subject: Australians "long Way From Kicking The Debt Habit" [print this page] Australians are not very close to wiping out their debt problems, according to an economics writer.
Australians are a "long way" from eradicating credit card debt, according to an economics writer.
Fairfax's Jessica Irvine said the global financial crisis was supposed to be spent reducing debts, but that has only been the case to a "small extent".
Her article for the Sydney Morning Herald added: "The return to relatively low interest rates and more relaxed lending criteria from banks have enabled us to borrow more to fund our consumerist lifestyles."
She noted the credit card statements that will have been delivered after the summer spend as one particular factor in the nation's debt.
Australians must "borrow more" to fund a current account deficit that the country has had for four decades, because there are more people investing than putting money into savings accounts at the moment.
In addition, Ms Irvine noted the net foreign debt of more than $600 billion is three times more than when John Howard was prime minister of the country in 1995.
However, Australia has "managed pretty well so far", despite the size of its debt.
Nevertheless, the global financial crisis was a warning not to rely on foreign money because this could prompt "out-of-cycle interest rate rises" if the investors call for a higher risk premium.
Ms Irvine added it is a shame getting money to pay off credit cards is not as simple as simply raising taxes or cutting spending, which is what the government could do to repay debts.
And she said investors are keen to let the government borrow money at the moment because of this.
Her comments come after the Reserve Bank of Australia noted earlier this month that Australia's terms of trade should have a positive outlook and rise for the first time since 2008-09 because of a worldwide increase in prices of rural commodities.
by: Sam Gooch
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