A very worrying, though hardly surprising, report in today's AGE. So much for the Libs' superior economic management argument.
It amazes me that the media has kept mindlessly repeating the Howard/Costello "we've never had it so good" mantra for so long. Howard & Costello are talking (conveniently) about average household incomes. But the "haves" are getting a far bigger slice of the cake than in the past & clearly a lot of low income people are in serious financial strife.:
Debt crisis forces mass super raid
Jason Koutsoukis
June 17, 2007/Sunday AGE
TENS of thousands of Australian families are being forced to raid their superannuation savings to pay off crippling personal debts.
Since 2001, the amount of money taken from superannuation accounts to pay off debt has quadrupled from $35 million to $135.3 million last year.
A record 16,500 individuals applied for early access to their superannuation accounts last year, with 13,871 applications approved by the Australian Prudential Regulation Authority.Households owe a staggering $160 for every $100 of disposable income, up from about $50 in the early 1990s. And it is rising, which is placing more pressure on the regulating authority to release super fund money.
Applications for early access to superannuation are approved only in cases of severe hardship where applicants can show they are "unable to meet reasonable and immediate family living expenses".
It is also possible to have money released from a superannuation account to prevent foreclosure of a mortgage or the exercise of a power of sale over a principal place of residence.
To be granted an early release, individuals must have been receiving Commonwealth income support for 26 weeks and be able to satisfy the trustee that the superannuation money is vital to meet living expenses.
Commonwealth income support payments include social security or service pensions; certain social security benefits; income support supplements; drought relief payments; exceptional circumstances relief payments; and Commonwealth Development Employment Projects Scheme payments.
"If you satisfy both of the above tests, the trustee/RSA (retirement savings account) provider may, in any 12-month period, release to you one lump sum payment," the guidelines stipulate.
With Reserve Bank governor Glenn Stevens last week signalling the likelihood of another interest-rate rise, the crisis threatens to undermine Prime Minister John Howard's election hopes.
And Part IX new debt agreements in the March quarter were 28.7 per cent higher than in the same period last year.
Total personal insolvency activity for the year to date has increased by 16 per cent.
Reserve Bank figures show that a record 12 per cent of families' disposable income goes on interest payments. That's up from just 6.9 per cent five years ago.
http://www.theage.com.au/news/national/debt-forces-mass-super-raid/2007/06/16/1181414613140.html