recipient) $345.00 $3,042.00 $2,697 884.34%

Note: The maximum fortnightly rental payment in the RMIT market survey is the payment at the 75th percentile.

ASIC is also reviewing the conduct of some lessors for compliance with their responsible lending obligations under the Credit Act.

‘ASIC is reviewing a number of larger lessors, to see if they are making reasonable inquiries to ensure the consumer can afford the lease and that it meets their needs, particularly considering how high the total cost of a lease can be. Relying on consumers being able to make payments as long as they are in receipt of Government benefits is not a substitute to making these inquiries,’ Mr Kell said.

ASIC has taken a series of enforcement actions against lessors for failure to comply with responsible lending requirements over the last few years, including banning directors, cancelling licences and obtaining refunds for customers.

‘We will consider further enforcement action if necessary,’ said Mr Kell.

‘We also recommend consumers shop around, as there are often cheaper options available for obtaining goods. Consumers can compare the total cost of a consumer lease using ASIC’s ‘Rent vs buy’ calculator, available on ASIC’s MoneySmart website. The website also provides helpful tips on alternatives to consumer leases, such as layby, no interest loans or Centrelink advances’.

ASIC will provide a copy of this report to the panel looking into the effectiveness of the law relating to small amount credit contracts (SACCs), in accordance with section 335A of the National Credit Act. The terms of reference include consideration of whether any of the provisions which apply to SACCs should be extended to regulated consumer leases. The panel is due to report at the end of this year.

Australia’s Unemployment Rate Decreased to 6.2 per cent in August 2015

Australia’s estimated seasonally adjusted unemployment rate for August 2015 was 6.2 per cent, a decrease of 0.1 percentage points. In trend terms, the unemployment rate was unchanged at 6.2 per cent in August 2015, as announced by the Australian Bureau of Statistics (ABS) today.

The seasonally adjusted labour force participation rate decreased 0.1 percentage points to 65.0 per cent in the August 2015 estimate.

The ABS reported the number of people employed increased by 17,400 to 11,775,800 in August 2015 (seasonally adjusted). The increase in employment was driven by increases in male full-time employment, and female full-time and part-time employment, with the largest increase seen in full-time employment for males (up 10,100).

The ABS seasonally adjusted monthly hours worked in all jobs series decreased in August 2015, down 0.6 million hours to 1,623.8 million hours.

The seasonally adjusted number of people unemployed decreased by 14,400 to 781,100 in August 2015, the ABS reported.

The seasonally adjusted underemployment rate remained steady at 8.4 per cent in August 2015, from a revised May 2015 estimate. Combined with the unemployment rate, the latest seasonally adjusted estimate of total labour force underutilisation was unchanged at 14.3 per cent in August 2015, from a revised May 2015 estimate.

So, Is Housing Lending On The Turn?

The ABS data on housing finance today suggests that the momentum in housing is shifting, as the tighter restrictions on investment lending bites; this despite strong market demand and the fact that investor property finance has never been higher at 38.9%.  Looking at the monthly flow trend data, lending overall rose 0.52% in the month, by $169 m. Within that, monthly approvals data shows that owner occupied lending rose 0.84% (up $105 m from last months approvals), refinancing up 0.72% ($44 m) and Investment lending up 0.14% ($19 m). In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions rose 1.5%.

Housing-Flows-July-2015Within these numbers, we see that owner occupied construction fell 1% compared with last month, owner occupied new property purchases rose 2.24%, owner occupied refinance rose 0.72% and owner occupied “other” purchases rose 1%. On the investment side of the equation, investment purchases by individuals fell 0.47%, whilst investment construction rose 4.3% and investment by other entities (including SMSFs) rose 2%. Still momentum, but the investment sectors is shifting. We expect to see ongoing strong demand from the SMSF sector.

Housing-Flow-Movements-July-2015Looking at first time buyers, both the original data from the ABS, shows a small fall in the month to 15.4% in July 2015 from 15.8% in June 2015, and the DFA data for investor FTB also fell. The number of first time buyers are still sitting at around 12,000 a month in total, still well below the peaks in 2009. Our surveys indicate strong FTB investor appetite. The changed underwriting requirements however are having an impact.

FTB-Adjusted-July-2015Looking at the loan stock data, the major banks still have the lion’s share, but we see that on the investment side, credit unions grew their books the largest in percentage terms, with a 1.1% rise in investment loans (compared with a rise of 0.52% by the banks and 0.68% for the building societies).  We suspect some investors are switching to smaller banks, credit unions and the non-bank sector when they find the larger players less willing to lend. Overall growth on the owner occupied side was 0.43%.

Housing-Loan-Stocvk-By-Lender-Type-July-2015Finally, looking at the overall stock of loans, we see that investment loans now make up a record 38.9% of the total portfolio, thanks partly to the recent restatement of loan types by some the banks. We think this is too-higher share of housing lending (it is more risky in a down-turn) and the banks 60% total loan portfolio in housing is also too high, sucking finance from business sectors which might contribute to real economic growth.

Stock-Housing-Loans-July-2015

What Drives US Household Debt?

