Calls for debt diet increase

By Andrea Lavigne | 13 Jan 2010

Westpac chief Gail Kelly has added her voice to the growing sentiment that Australians need to stop living beyond their means.

Kelly's warning echos Opportune Home Loans Paul Ryan's comments yesterday that there is a need for consumers to save more and borrow less.

In a written article published by the AFR, Kelly stated "Australians have long borrowed more than we have saved... While essential to support growth in the economy, this reality has created a reliance on global capital markets that means that we cannot long ignore any new regulation that comes to bear in this area".

RBA figures reveal that mortgage, credit card and personal loan debts are at $1.2 trillion - up 71% from five years ago, which averages out to $56,000 for every man, woman and child in the country.

Yesterday, Opportune's Ryan stated this exposure to debt places borrowers under "extreme pressure" - making them more vulnerable to rate rises.

He argued borrowers should be conducting a home loan health check by investigating their credit card and home loan rates and shopping around.

Related stories:

Binge borrowing necessitates debt diet: Opportune - Now that the Christmas spending season is behind us Australian consumers may find themselves living beyond their means and will need to go on a debt diet, cautioned Opportune Home Loans CEO and founder Paul Ryan.

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Commented by: Dave at 13 Jan 2010 11:53 AM
Yes all well and good but who is going to teach them how to save, most of my client don't even have a budget. Start teaching this in schools and the next generation may get it...til then if we rely on parents who have never saved how are they going to teach something they have never done?

Commented by: Broker Martin at 13 Jan 2010 12:30 PM

Gail Kelly 'adding her voice' to growing sentiment about debt levels etc. seems as genuine as McDonalds creating ads to 'Eat Healthy', and the alcohol and gambling industries' 'Drink Responsibly' and 'Gamble Responsibly' ads. They sell the crap, and want consumers to gorge as much as they can possibly and legally do. And it's what the Board expect her to do to the extent of the law/legislation/compliance/policy. If Kelly's really serious about reducing people's debt levels she'll force the reduction of Westpac and its subsidiaries' lending by tightening policy and other means other than disgracefully piss-poor service (to us brokers, at least). Until then, her comments are no more than politically correct hot air.

Commented by: Philip E at 13 Jan 2010 01:08 PM
The $5 mil for Financial Literacy to be taught in schools was "lost" in the stimulus budget. Getting the basices should be part of the education process so start with the teachers and educators There are great resources already there just need to be used.

Commented by: Tony H at 13 Jan 2010 02:24 PM

Conduct a home loan health check where your staff will suggest an urgent and immediate need for an increase in their current home loan or a new personal loan to bed down debt. Soon to be followed by a letter from the Bank saying that because they are such great credit card customers the Bank has automatically increased your credit card limit to $20,000-. Not sure how banking exec's sleep at night- maybe a soft pillow made of the million dollars they are paid for speaking this pack of manure.

Commented by: Martin J. Rollins ALMO Australia at 13 Jan 2010 02:24 PM

Are you kidding me Kelly?

Let's get this straight. Banks, their CEO's and Marketing Directors (at Banks and large financial institutions) have invested 40 years and billions $$$ collectively to delberately construct a market place, environment and conditioned the consumor to build and grow debt.

Banks call this program 'Wallet Share'. Kelly's comments anger me because it's akin to giving air time to the owner of a Fish and Chip shop who comes out trying to give advice on diet and nutrition.

If Kelly and cohort believed in this rhetoric banking and financial services would look very different in this country from what it currently does.

Her comments further annoy me because they once again belittle her own customers; media gives the likes of Kelly air time and in my opinion is like listening to Dracula providing advice on blood bank patronage.

There is one reason debt is at an all time high in this country, and it's not entirely the fault of Australians... you can't blame the sheep for the fencing just like you can't blame Chickens for the hormones in their feedstock.

Banks rely on growing people's debt, it's their core business. From Vision and Mission statements right through to remuneration and staff performance and payments, everything a bank does is about growing a customers debt.

Let's get serious about this issue, and let's stop playing the dumb card. Banks and Government could arrest these issues over-night, but they won't because it does not serve their interest, because their interests %%% run into the billions.

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