The Australian Financial Security Authority (AFSA) has released the statistics for the June 2015 quarter and 2014-2015 financial year.
Below is a summary of some of the key data and some of the potential reasons behind the recent reduction in personal insolvency levels across Australia.
Australian Wide 2014-2015
There were 28,288 personal insolvencies Australia wide in 2014- 2015, consisting of:
The number of personal insolvency figures for 2015 are lower than 2014 by 1,226, represented by:
- Bankruptcies – down 1,438
- Part IX Debt Agreements – up 206
- Part X Personal Insolvency Agreements – up 6
Whilst there was an overall decrease in personal insolvency Australia wide in 2014-15, the following regions experienced an increase in personal insolvency activity:
- Northern Territory – up 26.1% (increase of 46)
- Western Australia – up 6.3% (increase of 146)
- Australian Capital Territory – up 4% (increase 15)
- South Australia – up 1.5% (increase 26)
June 2015 Quarter – Australia
The number of personal insolvencies across Australia for the June 2015 quarter was 6,945, consisting of:
- Bankruptcies – 4,215
- Part IX Debt Agreements – 2,678
- Part X Personal Insolvency Agreements – 52
The personal insolvency figures for the June 2015 quarter are relatively constant compared to the March 2015 quarter, with the number of insolvencies down by 44 (0.3%), represented by:
- Bankruptcies – down 164
- Part IX Debt Agreements – up 110
- Part X Personal Insolvency Agreements – up 10
Bankruptcy – Australia
- The number of bankruptcies decreased across Australia in 2014-2015 by 1,438, down 7.7%
- The number of bankruptcies decreased across Australia for the March-June 2015 quarter by 164, down 1.2%
New South Wales Regional Statistics
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- Total personal insolvencies for the June 2015 quarter were 2,124
- This reflects an decrease of 57 personal insolvencies compared to the March 2015 quarter, an decrease of 2.6%
- Business related bankruptcies have increased over the quarter by 9, an increase of 3.1%
Greater Sydney
In the June 2015, personal insolvencies fell by 6.5%, compared to the March 2015 quarter
- The region with the highest increase was Dural-Wisemans Ferry
- The regions with the highest number of debtors were Wyong, Campbelltown and Gosford
- Business related personal insolvency fell by 10.3%; the main region contributing to the fall was Sydney Inner City
- The regions with the highest number of debtors who entered a business related personal insolvency in the June quarter 2015 were Gosford, St Marys, Canterbury, Wyong and Ryde-Hunters Hill
Rest of NSW
- The number of personal insolvencies increased by 3.0% in the June 2015 quarter, compared to the March 2015 quarter
- The region with the highest increase was Great Lakes
- The regions with the highest number of debtors were Newcastle, Lake Macquarie and Tamworth-Gunnedah
- Business related personal insolvency increased 20.3%; the regions with the highest increase were Tamworth-Gunnedah, Port Stephens and Shoalhaven
- The regions with the highest number of debtors who entered a business related personal insolvency in the June quarter 2015 were Tamworth-Gunnedah, Shoalhaven and Newcastle
Potential reasons for the fall in Personal Insolvencies
There are several factors driving the reduction in Personal Insolvency levels across NSW according to SV Partners’ Director Jason Porter, who shares his thoughts below.
The key indicator is the large increase in business related insolvency in regional NSW with a 20.3% increase. Indicators are that extended drought conditions may be a contributing factor in regional NSW for NSW farming families, with the exception of non-drought affected areas throughout Shoalhaven, where there has been a number of key business closures and relocations out of the region, with poor employment as a primary cause.
The main drivers of personal insolvency, based on our experience, are:
- Business related
- Guarantees and liabilities from company failures
- Unpaid taxes (the ATO is actively pursuing unpaid taxes at present)
- The competitive conditions in industries such as construction, retail, manufacturing and transportation
- Personal (non-business related)
- Unemployment or loss of income
- Excessive use of credit
- Domestic discord or relationship breakdowns
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Queensland Regional Statistics
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- Total personal insolvencies for the June 2015 quarter were 2,168
- This reflects an increase of 89 personal insolvencies compared to the March 2015 quarter, an increase of 4.3%
- Business related bankruptcies have increased over the quarter by 52, an increase of 15.5%
Greater Brisbane
- In the June 2015, personal insolvencies increased by 3.3%, compared to the March 2015 quarter
- The region with the highest increase was Cleveland – Stradbroke
- Business related personal insolvency increased by 18.3%; the main regions contributing to the rise were Cleveland – Stradbroke, Ipswich Inner and Nundah
Rest of Queensland
- The number of personal insolvencies increased by 4.7% in the June 2015 quarter, compared to the March 2015 quarter
- The areas that increased the most were Nerang and Townsville
- Business related personal insolvency increased 11.5%; the region with the highest increase was Townsville
Potential reasons for the fall in Personal Insolvencies
There are several factors driving the reduction in Personal Insolvency levels across Queensland according to SV Partners’ Director, Jason Cronan, who shares his thoughts below.
