FAMILIES hurting more now than at height of Global Financial Crisis

A special report by The Sunday Telegraph has revealed the that households have been forced to drastically cut back on spending, stores are empty despite unprecedented sales and the property market is dire, with 40 per cent of auctions in Sydney last week resulting in no sale.
At the heart of the country’s precarious financial position is western Sydney, where residents have told – in more than 200 in-depth interviews – that they owe more on their credit cards and have less in their pocket than at both this time last year and at the 2007 election.

Retailers are slashing prices by up to 70 per cent to entice customers, but, as The Sunday Telegraph visited shopping centres across Sydney, idle retail assistants were struggling to sell stock.

In more than 600 detailed interviews conducted in marginal electorates around Australia, the majority of voters said they felt the economy was volatile and had changed their spending habits.

Spending on a broad range of consumer items, including clothing, holidays, restaurant and takeaway food, newspapers and magazines is shrinking as Australians struggle to cope with interest rates, increased cigarette taxes, rising petrol prices and tight rental and housing markets. And there is more bad news for Prime Minister Julia Gillard and Treasurer Wayne Swan: 53 per cent of consumers believe they are less competent at economic management than former PM John Howard and his treasurer, Peter Costello.

The Sunday Telegraph interviewed more than 200 voters in Penrith, Campbelltown, Parramatta and the Blue Mountains. More than 60 per cent said they had changed their spending habits, with 38 per cent spending less, 12 per cent saving less money, and 10 per cent paying less off their mortgage.

Seventy per cent have delayed buying big items, especially cars and houses.

Of those who have reduced spending, the biggest cutback (23 per cent) was in clothing, while 33 per cent said they were spending less on restaurants and takeaway food and 18 per cent admitted they had reduced spending on holidays. The one treat surviving the downturn is a trip to the movies. Only eight per cent of those interviewed said they had reduced their outings to the cinema.

Forty-three per cent of NSW consumers surveyed said the economy was “volatile” whereas 44 per cent believed it was stable.

Nationally, 48 per cent of voters said they were worse off now than at the 2007 election and 44 per cent said they were worse off financially than this time last year.

In NSW, those figures were 37 and 35 per cent respectively.

The investigation revealed credit-card debt is spiralling. In NSW, 39 per cent owe more on their credit cards than last year, with 55 per cent owing more than $1000 and 18 per cent owing more than $5000.

A whopping 54 per cent of respondents nationally and 37 per cent in NSW are saving no money each week.

The disastrous situation was confirmed by dozens of retail staff in shops around Sydney, who revealed the dire situation to The Sunday Telegraph on condition of anonymity.

Stock was going on sale at discounts of up to 70 per cent as soon as it arrived at Wittner stores, a shop assistant said.

“The sale keeps getting bigger to move the stock. Even the new shoes that come in are going on sale the day they arrive,” she said.

“Customers don’t like to browse any more.

“They see the shoes they want in a magazine, come in to buy them and leave without looking around.”

A Myer saleswoman said she feared losing her job.

“I’ve never seen it so quiet. I’m worried, because they’re cutting shifts,” she said. Another department-store worker said women’s fashion departments were no longer taking deliveries of new stock.

Conditions were even quieter this year than at the height of last year’s downturn, another store worker said, admitting that long days with no customers were making staff miserable.

Australian Retailers Association executive director Russell Zimmerman said retailers were not selling stock despite the huge sales.

“Some stores are offering 70 per cent off,” she said.

“That’s unprecedented, and they still can’t get people in the door. It’s tough out there, and retailers are finding it harder to move product than they have in the past.”

Consumers are also increasingly nervous, with the latest Westpac-Melbourne Institute consumer sentiment index falling by 12.3 per cent over the past two months – the biggest drop since March, 2008.

Westpac chief economist Bill Evans said consumers were more concerned about international economic conditions than they were during the global financial crisis.

Concern about global instability was at its highest since the Asian financial crisis of 1997-98, Mr Evans said.

Official consumption figures confirm the slump, with NSW lagging behind the nation in the Australian Bureau of Statistics’ latest retail turnover trend figures.

NSW was the only state to record a fall, with trend turnover dropping 0.1 per cent in May compared with a meagre national rise of 0.2 per cent. Auction sales have been heading south for 11 weeks, with figures from RP Data showing only 56 per cent of capital-city auctions last week resulted in a sale.

In Sydney last week, more than 40 per cent of auctions resulted in no sale.

Article excerpts Sunday telegraph