As at the end of February 2007, the total number of companies registered in Australia was 1,527,402. This represented an increase of 73,405 companies since the same time in 2006. An analysis of registrations on a state basis is as follows:-
NSW - 521,683, VIC - 476,725,QLD - 253,859,SA - 85,056,WA - 138,195,TAS - 16,504, NT - 8,050, ACT - 27,330 in total 1,527,402 registrations.
The Australian Bureau of Statistics estimates that the current population of Australia is 20,737,636 (as at 28 February 2007). This represents one company for every 13.6 people.
The following identifies the number of companies entering into any form of external administration for the first time during 2006 (excluding members’ voluntary liquidations).
NSW - 5,798, VIC - 3,234, QLD - 2,013, SA - 541, WA - 627, TAS - 71, NT - 34, ACT - 168. A total of 12,486 companies.
2006 saw a number of high profile corporate collapses including Westpoint, Ajax Engineered Fasteners and Cross City Tunnel Motorway Pty Limited, owner and operator of Sydney’s Cross City Tunnel.
The Reserve Bank of Australia, in their statement of monetary policy released in November 2006, raised some interesting features about the economic climate of Australia at present. Extracts of the statement are detailed below:-
(i) The CPI rose by 0.9 per cent in the September quarter and by 3.9 per cent over the year.
(ii) In the short term, GDP growth will be significantly affected by the drought, as the farm sector is unable to supply its normal level of production. Farm output could fall by around 20 per cent, which would directly reduce GDP growth in the year ahead by around half a percentage point, with some additional indirect effects flowing on to other parts of the economy.
(iii) There will be some significant fluctuations over the next eighteen months in the headline inflation rate. In particular the unwinding of earlier increases in petrol and banana prices will see the annual headline rate declining sharply over the next year, before rising again by the first half of 2008. The drought may add to some food prices in the short term, though the experience of previous drought episodes suggests that the net effect on the CPI should be fairly small. In setting monetary policy, the Board will continue to abstract from these short-term fluctuations, just as it did when temporary factors were adding to headline inflation.
(iv) The overall strength in domestic spending has been broadly reflected in the demand for finance, which has seen total credit growing rapidly over the past year at a rate of 14 per cent.
(v) Demand for credit in the business sector also remains high, despite some recent moderation, with the amount outstanding increasing by 16 per cent over the past year.
(vi) Looking ahead, and taking into account the likely effects of the changes to monetary policy this year, the Bank’s assessment is that domestic demand can be expected to record moderate growth over the next year or two, with continued expansion in consumer spending, a noticeable easing in investment growth and a gradual pick-up in housing construction.
Couple the expansion in credit terms with the bankruptcy figures released by the Insolvency Trustee Service of Australia for the December 2006 quarter which identifies an increase of 15.2% (up from 25,710 in 2005 to 29,623 in 2006) in the number of personal insolvency appointments (summarised below) and it is evident that both corporate and personal insolvency appointments looks set to rise.
| Quarter Ending |
December |
September |
June |
March |
| Personal Insolvencies - 2006 |
7,557 |
7,642 |
7,195 |
7,229 |
| Personal Insolvencies - 2005 |
6,128 |
6,712 |
6,740 |
6,130 |
| Increase in 2006 |
1,429 |
930 |
455 |
1,099 |
| Increase in 2006 % |
23.32% |
13.86% |
6.75% |
17.93% |
In light of the above, we believe that the following industries are at specific risk in the coming 12 months:
- Rural producers
- Rural service providers
- Transport
If you have any clients who operate in the above industries and are concerned about their ability to withstand the financial pressures looming, please do not hesitate to contact our offices for a review: Ray Tolcher in Newcastle – (02) 4962 2294 or Robert Whitton or John Vouris in Sydney on (02) 8346 6000.
