As the silly season sets in and real news stories dry up, desperate journalists turn to a set of Xmas-New Year staples that can be trotted out every year.
An old favourite that seems to have disappeared in recent years was the Christmas toy warning, with Fair Trading bureaucrats putting on display a range of horrific toys that could maim or kill your child once they removed them from the stocking on Christmas morning.
But others are still with us: warnings from nanny state public health groups not to drink too much over Christmas, or not to eat too much over Christmas. How we should avoid misbehaving at office Christmas parties, and not speed over the holidays.
And there’s another old Yuletide favourite: don’t spend too much on your credit card over Christmas (usually styled as “avoid a Christmas debt hangover”). In fact the Christmas credit card story is a great one because you can run it both before Christmas and in the New Year.
Well that story might have to go the way of the killer toys story if anyone bothers to check the evidence, which is to be found in the Retail Payments data from the Reserve Bank. It shows that Australians’ long relationship with their credit/charge cards is coming apart.
Apart from big falls in cheque payments and a drop in ATM transactions, the data reveals a sharp fall in credit card debt attracting interest. The RBA started issuing data in July for the month of May when the national unpaid credit card balance attracting interest totalled $24.8 billion.
By October — just six months — that had fallen 14.9% to $21.108 billion, the lowest total for this figure since January 2005.
The long-term fall is also significant: the figure in October 2017 was a total of $32.068 billion, meaning a fall of more than one-third in three years.
So much for reckless Australians racking up a “debt hangover”.
The fall is bad news for the banks and credit card giants — what was a reliable source of income from fees and interest charges has fallen sharply.
Assuming credit/charge card interest rates average around 19% a year on outstanding balances, that means that the income on unpaid balances from interest costs has fallen from around $6.1 billion in October 2017 to around $4 billion for October this year.
Australians haven’t just cut their credit card debt significantly, they’ve put more than $100 billion into deposit accounts at the country’s banks since the pandemic started — which is good news for the banks, because they have to borrow less in volatile wholesale markets here and offshore, and lightened the load on the RBA with its Term Funding Facility — around $83 billion has been lent to banks by November, a relatively steady figure despite increased bank lending for housing finance.
As Crikey pointed out earlier in the year, they also hoarded cash at remarkable rates.
One of the key narratives pushed by some economic commentators and analysts — especially those based overseas — is that Australia has worryingly high levels of household debt, fuelled mainly by our love of property, and we’re permanently just one recession away from a mass default event that would plunge the financial system into chaos.
Well, we had the biggest recession since the 1930s and Australians coolly paid down their credit card debt and put money into the bank.
That’s partly due to the government’s willingness to keep people in jobs with its JobKeeper payments. But it also suggests Australians are far more responsible with their finances than the nanny state brigade would have us believe.
Journalists might have to find another Christmas cliché to use.
“Nanny state” is used scornfully but we need more of the Nanny state, not less. Workers need more protection, not less. All of us need more honesty in politics, not less, so we need a Nanny with a big fist to set crooked politicians on the path to righteousness. We need less greed, more sharing, less aggression, more compassion. The sort of freedom demanded by those who revile the Nanny state leads to conspiracies of paedophiles headed by George Soros and Hillary Clinton seeking world domination from their headquarters in a pizza shop in Washington.
“Nanny state” is a favourite of Bernard Keane’s. I prefer the line taken by Ross and John of 3AW: decrying the nanny state one day, and proclaiming “There ought to be a law against it” on alternate days.
Agree that we need more Nanny State in some areas but we also need to instill a sense of “self-reliance” in the Australian population. I see far too many people that refuse to take the necessary steps to improve their lives via education, the overall sense of the population that the Age Pension is a right instead of a safety net, the love of sport and the consequent deification of people with strong hand-eye coordination instead of academic and scientific leaders, the ridiculous notion in Australia that everyone can afford to buy a home and actually taking personal responsibility for your situation just to name a few areas that need to improve.
I find your “nanny state” comment patronising and singularly foolish regarding drinking, speeding and behaviour at office parties. As a Radiographer (now retired) I spent more hours in Accident and Emergency Depts than I can remember during the Christmas/New Year and school holiday period.The very people covered by your nanny state remarks were, in general, the ones who were the cause of the too often fatal and appalling injuries both to themselves and to perfectly innocent road users, bystanders and families. And that’s not including the other topical comments from rumptytum. Nanny state has got some annoying regulations, but trying to improve peoples’ behaviour in pubs, clubs, on the road etc. does not come under these. Or so I believe.
It is lazy to speculate on explanations for empirical and researchable questions. One reason though for declining credit card debt might be that much maligned, by Bernard Keane and others, withdrawals from superannuation funds have been used to reduce credit card debt. As pointed out, bank charges on credit cards are very high. Despite claims to the contrary, taking the opportunity to reduce credit card debt now at the expense of long distance benefits from superannuation would be a rational calculation for many contributors.
The reason that Interest Rates on cards are high is because they are revolving unsecured debts with high default rates and management costs on defaults.
It is not stated but much of household debt is a consequence of mandatory saving, superannuation, or borrowing to obtain greater public subsidies that are dished out for superannuation by contributing more to super, and, oh, perhaps also because of low wages growth.
How many houses can a middle mainstream Aussie Ozzie Ostrich hold along the lines of how long is a piece of string ?
Interesting, but headline data does not cut it for analysis; there needs to be drilling down through variables such as age, post code etc., comparisons and trends.