National Debt Helpline calls skyrocket in Western Australia amid epidemic of financial stress

Updated

West Australians are making more calls per capita to the National Debt Helpline than residents in any other state, as the legacy of a mining construction and housing downturn continues to bite.

Key points: The WA branch of the helpline received on average 70–80 calls per day last month

30 per cent of calls were related to utility debt and disconnection

Almost one third of WA calls went unanswered from October–December last year

In the three months to December, more than 9,000 calls were made to the financial advice helpline in WA, making up 21 per cent of the national total.

That figure represents a 68-per-cent increase in calls compared to the same period in 2017, when WA made up just 14 per cent of the total.

"We're getting a fifth of the national calls, [but WA represents] only a tenth of the population," said Bev Jowle, executive officer of the Financial Counsellors' Association (FCA) of WA.

In the past month, the WA branch of the helpline, which is run from the FCA's office in East Perth, has received an average of 70 to 80 calls per day.

"We had 137 calls in one day," Ms Jowle said, describing it as a record in her two-and-a-half years in the role.

"January's never usually this busy. We're really surprised."

Housing stress, utility debt key issues: FCA

While the FCA is grappling to understand what is driving the spike in calls, a large number of callers have cited mortgage stress and property repossession.

"The mining downturn, I think, really started the ball rolling," Ms Jowle said.

"Many, many people are just mortgaged to the hilt. They basically either owe what their house is worth or they are going backwards.

"We know that there's a whole cohort of people who are just hanging in there and a change — even a slight change — in mortgage rates is going to have an impact."

Ms Jowle said many workers who had received redundancies in the immediate aftermath of the mining boom used the money to pay down their mortgages or other debt.

"Now that [money has] run out, they're starting to have to go back to making repayments on the mortgage," she said.

In some areas, particularly the North West, those home owners were now in negative equity, Ms Jowle added.

"They can't sell the asset, they can't live off the asset and their income isn't enough to sustain the debt that they've got on their assets," she said.

"We know that the mum-and-dad investors often were borrowing to the hilt on their own mortgage, extending that mortgage to buy the second house, and now they're having difficulty renting that house out for the cost of the mortgage."

The other key issue, Ms Jowle said, was customer disconnections from electricity retailer Synergy, which make up about 30 per cent of WA calls.

"It's people who've been advised by Synergy that they're either about to be disconnected or have been disconnected," she said.

"There are people who are on almost an indefinite payment plan, because they're never going to be able to afford that bill.

"It's not unusual for us to have people who have $6,000–$7,000 worth of utility debt that they're probably never going to ever repay."

Data from Synergy showed there were 17,614 residential disconnections in the past financial year, up from 14,251 in the previous year.

The utility said in a statement it was able to provide debt waivers or incentive payments in cases where customers had made an effort to address their financial hardship.

Small business a hidden problem

The FCA also said an increasing number of small businesses — in particular, sole tradespeople and franchisees — were seeking help.

"Either their customers are in so much financial hardship [the business is] not getting paid, or they themselves have got too much debt," Ms Jowle said.

"As people have less and less money in the economy, they're spending less and less, particularly [on] things like fast food and restaurants."

While many callers were on low, fixed incomes, an increasing number were on middle incomes, Ms Jowle said.

"It's people who are starting to raise children, who are out there in the mortgage belt, who are not the retirees who have perhaps benefited from having lower mortgages 20 years ago."

Calls for more funding as demand surges

The helpline data, which is collated by Telstra, only revealed the number of calls made to the Federal Government-funded helpline, rather than the number of calls answered.

Almost one-third of calls in WA went unanswered between October and December last year.

Some agencies offering face-to-face counselling were reporting a three-week wait list, while others had stopped taking registrations altogether.

"The numbers speak for themselves, but there are many, many people who don't get through because we simply don't have the staffing to manage that volume," Ms Jowle said.

A maximum of five financial counsellors are on duty at the helpline at any one time, with a single call taking up to one hour.

Calls are triaged to prioritise the most urgent cases.

"We've got one solicitor who works for the whole state," Ms Jowle said.

"I think capacity really needs to be doubled before we actually start to see that people are getting those services as quickly as possible."

Topics: business-economics-and-finance, consumer-finance, money-and-monetary-policy, housing-industry, industry, housing, house-and-home, stress, perth-6000, wa

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