The Australian Financial Security Authority (AFSA) have released their quarterly statistics of personal insolvency and it’s not great news for the ACT. The Territory recorded a slight increase of 4.2% in personal bankruptcies.
The ACT didn’t fair the worst though with the Northern Territory seeing a whopping 29.6% increase, Western Australia 17.4% and Tasmania an unimpressive 19%. All other states saw a decrease in personal insolvencies with New South Wales seeing a 8.4% drop, Queensland 1.8%, South Australia 4.6% but Victoria being the kings by achieving a giant 11.9% decrease in personal bankruptcy.
There were somewhat comparable increases in other types of personal insolvency agreements such as Part X and Part XI insolvency agreements. All in all the ACT experienced a total rise of 12.5% in all types of personal insolvency, but that was still better than WA with a 29.3% increase and NT with 38.7%.
Generally speaking these stats can be used to indicate the general economic status of each jurisdiction. More accurately speaking it more likely shows the general economic status of each jurisdiction in the previous year or two.
Personal insolvency will usually take roughly one year or more before taking effect. First bills start getting missed, followed by demands, followed by either court action, then bankruptcy notices then finally a debtor is made bankrupt.
The mining boom to gloom would seem to be the most obvious answer for the NT and WA, with both being overly reliant on the hole-digging industry. Tasmania is a bit harder to explain but possibly just part of the general economic woes that afflict the Apple Isle. The Northern Territory stats particularly seem to mesh with data showing an 18% drop in new houses and a 15% drop in business hiring intentions in NT, demonstrating a true slowdown. Queensland, also being heavily reliant on mining managed to buck the trend of increased personal insolvency. This is probably a result of their more diversified economy and certainly shows the issues that can befall states that overly rely on any one industry which is probably a lesson for Australia as a whole.
As far as the ACT is concerned the uptick in personal insolvency would seem to fit well with the aftereffects of the public servant cuts that disproportionately effected the Territory. I suspect the corporate insolvency states will be somewhat similar once they are released.
Owning and operating a soapbox gives me the opportunity to make unsolicited, unqualified predictions. AND I PREDICT that with the Federal Government realising their mistake by mass firing public servants and with numbers now basically back to where they were, that the ACT will see its insolvency numbers improve over the next few quarters and being a relatively tiny jurisdiction will likely even see a complete recovery by the time the next stats are released in January.