On 13 July 2016, The Australian Financial Security Authority (AFSA) reported an annual rise in personal insolvency for 2015-2016 financial year compared to the previous financial year. According to AFSA this is the first annual rise since the 2009-2010 financial year.

AFSA reported the national personal insolvency movements as follows:

• bankruptcies increased by 7.0%
• debt agreements increased by 24.3%
• personal insolvency agreements were stable (0.0%).

The big stand out in these movements are the reported debt agreements which were tallied to be 3,329 for the June quarter this year. This figure is the highest on record. The previous record was in the September quarter 2015 (3,081 debt agreements).

The graph below shows movements in personal insolvency from 2001 to 2016.

Why the rise?

The rise in personal insolvency could be attributed to the weakening of the mining industry, as Queensland and Western Australia were the main contributors to the rise in personal insolvency. Data from the West Australian Department of Mines and Petroleum put the state’s mining industry employment for the 2015 financial year at 105,922 people, down from a peak of 108,975 in the 2014 financial year and this number is only declining after a reported 2000 jobs cut across the Australian mining industry in March 2016. Also, in 2012- 2013 financial year the mining sector firms estimated that spending would total $113.4 billion. Fast forward four years and they now expect expenditure of just $34.35 billion, a decline of 70%.

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