The SMB market is feeling the brunt of a massive rise in bankruptcies with up to 86% of all new businesses failing. At the same time the high cost of living and easy access to credit have led to the highest number of bankruptcies in NSW since records began more than 20 years ago, the Insolvency and Trustee Service Australia (ITSA), accountants Hall Chadwick has said.
Referring to statistics released by the federal government body Hall Chadwick said that some consumers were struggling to manage burgeoning levels of debt.
According to ITSA, there has been a 23.39 per cent increase in bankruptcies in NSW for the year to June 30, with the figure of 9248 the largest on record since monitoring began in 1986.
Queensland recorded the second highest number at 5751, up 6.94 per cent, followed by Victoria on 5700, up 13.68 per cent.
Only one state, Western Australia, recorded a fall in the annual number of bankruptcies, down 1.42 per cent to 1392.
Australia-wide, the number of bankruptcies was up 13.2 per cent to 25,242.
The figures showed that some consumers were getting lost in the economic boom, insolvency partner with Hall Chadwick Paul Leroy said.
“Some say Australia’s prosperity and booming economy is great for everyone, but certainly the figures reflect another side to the story,” Mr Leroy said.
“These statistics are very significant and confirm that people are struggling with the increase in the cost of day-to-day living.
“It is especially hard for the battlers who don’t own their home, with rents rising, as the rental squeeze in Sydney bites.”
Rising petrol prices were also having an impact, Mr Leroy said, while the ease of obtaining credit was of major concern.
“With credit card growth at such record levels, it is clear why misused credit cards are behind so many personal bankruptcies,” he said.
“In an age when people are relying more and more on credit, something has to happen, we can’t continue to raise debt levels without long-term consequences.”