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Australians and debt
Saturday, 07 February 2009 15:14 | Written by Graham Young

Reader Jeff, a seasoned political analyst, suggested that "I suspect the mob are very susceptible to a fear campaign about the level of government debt. That is the one problem for 07 with his package - the mob will like the package but worry about the debt."

In fact that doesn't appear to be the case at the moment. While our respondents are looking to pay-down their own debt levels, they are relaxed about government debt. This could be for a number of reasons.

First, they are not really sure what level of net debt the government has. Less than a third could accurately pick the figure closest to Australia's net debt level, which the government estimates to be -$16.2 billion for this financial year (that is a cash surplus).

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Coincidentally, a similar number was also concerned about net debt, but the majority (54%) were unconcerned, and 16% were neither concerned nor unconcerned.

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And most saw no connection between government debt and their own personal economic plans.

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As noted in our last post, Australians would pay back their personal debt if they had a cash surplus. These tables give some more detail on that.

Privately our respondents are very contractionary. Only 9% are thinking of increasing their mortgage, while 67% are likely to pay it back.

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On credit cards they are even more cautious with 79% likely to reduce and only 2% contemplating a spending spree.

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11% said they did not have a credit card. Of the balance, 75% said they tried to pay their credit card bill entirely each month.

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Comments   

 
0 #1 Comment — Brian gibbons 2009-02-11 04:19
Is there a reason the survey did not inquire re corporate debt?
Corporate debt appears to be a major factor in the pattern of capitalist cycles of boom & bust that are rescued by states using community taxes.
 
 
0 #2 Comment — Doug 2009-02-11 06:29
What is the age profile? How typical is it of the broadr population?
 
 
0 #3 Comment — Graham Young 2009-02-11 06:56
Doug the age profile tends to be older than average, and it also breaks more towards males than females. It's not typical of the broader population, but not atypical either. We use the samples generally for qualitative research, rather than quantitative.

Brian there is a reason it didn't inquire into corporate debt. We wanted to know what citizens were likely to do and we didn't think that would be impacted by their perceptions of corporate debt.
 
 
0 #4 Comment — David Truman 2009-02-11 07:46
While the Government and Treasury are seeking to sustain consumption (and also investment) and thereby prevent demand-deficien cy unemployment, the survey results suggest that many people will react to the prospect of worsening times by saving more. That's not surprising. It accords with the cultural values of older generations (disproportiona tely represented in the survey). But it might also reflect a change in attitudes and behaviour of less mature generations. If so, despite possible short-term disadvantage (not enough consumption to stave off large job losses), it could, hopefully, presage a most desirable and necessary change in our behaviour as a society.

On Lateline a few nights ago, Paul Keating spoke very persuasively of the need for Australians, and Westerners generally, to consume less and save more, thereby funding more of our own investment needs from internally generated savings instead of sucking in savings from "surplus" countries like Japan and even China.

The good old Calvinist / Protestant values of thrift, prudence and financial conservatism sorely need to be re-planted in this country.

Four Corners last night documented the Storm financial debacle in Townsville, and traced the naive, unrealistic and (my comment) just plain greedy mindset that has been fostered by investment advisers and banks here - encouraging otherwise rational private investors to buy the idea that share prices are a sure bet to keep rising, like a perpetual motion machine. So they heavily geared up their investments, put their homes on the line, and now in many cases face total ruin.

Saving and a healthy dose of financial conservatism are great virtues. Maybe the present meltdown may jolt a fair number of people in Australia out of their unrealistic fecklessness!
 
 
0 #5 Comment — Bruce Kelley 2009-02-11 18:49
It would appear that the maxed out credit card problem that is constantly being trotted out as a really big economic issue is just a government beat up experienced by a relatively small percentage of the population.
 
 
0 #6 Comment — V.J.OHara 2009-02-20 01:21
I cannot live with personal debt, but I have no fear about carrying some national debt because who would try to forclose on Australia? ALWAYS WITHIN REASON.
 
 
0 #7 Comment — V.J.OHara 2009-02-20 01:21
I cannot live with personal debt, but I have no fear about carrying some national debt because who would try to forclose on Australia? ALWAYS WITHIN REASON.