Others are chasing money from the dead, bungling identities and abusing family and workmates in the pursuit of a growing pile of owed cash.

Counsellors fear more households will fall prey to dodgy tactics as the financial crisis deepens and more businesses sell debts to collection agencies, the Herald Sun reports.

Australian Competition and Consumer Commission chairman Graeme Samuel yesterday warned that rogues face legal action.

Collection agencies manage about $6 billion in debt owed by millions of customers. The business is tipped to expand this year with more defaults on mortgages, credit cards, loans and other bills.

Mr Samuel, speaking at the launch of the Australian Collectors and Debt Buyers Association in Melbourne, said complaints were few, but some unscrupulous methods remained.

“Debtors must be held accountable for debts but in a reasonable and constructive way that leads to repayment … and upholds their dignity,” Mr Samuel said. “What we have to remember is that debtors could be your mum, dad, son, daughter, close friend or relative.

Investigators bombard debtors with 60 million phone calls, text messages and face-to-face meetings each year.

ACDBA chief Alan Harries said the industry had improved dramatically through staff training and complaints handling.

“We know we can’t get blood out of a stone. A couple of cowboys are ruining the image for the rest of us,” Mr Harries said.

“We’re dealing with people who are already emotionally charged. Despite that, the complaint rate is only .0001 per cent.”

Collectors using physical force and undue harassment and coercion risk fines of up to $220,000 for individuals and $1.1 million for corporations.

The ACCC has received almost 5000 calls about debt collection in the past four years.

Complaints include disputes about amounts owed when debts are sold to multiple collection agencies, and people mistakenly singled out because they share a similar name, birth date and address.

The IMF believes the financial crisis is entering a dangerous new phase, with massive government budget deficits making it impossible for banks and companies to raise money.

This will particularly affect countries such as Australia that depend on international capital markets to finance the banking system.

The fund’s review of world financial stability released last night said nations relying on wholesale financial markets risked “more rapid, disorderly deleveraging” in which bank lending could be abruptly slashed.

The IMF believes the downturn will last for years, saying the weakness of lending in the US and Europe resembled that in Japan, where there was no growth for a decade.

The IMF believes the financial crisis will result in bad debts of $US4.1 trillion, ($5.7 trillion), of which $US2.8 trillion would hit the banks.

Only one-third of those losses have so far been recognised. In a damning assessment of the solvency of the world banking system, the IMF says:

“If banks were to bring forward to today loss provisions for the next two years before expected earnings, the

US and European banks in aggregate would have tangible equity close to zero.”

The IMF estimates the banks will have to raise at least $US875 billion in additional capital, and possibly as much as $US1.7 billion, if they are to resume lending.

However, raising funds is becoming increasingly difficult, despite some recent improvement in interbank markets.

article excerpts news.com.au

According to figures compiled by Treasury, the total wealth of the private sector in Australia stood at $4850 billion at the end of December.

That pool diminished last year as a result of falling property prices and sharemarket values.

Wealth per person had slumped from $249,000 to $224,000 during 2008.

Adjusted for inflation, wealth had slumped more than 12 per cent for the year, the biggest fall in almost 50 years of figures.

Meanwhile, total debt held by private firms and households increased during 2008.

Also yesterday, a “leading index”, which attempts to estimate the pace of economic activity three to nine months into the future, dropped sharply in February.

Bill Evans, the chief economist at Westpac, which compiles the index with the Melbourne Institute, said the rate of deterioration was “remarkable”.

Mr Evans said it would be a mistake for the Government or the Reserve Bank to think they had done enough work to prop up the economy.

article excerpts smh.com.au

In one state, the average person is forking out 62 per cent more in State Government and local council taxes than they did in 2003.

Figures released by the Australian Bureau of Statistics (ABS) reveal the average Australian paid $16,401 in taxes to local, state and federal governments last financial year – a 36 per cent rise since 2002-03.

In Western Australia, the State Government and local councils hiked taxes by 61.77 per cent per person over five years to $3470 – but only increased spending by 45 per cent in the same period.

In the ACT increased taxes by an average 42.8 per cent per person. Spending increased by just 28.56 per cent.

The people of NSW are the second-most taxed by state and local governments – behind WA.

Overall state taxes and council fees have risen by 40 per cent in five years.

The biggest tax burden on Australians was Commonwealth taxes, totalling $285.7 billion in the 2007-08 financial year. In 2002-03, they amounted to $194.8 billion.

The average Australian forked out $13,451 in Federal Government taxes last year, up from $9853 in 2002-03.

The ABS figures do not include the tens of millions of dollars handed out by the Federal Government each year under GST arrangements.

The GST accounts for 12.7 per cent of all tax paid by Australians. More than $44 million in GST was raised last financial year.

Average amount of tax paid to state and local governments (per capita):

                        2002-03      2007-08

NSW:                $2480          $3083

VIC:                  $2281         $2962

Qld:                  $1861         $2763

SA:                   $2015         $2796

WA:                  $2145         $3470

TAS:                 $1558         $2122

ACT:                 $2110        $3014

Average amount of tax paid to all governments (per capita):

                       2002-03     2007-08

NSW:               $12,333      $16,534

VIC:                $12,134      $16,413

Qld:                $11,714      $16,214

SA:                 $11,868       $16,247

WA:                $11,998       $16,921

TAS:               $11,411       $15,573

ACT:               $11,963       $16,465

New Bureau of Crime Statistics and Research figures released yesterday for NSW revealed shoplifting of food rose 17 per cent last year, with almost two cases reported to police every day.

But alcohol topped the shopping list for thieves, with 1047 thefts reported in 2008, up from 753 in 2007.

Sydney’s Canterbury Bankstown had the largest area increase for shoplifting, with reports up 32 per cent on 2007.

