5th January 2009

Western Australia, the mecca of the nation’s mining boom, has registered a sharp increase in the number of individuals going bust, as the effects of the global financial meltdown start to bite.

 

Fresh figures on personal bankruptcies reveal that rates in Western Australia increased by almost 13 per cent by the end of last year, compared with just 2.2 per cent across the country.

 

A total of 1520 people from the west filed for bankruptcy last year – a sobering figure for a state that is coming down from several years of resources industry fuelled growth, which in turn has spurred property prices and boosted the personal wealth of many of it inhabitants.

 

The figures, which have been complied by Queensland insolvency group SV Partners, suggest that the global financial crisis and subsequent market downturn have yet to be significantly felt in Australia.

SV Partners managing director Paul Sweeney said 2008 compared favourably with previous years overall, including 2007, when national bankruptcies rose more than 8 per cent.

 

The national bankruptcy rate actually stabilised during the last quarter of the year, he said.

“While personal bankruptcy statistics usually lag behind company failures, there’s clearly little or no evidence at year’s end of the expected spike,” Mr Sweeney said. “So the predicted doom and gloom has yet to hit home in terms of personal finances.”

 

Corporate insolvencies and company administrations have increased by a third in the past year, according to the Australian Securities & Investments Commission.

 

That could spell bad news for Western Australia in particular, where economic growth is expected to be slashed from 6 per cent this financial year to just 15 per cent in 2009-10.  Declines in business investment, slower export growth and a flat housing market have all been blamed for this.

 

Still, the west still had a way to go if it was to steal NSW’s mantle as the “bankruptcy state”, Mr Sweeney said. With more than 10,000 people going bankrupt last year, up 4.5 per cent on 2007, NSW recorded the highest bankruptcy rate per capita.

 

The situation is far better in Victoria and South Australia, where personal bankruptcies fell 2.8 per cent and 1 per cent respectively.