Ten years older – and deeper in debt

Where do you stand, at the start of a bright new decade?

An old song puts it well.

“You load 16 tons – and what do you get?

“Another day older – and deeper in debt.”

This coal miner’s lament, which was once a huge hit, still  has lessons for  all Australians.

At the end of the noughties, for example, their nation is more  dependent on coal than ever.

That’s not a good look, in a world – rightly – worrried about climate change.

And debt levels have risen so sharply, in Australia, over recent years, that they now present a real risk to the nation’s financial stability.

At the turn of the Century, the average Australian owed a little more than $22,000.

According to the Reserve Bank,  that’s now $74,000.

So debts have more than trebled over the decade, while prices rose by just 35 per cent.

Repayment capacity hasn’t matched debt growth, either.

While average weekly earnings now stand at a truly impressive $1,249 a week – wages – from which debt repayments are made – rose by just 50 per cent over the noughties.

Don’t despair if you don’t earn quite that amount, though.  Most people don’t.  It’s the relatively small number, right at the top, who push that figure into the stratosphere.

The crash still dominates Australia’s prospects, even though its influence is now waning.

At the start of the last decade, Australia had chalked up 3.75 per cent growth – while  expecting something a little better in the year ahead.

On the latest figures, Australia’s annual economic growth rate was just 0.5 per cent and – once again – we are looking for something a little better in future.

The crash, though, hit Australia’s national finances very hard.

At the turn of the Century, for example. the Federal government took a 23.4 per cent revenue bite from Australia’s output.

That tax take is now up to 24.9 per cent.

The Federal government’s spending has also risen  sharply.

It was just 22.8 per cent of the nation’s gross domestic product, back then.

It is now about 27 per cent.

Stimulus packages might be necessary,  after stock market crashes.

Bu they are not cheap.

So what else hits the pockets and purses of ordinary Australians, today – and how has all that changed, over the past decade?

At 5.7 per cent, Australia’s unemployment rate is still low, by current standards.  The US rate, for example, is 10 per cent.

Most will have forgotten, though, ours stood at 7.5 per cent at the turn of the Century.

And Australia’s inflation rate – which was approaching 6 per cent then – is now down to 1.3 per cent.

Share prices had been rising strongly, as the turn of the Century approached.  But the tech-wreck  rock was just ahead.

That, sadly, became a model for a later disaster, too.

Technical advances were certainly impressive, at the turn of the Century .

But they were also over-hyped, on world share markets.

Sadly we  forgot that lesson, all-too-quickly.

If we had remembered it, we might well have asked some salutory questions, when complex financial products were also hyped, some years later.

So what lies ahead now?

We will make just one prediction, but we offer it with absolute certainty.

Expect the unexpected

It’s a safe bet.