Unemployment rise could increase bankruptcy

Personal and business-related bankruptcy levels fell in the City of Wanneroo in the June quarter but the state’s rising unemployment level could test that. Picture: Illustration only

ALTHOUGH bankruptcy numbers in the City of Wanneroo fell in the June quarter Western Australia’s rising unemployment rate means individuals and businesses need to take measures to safeguard their assets.

Personal and business-related bankruptcies decreased in the City of Wanneroo in the June quarter compared with the March quarter, according to the Australian Financial Security Authority.

But on Thursday Australian Bureau of Statistics figures showed Western Australia’s unemployment rate rose from 5.7 per cent to 6.3 per cent in July.

Authorised Australian Financial Security Authority provider GlobalX Legal Solutions chief executive officer Peter Maloney said the authority’s statistics showed there were 51 personal (or reason not stated) and 23 business related bankruptcies in the City of Wanneroo in the June quarter down from 57 personal (or reason not stated) and 25 business related bankruptcies.

Mr Maloney said nationally the number of bankruptcies increased 7 per cent in the June 2016 quarter compared with the same period last year.

He said the federal government recently released proposals on measures to improve existing bankruptcy and insolvency laws by making changes to the default bankruptcy period, introducing a safe harbour for directors, and changing the operation of ‘ipso facto’ clauses.

“The government’s proposals demonstrate the need to address the rapid increase of personal insolvency cases, but people should already be taking extra measures to ensure their personal and business assets are protected,” he said.

“In this volatile market, a simple bankruptcy search gives certainty of an individual’s financial background, helping ensure the bona fides of a deal is not in question.

“There is a misconception that this is a time consuming and costly process, but a search can be completed in the time it takes to order a coffee – and for the same price.”

He said there was a common view the rise in bankruptcies were mainly in the mining and resources sector but the retail and hospitality industries were also being affected.

“These incidents confirm business people are typically finding the local business climate harder than last year, and are struggling to find avenues outside of claiming bankruptcy.”

Labor Opposition leader Mark McGowan another 8200 Western Australians joined the ranks of the unemployed in July, which meant more than 90,000 Western Australians were without a job.

Mr McGowan said the rise in unemployment in Western Australia came as unemployment declined across Australia and meant Tasmania’s economy was now performing better than Western Australia’s.

He said the Liberal-National Government had wasted the boom and failed to diversify the economy.

Employment Minister Michaelia Cash said nationally the unemployment rate had fallen to 5.7 per cent, driven by a rise in total employment of 26,200, well above market expectations and reaching a record high of 11,968,600.

Senator Cash said during the past year the Australian economy had generated 219,800 additional jobs, representing an increase of 1.9 per cent and above the long term average of 1.7 per cent.

She said the re-balancing of growth, away from the mining industry and towards the labour intensive services sector was set to continue, highlighting the success of the Federal Government’s economic credentials and its commitment to creating more jobs for all Australians, despite the headwinds from slower global growth and the greatest terms of trade shock in the nation’s history.