October 14, 2006 12:00 Article from: The Sunday Telegraph
DEBT-stricken families with new homes, cars and plasma televisions in Sydney's sprawling housing estates are relying on charity handouts to buy food.
Welfare agencies report a worrying increase in the number of middle-income families with big mortgages seeking help to pay grocery, electricity and gas bills.
Dubbed the "pay-later poor'' by St Vincent de Paul, they live in homes boasting cable television and the latest electrical goods and use credit cards to meet basic living costs.
Many of the families live in so-called McMansions.
Rising interest rates and petrol prices have hit them hard, with the latest figures showing soaring personal debt levels and bankruptcies.
With rates tipped to rise again next month, the blame game has begun, with the State Government accusing Federal Treasurer Peter Costello of economic mismanagement.
St Vincent de Paul Society chief executive officer John Picot said families were seeking cash and vouchers to buy food and clothing, and pay electricity and water bills and other debts.
He blamed a "want-it-all'' attitude for the trend.
Those who took up "buy now, pay later'' offers and store credit cards often found themselves in difficulty when the interest-free periods ran out, a member of the family fell ill or one of the family's breadwinners lost a job.
"I call them the pay-nothing-now poor - couples who have wanted everything now,'' he said.
"Retailers have created this new breed of poor - people who have over-extended themselves to buy a new home and then signed up to all these contracts to get the furniture, the television and cable.
"Suddenly there is a quarter per cent rise in interest rates and or a hike in petrol prices and of course, it's a disaster.
"We never heard of borrowing money from the bank to pay for wine or to get our hair done in the 1970s - that would have been an absolute nonsense - but that's what we are doing now through all these credit cards.
"I'm not just blaming the banks or retailers - there has to be some personal responsibility taken.''
Mission Australia and the Salvation Army have also reported an increase in the number of homeowners seeking charity handouts.
Mr Picot said while the charity refused to cover mortgage repayments, it had helped out with food and electricity vouchers.
Families in financial difficulties were also referred to a budget counsellor on how to manage their debt.
"We say, you have to make some decisions or choices, such as maybe looking at winding up the cable TV contract,'' Mr Picot said.
"Our focus is always on the society's most disadvantaged but we will always help in a crisis. We will always make sure there is food on the table.''
Figures compiled by St Vincent de Paul for The Sunday Telegraph show the number of welfare recipients has soared in the past five years.
Case-workers visited 235,718 homes last year - an increase of over 29,000 compared with five years ago.
In the year to June, more than $11.5 million worth of assistance was given - up from $8 million five years ago.
While singles and sole parents were the major recipients, couples with a child were also high on the list.
More than $2.3 million was handed out so families could buy food.
Almost $2.5 million worth of vouchers were issued to pay electricity bills. Another $150,000 worth of vouchers paid for water.
An Illawarra case-worker said some families appeared on the surface to be well-off with "a large house and plasma TV'' but had sought help because they could not pay the bills.
Mission Australia reported an estimated 25 per cent increase in cases of homeowners asking for assistance for the first time.
The charity's State manager of financial counselling services, Barbara Jones, said the rise indicated an alarming trend and was likely due to the increased cost of living.
"My financial counsellors have reported a significant increase in cases where both partners are working but are still struggling to make ends meet, without enough money for food and electricity,'' she said.
"The rise in petrol prices and interest rates make it incredibly difficult to afford things like food.
"Five years ago, you would be lucky to see 10 per cent of these cases - now it's up to 35 per cent.''
New figures from the Insolvency and Trustee Service Australia showed bankruptcies in NSW increased 18 per cent in the past year.
Personal debt accounted for 88 per cent of the bankruptcies.
The ING Direct-Melbourne Institute Household Saving & Investment Report showed the latest interest rate rise had had the greatest impact on NSW households.
Over one-third of NSW residents were worried about the effects of the rise, it said.
Six per cent of NSW households were running into debt to meet daily expenses - up from four per cent in the previous quarter.
NSW Treasurer Michael Costa blamed rate rises for people falling harder into debt.
"Interest rate rises are hurting NSW families,'' he said.
"As I said at the time, the Federal Budget added to the inflationary pressures that saw the Reserve Bank raising interest rates for the seventh successive time in August.
"Prior to the May interest rate rise, the property sector was showing signs of improving demand, with increased housing finance approvals, low vacancy rates, and rising rents all pointing towards a recovery.''
