Australia is world renowned for many things: the Hills Hoist, wine in a box, the Cochlear Implant, rolling sentences with poor enunciation, bush bashers and unusual animals. But now we have a new global label that is much more defining and much less attractive – debt.
According to a report released by Barclays, Australia leads household debt out of all developed countries. Household debt includes mortgages, credit cards, overdrafts and personal loans for things like cash, travel, holidays and cars. According to the report, while the rest of the world is focussing on paying down debt and avoiding a repeat of the global financial crisis, Australians are doing the opposite.
Barclays Chief Economist, Kieran Davies, said this is putting us in danger of another crisis. He said, “With high levels of leverage by world standards, where debt is concentrated in the household sector, we see this as a vulnerability in the event of another global shock”.
Home loans are one thing, we’ve all had them and it’s virtually impossible to buy a home without one. This is also building an asset that is valuable and can contribute to a lifetime of wealth and a happy retirement. The problem we see here is the rest of it – the liabilities that we’re putting on debt. It’s the personal loans for holidays and cars. It’s the credit card loans for nice clothes and fancy electronics. This is where Australia has a problem.
Australians are so caught up on having the best things, having the most fancy things, having the nicest clothes and flashing cash through material objects – and all for what? We are a country that was significantly built on English colonisation due to convicts. Not all of us came to be here this way but from the very beginning of time we had a culture where the things that mattered were hard work and mateship, not at all what we own.
So where did things change? Why has this cultural shift happened and which generation is really responsible? Did we get carried away with owning nice things and keeping up appearances for the sake of publicly feeling good about ourselves? Or is it the younger generation – also known as the disposable generation who believe that cars can be written off and replaced, laptops can be smashed and returned and clothes can be worn once and never seen again?
I believe that while times have been tough for everyone, the shift in our culture has a lot to account for when it comes to our spiralling household debt. It isn’t that our earnings are so small in comparison to our cost of living; it isn’t because our government doesn’t support us enough; it’s because we have a culture where keeping up appearances and always having the latest and greatest is more important than living within our means.
Tell me, do you agree?