Over a year ago, SCSA published the Economy Working Group Report 2011, providing a framework for Community Groups to discuss ecologically and socially responsible alternatives to economic growth. The report specifies that the paradigm of economic growth in Australia and most other countries is not compatible with environmental sustainability and the reality of finite natural resources. Our debt-based and unstable monetary system is also identified as a major issue. The report acknowledges that although our social and financial addiction to increasing consumption is going to be a hard habit to break, overcoming it is crucial to achieving a sustainable future.
The global financial crisis (GFC) came to the forefront of the business world and world media in September 2008, with the failure and merging of a number of American financial companies. Just ten months before the crisis made public news, Adam Bennett wrote an article in the Sydney Morning Herald titled Christmas spending spree set to continue. Here is a brief summary of Bennett’s article, published on the eve of Christmas 2007.
In December 2007, consumer spending had not reduced despite a series of interest rate increases, rising petrol prices and a federal election. The Australian Retailers Association (ARA) predicted retailers’ good times were likely to continue and ARA executive director Richard Evans warned that Christmas shoppers may just be using debt to fund their spending. Bennett’s article highlighted Reserve Bank of Australia figures which showed Australia’s credit card debt was a record $41.3 billion at the end of October 2007. Four years have now passed since the GFC came to public attention. With just 12 days left before Christmas 2012, is Australia’s spending spree continuing??
We have all heard reports that Australian consumers are growing more cautious and that the use of credit cards has decreased in the past year. There seems to be abundant concern and alarm in our mainstream media about the impact of decreasing consumer demand on our retail sector and economy. Yet, despite rising unemployment, falling house prices, a downturn in the construction industry, the apparent slowing of Australia’s mining boom, as well as ever growing uncertainty about the future of the global economy, it is surprising to learn consumer spending in Australia is actually increasing.
Clancy Yeates, in a more recent Sydney Morning Herald article, Credit card debt swell , reports Australian credit card debt has struck a new record high of $50 billion. She quotes new figures from the Reserve Bank, published in January 2012, which show outstanding credit card debt topped $50 billion for the first time in November 2011, with $36.3 billion of the total accruing interest. These figures seem to suggest consumer demand is still growing though perhaps not quite at the rate the retail sector would like it to be.
So, what can we expect from Australians this Christmas? Earlier this month, the Commonwealth Bank of Australia released the results of its
latest study on this topic. The results showed the average Aussie is planning to spend an average of $475 on gifts. This equates to a total
consumer spending on gifts of $7.8 billion nationwide. The Australian National Retailers Association has joined ARA in tipping an even
better Christmas this year, forecasting that Australians will boost their overall spending to $32 billion this season, or more than $1,400 each.
It seems, for many Australians, the ‘shopping’ is not over…yet. This Christmas, a reduction in household debt also seems unlikely. Although overcoming our addiction to consumption is crucial to achieving a sustainable future, it is indeed going to be a hard habit to break.
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