Mortgaging our children’s future: Aussie ticking time bomb sparks fears should new GFC hit

AUSTRALIAN households are sitting on a ticking time bomb of debt, exposing the economy to risks in the event of another financial crisis, according to new analysis.

The Australian reports household debt in Australia is equal to 130 per cent of GDP, compared with an average across the advanced world of 78 per cent, according to Barclays chief economist Kieran Davies.

Household debt was at 116 per cent of GDP before the global financial crisis and held steady until 2013, when the property boom set it rising again.

Mr Davies said Australia’s debt levels were rising when those of other countries were falling, and the predicted rate cuts were likely to push borrowing even higher.

Reserve Bank governor Glenn Stevens warned of the dangers of taking on excessive debt last year, saying “we would surely be asking for trouble if we see a big step up from where we are”.

“The tricky thing for the Reserve Bank is that promoting leverage is the key channel for the transmission of lower interest rates through to the rest of the economy,” Mr Davies said.

The high popularity of real estate investment in Australia compared with other countries is being driven by the availability of negative gearing tax concessions and favourable capital gains tax treatment.

The level of household debt is higher now than at any other time in Australia’s history, with records going back to the 1850s. The level of bank lending as a share of GDP is now more than double the share of the previous peak, which was during the 1890s land boom.

Private Health Insurance Pain as Households Struggle to Cope With Rises

Private health insurance pain as households struggle to cope with rises

Private health insurance premiums are set to rise an average 6.18 per cent on April 1.

HALF of Australia’s private health insurance customers are thinking about downgrading their cover in an effort to combat soaring premiums.

Ahead of an average health insurance rise of 6.18 per cent on April 1, new research by consumer network One Big Switch has found that two-thirds of households have had trouble paying their bill.

Its survey of 40,000 consumers also found that many people are making sacrifices to stay insured, including reducing their level of cover, increasing their excess and spending less elsewhere.

One Big Switch spokesman Joel Gibson said this year’s premium hike was the second consecutive annual bill rise of about $300.

“Health insurance is one of those bills that really gets under people’s skin,” he said.

“Sooner or later, something’s got to give, or thousands of consumers will dump their private cover and fall back on the public health system.”


Consumers who \dump their private cover will fall back on the public health system. Picture: Publishing Ingram.

Mr Gibson said some people were trading away certain treatments, such as heart or eye treatments.

MORE: The government’s health fund rebate slashed costing families $120 a yea

He cautioned about quitting private health cover outright. “There’s the danger that if you drop it altogether, because you can’t afford it, it becomes harder to get back in if you are over 30.”

The Federal Government’s Lifetime Health Cover rules penalise people with a loading of 2 per cent for every year after age 30 that they don’t have hospital cover, up to a maximum 70 per cent loading. There are also penalty taxes for middle and higher income earners who don’t take out hospital cover.

“Australians want the peace of mind that comes with private health insurance, but many are now being priced out of the market,” Mr Gibson said.

Medibank chief customer officer Laz Cotsios said customers should review their health insurance policies at least annually.

“A cover review allows people to consider their situation and check that their cover still suits them,” he said.


Medibank branch, Adelaide Street, Brisbane. Medibank was floated on the stock market today. Customers discuss their impressions of the float. Photo: Claudia BaxterALSO: Pay doctors more but only when they provide the right care say health funds

“Don’t forget that you can prepay your health insurance to lock in your current premium.”

More than 20,000 people have signed a One Big Switch petition calling for more affordable private health insurance, and the consumer network has joined forces with News Corp Australia in a campaign to use people power to unlock a group discount offer from a health fund.

RELATED: Mooted private health insurance ‘excess’ rise could double the cost of an operation

Last week was the first week of the four-week Big Health Insurance Switch campaign and more than 45,000 people signed up. Joining is free and there is no obligation to accept any offer that is presented.


The Big Health Insurance Switch

For more details visit moneysaverhq.com.au. One Big Switch and News Corp Australia earn a commission on any offers that are accepted.

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Australian Dollar Tumbles on RBA Cash Rate Cut

The Australian dollar tumbled by more than one and a half cents on the Reserve Bank of Australia's decision to cut the cash rate to a historic new low.