- The figures reflect a general trend over the last few years of decreased personal insolvencies, especially bankruptcies
- There is a continual increase in the use of Part IX Debt Agreements by individuals, as opposed to bankruptcy. Part IX Debt Agreements are primarily tailored for individuals with consumer and credit debt.
- The major regions in Australia for personal insolvency activity continue to be New South Wales (31.2%), Queensland (28.8%) and Victoria (20.4%)
The main drivers of personal insolvency, based on our experience, are:
- Business related
- Guarantees and liabilities from company failures
- Unpaid taxes (the ATO is actively pursuing unpaid taxes at present)
- The competitive conditions in industries such as construction, retail, manufacturing and transportation
- Personal (non-business related)
- Unemployment or loss of income
- Excessive use of credit
- Domestic discord or relationship breakdowns
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Victoria Regional Statistics
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- Total personal insolvencies for the June 2015 quarter were 1,400
- This reflects a decrease of 105 personal insolvencies compared to the March 2015 quarter, a relative decrease of 7%
- Business related bankruptcy numbers fell by 20 (or 8.1%) compared to the March 2015 quarter
Greater Melbourne
In the June 2015 quarter, personal insolvencies fell by 9.5%, compared to the March 2015 quarter.
- The main contributors to the fall in Greater Melbourne were the Yarra Ranges and Whitehorse – West. Manningham – West had the biggest fall (11 less debtors, equating to a 58% reduction).
- The region with the highest relative increase in debtors was Melbourne City, which experienced an increase in debtor insolvencies of 92% compared to the March 2015 quarter
- The regions with the highest number of debtors for the June quarter were:
- Wyndham (68);
- Whittlesea – Whalan (64);
- Carey South (59);
- Tullamarine – Broadmeadows (57);
- Melton / Bacchus Marsh (53);
- Frankston (52)
- Business related personal insolvency fell by 13.3%; the main regions contributing to the fall were Maroondah, Wyndham and the Yarra Ranges.
- The region with the highest number of debtors who entered a business related personal insolvency in the June quarter 2015 was Tullamarine – Broadmeadows (11). The regions with the highest relative increase in business related personal insolvencies were Bayside and Dandenong, which both experienced a relative increase of 133% compared to March 2015 quarter statistics.
Rest of Victoria
- There was no change in the number of debtors who entered a personal insolvency in the rest of Victoria in the June quarter 2015 compared to the March quarter 2015. In each of these quarters, there were 399 debtors who entered a personal insolvency.
- The region with the highest relative increase in debtors was Creswick – Daylesford – Ballan, which experienced an increase in debtor insolvencies of 175% compared to the March 2015 quarter
- The region with the largest relative fall was Gippsland – South West, which experienced a decrease in debtor insolvencies of 47% compared to the March 2015 quarter
- The regions with the highest number of debtors for the June quarter were:
- Geelong (54)
- Ballarat (28)
- Bendigo (26)
- Business related personal insolvency increased 4.5%; the regions with the highest increase were the Upper Goulburn Valley and Brimbank
- The regions with the highest number of debtors who entered a business related personal insolvency in the June quarter 2015 were also Brimbank and the Upper Goulburn Valley.
Potential reasons for the fall in Personal Insolvencies
There are several factors driving the reduction in Personal Insolvency levels across Victoria according to SV Partners’ Associate Director, Fabian Micheletto, who shares his thoughts below.
The statistics indicate a decline in personal insolvencies throughout Victoria, driven largely by a fall in debtor numbers in Greater Melbourne. A rampant Greater Melbourne property market and low interest rates continue to provide a soft cushion for debtors facing financial constraints and a means of securing access to finance. The widening availability and uptake of Debt Agreements is also working to lower non business related bankruptcy number, and provide consumer debtors with a more viable and flexible alternative to formal bankruptcy.
Regional Victoria personal insolvency numbers remain steady, albeit the make-up of debtors appears to be shifting with an increased proportion citing business related factors as the cause of their personal insolvency. Headline data suggests that regional personal insolvencies are largely confined to large regional centres, such as Geelong, Ballarat and Bendigo although personal insolvencies in those regions are driven predominantly by non-business factors.
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If you would like more advice on how SV Partners can assist your clients with personal insolvency matters, please contact one of our expert advisors on 1800 246 801.