The largest increase of the 17 major categories of crime reported in 2008 was in fraud (up 15.7 per cent), primarily driven by a surge in petrol theft.

A Sydney store detective told The Daily Telegraph that aged pensioners and drug-users were the usual suspects for food theft.

“(But) when times get tough the sort of people we’ve caught stealing food aren’t the ones you would normally see – they’re not the people who would normally steal. We’ve seen some pretty sad cases,” he said.

One trend over the past two months has been an increase in tradespeople stealing materials from suppliers.

article excerpts news.com.au

Roger Mendelson, chief executive of Australia’s largest debt collector Prushka, warns people to consider spreading their banking around.

“If you have a loan from a bank, don’t have your credit card with the same bank,” says Mr Mendelson, a commercial lawyer with 25 years’ experience.

“You may have partners and your business loan goes into default or the bank may ask you to repay the principal, then that triggers a default with any credit cards you may have at the same bank.

“Normally the bank will insist you repay the credit card at the same time.

“My other advice for SMEs is if you have a loan and some savings on deposit, then it’s better to keep your savings at another bank. If the bank demands you repay your business loan they have a right to take your savings too without asking and apply the proceeds to your loan.

“It happens, I’ve seen it a lot, so spread your banking around a bit.”

He says people don’t understand the power of the banks over defaulting borrowers and are often shocked by how far lenders can go to recoup their loans. “If a borrower has multiple loans with the same lender, any assets connected to those loans can usually be used as security to cover defaults on other loans,” he says.

“So avoid taking out multiple loans with the one lender.

“Borrowers with debts from different sources such as credit cards, personal loans or car loans should consider consolidating their debts on to their home loan to reduce interest costs and monthly repayment rates.

From the time most loans go into default they are subject to interest at a prescribed higher rate, usually 3-5 per cent higher than the existing rate.

Mr Mendelson says borrowers should realise the power in a loan agreement is heavily weighted on the side of the lender.

He also says most non-deposit-taking lenders are uncompetitive in the current market.

“They are not writing new business and are only managing their loan book.

“As they no longer need to compete with other lenders there is little incentive to pass reductions in rates on to borrowers.”

news.com.au article

The Westpac/Melbourne Institute leading index, which signals the likely pace of economic activity three to nine months in the future, shrank by 5.1 per cent in February.

It was the lowest rate of annualised growth since September 1982.

February’s result compared to a downwardly revised fall of 4.8 per cent in January and a February annualised growth rate of 0.7 per cent.

Westpac chief economist Bill Evans said the deterioration of the growth rate of the leading index was “truly remarkable” and  that “for some months the index has been signalling that the Australian economy will enter a recession,”.

“The consistent run of negative reads for the growth is comparable with Australia’s previous recessions which began in 1961, 1974, 1982 and 1990.”

“During that earlier recession the low point for the Australian economy was 1991 when the economy contracted by 1.3 per cent. Westpac is currently forecasting that the Australian economy will contract by one per cent in 2009 which we expect to be the low point of the cycle.”

news.com.au article excerpts

The airline has also slashed its profit forecasts by as much as 80% because of a rapid deterioration in trading conditions in recent weeks.

Jobs being lost include 500 management positions from its 34,000-strong workforce.

Three weeks ago it axed 90 management roles and last year laid off 1500 workers.

Qantas will also reduce capital expenditure by at least $800 million next financial year.

The chief of Qantas said “Market conditions have deteriorated, especially in our international business…….”we are experiencing significantly lower demand, particularly in premium classes, and considerable price pressures with extensive sales and discounting by all carriers.”

Flight Centre last week also issued its third profit downgrade in six months, amid the worst downturn in aviation and tourism in years.

Editor of the car buyers Dog & Lemon Guide, Clive Matthew-Wilson, said the Australian car manufacturer is poised to shut down for good because it can no longer compete in the global market.

Holden signalled the beginning of the end when it recently halved production at its South Australian plant from about 600 vehicles a day to 310, he said.

“Australia’s car factories are losing money on every vehicle they make,” Mr Matthew-Wilson said in a statement.

“No amount of incentives from the state and federal governments can solve this basic problem.

“It’s not a matter of whether they close down, but when they close down.”

He said Holden will be the first to go, followed by Ford and then Toyota.

“People falsely believe that Ford is doing okay. That’s not true,” he said.

“American Ford’s sales are down 43 per cent in the first quarter of this year.

“Ford is losing billions just like GM; it’s just that Ford arranged private sector finance before the recession, so it’s not quite so obvious how serious things are.”

“Globally, there’s a glut of new cars at bargain prices, yet Australia, which produces a small number of high cost cars, is trying to compete with countries like China, which produces ten million cars a year and pays its car workers as little as one dollar per hour. He said.

“The Australian government can throw $6 billion or $600 billion at these car plants, but they still won’t be economically feasible,” There’s no feasible way of turning this around” he said.

Commonwealth Bank, Bankwest, ING, Challenger, Citibank and Suncorp have all cut their maximum loans from 95 per cent to 90 per cent of the property value – and may cut further.

ANZ cut its maximum loan to 90 per cent last November.

The move is designed to ensure the bank can recover the loan value, if the house has to be sold in the event of a loan default.

Westpac and NAB say their 95 per cent maximum loans are “under review” and may be adjusted soon.

Many experts fear that, by reducing the amount people can borrow, banks will trigger a fall in house prices because, if buyers cannot borrow as much as before, they will not be able to pay as much as previous buyers.

This kind of credit rationing led to the US housing crash, with lenders progressively cutting maximum loans, so buyers could no longer afford to purchase.

If the government cuts back the first home-buyer grant in June, this lowering of loan ratios by the banks may increase the chances of an abrupt fall in prices.