The local currency hit a fresh five-and-a-half year low to US76.57¢ on Tuesday afternoon, down from US78.16¢ just before the release. The reaction followed the central bank's decision to cut the cash rate by 25 basis points to 2.25 per cent after 18 months of holding the rate steady.

Despite the sharp fall in the Aussie dollar – nearly 20 per cent in the past six months – the Reserve Bank said the exchange rate remained high. 

"The Australian dollar has declined noticeably against a rising US dollar over recent months, though less so against a basket of currencies," the Reserve Bank said in its statement on monetary policy.

"It remains above most estimates of its fundamental value, particularly given the significant declines in key commodity prices. A lower exchange rate is likely to be needed to achieve balanced growth in the economy."

Market forecasts the exchange rate to continue to fall. On Commonwealth Bank of Australia figures, the local currency is expected to fall towards 73¢ by June this year, but the bank's senior currency strategist Elias Haddad said there was a risk the Australian dollar will fall even further and the bank will be revising its forecast.

"We expect a further downside movement here, not just against the US dollar but also on the crosses, due to narrowing interest rate, falling commodity prices and still unimpressive Chinese economic data," Mr Haddad said.

National Australia Bank will also be revising its forecast in light of Tuesday's tumble. Back in November last year the bank forecast the Australian dollar to hit US78¢ by the end of 2015. NAB global co-head of FX strategy Ray Attrill said the bank will be reviewing its forecast after the central bank releases its statement on monetary policy on Friday.

"The market already priced in the expectations of a rate cut, but the currency still lost. It shows the market is still prepared to sell," Mr Attrill said.

In an exclusive interview with The Australian Financial Review in December last year, Reserve Bank governor Glenn Stevens said an appropriate level for the Australian dollar would be US75¢.

Mr Attrill said the currency could be heading towards the US70¢ mark, given the fall in the commodity prices since December.

"You can argue, if US75¢ was about the right level in mid-December, and taking into account what's happened with commodity prices generally, maybe US70¢ is more appropriate," he said.

A batch of data fuelled RBA jitters earlier on Tuesday. The Australian dollar jumped by more than third of a cent to US78.30¢ after slightly better-than-expected economic data was released: building approvals slipped 3.3 per cent in December (better than the predictions of a 5 per cent slide) and trade deficit narrowed to $436 million in December, beating expectation of more than $850 million.

#AustralianDollar #RBA #interestrates

Rhonda and Ketut from AAMI's Car Insurance Commercial are a Facebook Hit

WE'VE all seen the ad and now Rhonda and Ketut are Facebook celebrities in their own right.
The stars of AAMI's car insurance ad, in which a sunburnt Australian woman and a Balinese bar attendant converse on a beach has spawned a fan page which has attracted over 52,000 likes in less than 48 hours.

The page, which has been named "The sexual tension between Katut and Rhonda," (sic) suggests that there is something more to Ketut and Rhonda's conversation than first meets the eye.
The creator of the page has reposted phrases from the ad such as "You look so hot today Rhonda. Like a sunrise" and "You're naughty" to back up his assumptions.

And users agree that there might be something going on between the flirty pair.
"You two are 'doing it', I know you are, everyone can tell..." wrote Daniel Taite.
Others have praised the ad for being the "best on TV".

"My kids are OBSESSED wth this ad, they run around playing 'the brakefoot game' and yelling rhonda is mine rhonda is mine. whoeva creatd this ad is a clever person very catchy," wrote Amber Lefevre.

While Jan D'orival added: "love the ad katut, when are you going to do another one?"
However, Rhonda isn't just making waves on Facebook.

Tribute t-shirts are already being sold in the Indonesian holiday destination and fans have posted photos of them wearing the souveniers on the page.

"Bali is actually full of singlets now that say "rhonda is mine" "I love rhonda" etc! They're so quick!" wrote Arlene Baverstock

Several other fan pages dedicated to Rhonda have also been created, including one that accuses the ad of being racist and reeking of "cultural and economic imperialism."

Ultimate guide to travel insurance - Oz Insurance

NO ONE plans to break their leg skiing in Japan or lose their bags in London, but it happens.
That's why you buy travel insurance - to bet against the unthinkable.

Tailor your insurance
The best way to buy travel insurance depends on the type of traveller you are. If you're web-savvy, online travel insurance is the cheapest. Insurance through travel agents is generally more expensive but may better suit travellers who are not net-friendly, such as retirees going on a cruise.

