The " Poor " of Australia !

A recent survey delivered alarming news.  We are one of the world's richest countries, but a third of our citizens would run out of money and become destitute if illness or something other caused their income stream to suddenly cease.   They lack the savings to survive beyond a month and they are virtually living from one paycheck to another.

That is indeed alarming news when the great powers are threatening one another with a trade war and if that eventuates a recession would be inevitable.  We do have a safety net that covers the unemployed, but that is mere survival money.  It would not cover the weekly rent or pay electricity and food bills and very soon many would find themselves living on the streets.

Some families would not even last a month.  It is now common for people with a lowly paid job to exhaust the money in their wallet before the next pay day arrives and they either go hungry or take out a loan to survive, and that leads to a cycle of debt that is unsustainable.  In too many cases that debt is not fully repaid and is simple rolled over into a new loan at an interest rate that is measured by the elevated risk factor.  The debtors find themselves on an unstoppable debt rollercoaster.

Educators report that many children arrive at school without the benefit of eating breakfast and often other meals of the day are uncertain, and this detracts from their concentration and has an adverse effect on their school progress.  Some schools have developed a breakfast programme as a matter of necessity.

Many blame this situation on our Capitalist style of society, but Australia is a hybrid society embracing some of the mores of capitalism with a socialist base.  By law we demand a minimum wage and bestow pensions and our legal system is designed to protect the weak from exploitation.The poor have always had access to fast money loans by way of the old pawnbroker system and later by loan companies that operated on a door to door basis and usually outside of the legal system.  That has now come full circle with the appearance of instant loan machines similar to bank ATM's appearing in suburban shopping centres.

These machines are sited where incomes are thirty percent lower than the national average and promise same day loans based on repayments geared to what the borrower earns as a wage or gets as a benefit from Centrelink.  The lenders profit comes from a twenty percent loan establishment fee and an interest charge of four percent per month.

These " payday " loans are often associated with rental-buy arrangements where consumer goods are offered at up to five times their retail price.  In one instance an air conditioner and table and chair worth $1650 were rented out for $6000 over two years.  It is clearly evident that the low interest paid by banks for money deposited has fuelled a redirection to the fast loan industry seeking higher rewards by way of high interest loans to the poor.

The activity in this area has increased from $476 million to $538 million in the past year and is rapidly ensnaring many people in unpayable debt.  It is being widely advertised on television and legislation is required to break the nexus with overpriced goods offered on a lease/buy basis and on loans that exceed a limit of ten percent of the borrowers net income.

Such action has been promised but seems to be proceeding slowly in coming to a vote !