Analysis from the Federal Reserve Bank of St Louis shows that in the US, whilst overall household credit is lower now, this is being driven by reduced credit creation, and not increased credit destruction.  We see a very different profile of debt compared with Australia, where household debt has never been higher. However, our analysis shows that core debt is also being held for longer, so the same effect is in play here, although new debt is also accelerating, driven by housing.

6tl-hhfinHousehold debt in the United States has been on a roller coaster since early 2004. As the first figure shows, between the first quarter of 2004 and the fourth quarter of 2008, total household debt increased by about 46 percent—an annual rate of about 8.3 percent. A process of household deleveraging started in 2009 and stabilized at a level 13 percent below the previous peak in the first quarter of 2013. During those four years, the household debt level decreased at a yearly rate of 3 percent. Since then, it has moved only modestly back toward its previous levels.

This essay provides a simple decomposition of the changes in debt levels to shed light on the sources of those changes. The analysis is similar to the decomposition of labor market flows performed by Haltiwanger (2012) and the decomposition of changes in business credit performed by Herrera, Kolar, and Minetti (2011). We use the term “credit change” to refer to the change in household debt: the difference between household debt (D) in the current period, t, and debt in the previous period, t –1, divided by debt in the previous period, t –1:

The total household debt is the sum of debt for each household i, so this can also be written as

Equivalently, one can add the changes in debt for each household i:

The key advantage of using household-level data is that one can separate positive changes (credit creation) from negative changes (credit destruction) and compute the change in debt as

Credit change = Credit creationCredit destruction,

where

and

These concepts are interesting because they can be linked to different household financial decisions. Credit creation can be linked to additional credit card debt or a new mortgage and credit destruction can be linked to repaying debt or simply defaulting.

As this decomposition makes clear, a stable level of debt (a net change of 0) could be the result of a large credit creation offset by an equally large credit destruction. Or it could indicate no creation and no destruction at all. To differentiate between these cases, it is useful to consider “credit activity” (also called reallocation), which is defined as

Credit activity = Credit creation + Credit destruction.

This is a useful measure because it captures credit activity ignored by the change in total debt.

The second figure shows credit creation, destruction, change, and overall activity. Recall that credit change is the difference between credit creation and destruction, while credit activity is the sum of credit creation and destruction. The credit change shown in the second figure traces the increase in debt before the 2008 crisis, the deleveraging that followed, and the relative stability of debt over the past 3 years. Analy­sis of debt creation and destruction shows that the expansion of debt was due to above-average creation of debt before the crisis—not insufficient credit destruction; credit destruction was actually slightly above average. Thus, credit activity was extensive during that period, with large amounts of both destruction and creation.

The deleveraging involved a decrease in creation (or origination) of debt: Creation started at nearly 10 percent in the expansion period but dropped below 5 percent after the financial crisis. Credit destruction was not the main contributor to the deleveraging: Destruction did not grow during the deleveraging period; it was actually slightly lower than during the expansion period. Thus, the deleveraging period of 2009-11 saw a very low level of credit activity, mainly due to the small amount of new credit issuance.

Finally, the stability of debt from 2011 to 2013 masked the increasing credit activity since both destruction and creation increased but offset each other. In sharp contrast, during the past year, the stability of debt has been due to very low levels of creation and destruction. In fact, credit activity is currently as low as it was in the middle of the financial crisis: about 9 percent of total household debt.

Overall, this analysis of household debt suggests that reduced credit creation, and not increased credit destruction, has been the key driver of the recent evolution of U.S. household debt. A topic for future investigation is that U.S. households are currently engaging in record low levels of financial intermediation, which is not obvious by simply observing the level of household debt.

Middle Income Households Income Is Getting Squeezed

Data from the ABS looking at income and wealth, shows that the average income of high income households rose by 7 per cent between 2011-12 and 2013-14, to $2,037 per week, whist low income households have experienced an increase of around 3 per cent in average weekly household income compared with middle income households which have changed little since 2011-12.

The average income of all Australian households has risen to $998 per week in 2013–14, while average wealth remained relatively stable at $809,900. Similarly, change in average wealth was uneven across different types of households. For example, the average wealth of renting households was approximately $183,000 in 2013-14. Rising house prices contributed to an increase in the average wealth for home owners with a mortgage ($857,900) and without a mortgage (almost $1.4 million).

Most Australian households continue to have debts in 2013-14, with over 70 per cent of households servicing some form of debt, such as mortgages, car loans, student loans or credit cards. For example, the average credit card debt for all households was $2,700.

One quarter of households with debt had a total debt of three or more times their annualised disposable income. Mortgage debt was much higher

These households are considered to be at higher risk of experiencing economic hardship if they were to experience a financial shock, such as a sudden reduction in their income or if interest rates were to rise, increasing their mortgage or loan repayments.

The survey findings also allow comparisons of income and wealth across different types of households.

In 2013–14, couple families with dependent children had an average household income of $1,011 per week, which was similar to the average for all households at $998 per week.

By comparison, after adjusting for household characteristics, one parent families with dependent children had an average household income of $687 per week.