Harry Senlitonga, financial analyst at Datamonitor in Sydney, said travel insurance through your credit card is another option. This cover is good but usually only comes with a platinum or gold card and not everyone has one.

"Surprisingly, premium credit cards offer very comparable travel insurance. A platinum card may cost you roughly $200 in an annual fee and you'll get free travel insurance," he said.
"If you went to the US for two months, an insurance policy may cost $300 to $400, so you can save money by using your card. But lots of different cards have different rules and some are strict that you have to pay for your entire airline tickets with the card."

Colin Bowman, general manager of marketing at Flight Centre, said you get what you pay for.

"Travel agents provide guidance but you can save money when you buy online. However, I would encourage travellers to know exactly what they are getting cover for," he said.

"Our insurance provider may not be the cheapest but you get assurance. People need to look closely to see if there are things excluded such as skiing, which won't be any good if you are going on a skiing holiday."

The chief executive officer of specialist travel insurance provider Mondial Assistance Australia, Brett Robinson, says where you purchase your travel insurance is a matter of personal choice - some people prefer a face-to-face experience via a travel agent.

But there is one non-negotiable - you absolutely must check the detail of your policy. Not all travel insurance is the same and it is important you understand exactly what you are covered for and what you are not. And the most important thing to check is your policy's emergency medical assistance cover should you become ill or be injured overseas.

You can always replace a suitcase or a camera but you can't replace your life.

Read everything

Steve Mickenbecker, head of research at Canstar Cannex, said it's boring but important to read the insurance "product disclosure statement" first. You are really looking to see what is not covered, what are the exclusions, specifically if you have an existing condition.

"Regardless of whether you travel overseas regularly, infrequently or on a once-in-a-lifetime trip, travel insurance is essential and can well mean the difference between fantastic and disaster," he said.

"Cancelled reservations, lost luggage, diverted flights, missed connections, bad weather and illness or accident can turn your well deserved holiday into a horror story.

"If you don't take out adequate travel insurance before you set foot out of Australia, you have rocks in your head.

"Medical insurance is at the top of the priority list as no one wants to arrive home after a trip with a longterm and very expensive financial burden to deal with."

Comprehensive travel insurance is the all-in-one package favoured by most people planning to go overseas. Many people, such as backpackers, travel light and are not so fussed about losing possessions but they do want cover for accidents and illness, offered by medical-only insurance.

The third type of travel insurance is domestic, which only covers theft since medical cover is unnecessary within Australia.

No travel insurance policy will cover you for every single thing that might happen on your holiday so it's important to get cover for what's important to you.

Insurance checklist

Do you have unlimited cover where it counts - overseas medical, hospital, ambulance, emergency dental expenses? Also, is the medical cover adequate for possible expenses in the country you are visiting?

- Are you covered for emergency repatriation or evacuation? Do you have 24-hour emergency assistance? A team of experts who can help you with advice when you need it most is extremely valuable.
- What excess fees are involved? Read the product disclosure statement carefully to make sure you are aware of any excess and where it may apply.
- Are your travel documents, credit cards and cash covered? A good policy will cover the replacement costs if lost or stolen.
- Are you covered for activities you may participate in on your holiday? There are activities that are excluded from many policies or may require an additional premium to be paid, such as snowboarding, surfing and bungy jumping.
Source: Flight Centre

For Your Information...

Best travel insurance by class

1. International: Southern Cross Travel Insurance and Worldcare Travel Insurance.
2. Domestic: Suncorp and Worldcare Travel Insurance.
3. Medical: Zuji online travel agency and Worldcare Travel Insurance
Source: Canstar Cannex

Cost of a night in intensive care at popular destinations

1. New York City, $16,000-$21,500
2. Hawaii, $10,500
3. Canada, $10,000
4. France, $9500-$12,500
5. Germany, $9500-$12,500
6. California, $8500
7. Florida, $8500
8. Thailand, $3000
9. Indonesia, $3000
10. Vietnam, $2000-$2500
Source: AAMI

Read more: http://www.news.com.au/travel/travel-advice/your-guide-to-travel-insurance/story-e6frfqfr-1225874930872#ixzz0sWS0KmAK