Box C: Survey-based Indicators of Household
Finances
Data on housing and credit card arrears provide a timely indication of households’ ability to
meet their debt obligations. As discussed in the Household and Business Balance Sheets chapter,
arrears rates on household loans have risen a little over recent years, but remain low by both
historical and international standards. Another – albeit less timely – source of information on the
financial position of households is provided by the Household, Income and Labour Dynamics in
Australia (HILDA) Survey, which is conducted annually.
Among other things, the HILDA Survey asks each participating household a series of seven
questions on whether it has experienced various specific financial difficulties during the year due
to shortages of money (including,
for example, difficulties in paying
Graph C1
bills, seeking financial help or selling
Indicators of Cash-flow-related
Financial Difficulties
personal possessions). The results
from the surveys undertaken since
2001 show a steady decline in the
share of households reporting such
problems (Graph C1).1 The decline
is most pronounced for the share of
households that report that they had
to delay payment of a utility bill at
least once during the year, although
it is also evident in all other specific
examples of financial difficulty.
Per cent of households
%
% n Could not pay utility bill on time
n Asked for financial help from family or friends
n Could not pay mortgage or rent on time
25
25
n Pawned or sold something n Went without meals
n Asked for help from a charity n Were unable to heat the home
20
20
15
15
10
10
5
5
0
0
There has also been a marked
2001
2002
2003
2004
2005
2006
Source: HILDA Release 6.0
decline in the share of households
that report multiple occurrences
of these cash-flow-related financial difficulties. For example, in 2006 around 5½ per cent of
households reported positive responses to three or more of the seven questions, down from 10 per
cent in 2001 (Graph C2). Renter households were more likely than indebted owner-occupiers to
experience multiple cash-flow-related difficulties: in 2006, 14 per cent of renters reported three
or more positive responses, compared with 4 per cent of indebted owner-occupiers. In aggregate,
indebted owner-occupier households reporting positive responses to three or more questions
held only 3½ per cent of outstanding owner-occupier debt in 2006.
1 Survey respondents are asked on a ‘yes/no’ basis whether they experienced a particular difficulty at any time during the year
in which the survey was undertaken. Consequently, the proportions shown in Graph C1 are most likely an overstatement of
the persistence of occurrences of each type of difficulty.
F I N A N C I A L
S T A B I L I T Y
R E V I E W
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M A R C H
2 0 0 8
61
Graph C2
Households Experiencing Multiple
Cash-flow-related Financial Difficulties*
Per cent of households
%
%
9
9
6
6
3
3
0
0
2001
2002
2003
2004
2005
2006
* Three or more difficulties
Source: HILDA Release 6.0
Graph C3
Other Indicators of
Household Financial Position
Per cent of households
% Self-assessment of financial Ability to raise funds for an
position
emergency*
75
Prosperous or comfortable
Easily
60
75
45
45
60
Would require a
drastic change
Just getting along
30
%
30
With some sacrifices
Unlikely
15
15
Poor or very poor
0
2002
2004
2006
2002
* $2 000 to be raised in a week
Source: HILDA Release 6.0
62
R E S E R V E
B A N K
O F
A U S T R A L I A
2004
2006
0
The
HILDA
Survey
also
asks households to make a selfassessment of their relative financial
position given their current needs
and
financial
responsibilities.
Notwithstanding the more subjective
nature of this indicator, the
proportion of households that have
a more positive perception of their
financial position increased over the
five years to 2006, with the share
of households assessing themselves
as ‘just getting along’, or ‘poor or
very poor’ declining (Graph C3).
The survey also asks households
about their ability to raise funds
($2 000) in a week for an emergency.
Again, the responses suggest that
fewer households were in financial
difficulty in 2006 than earlier in the
decade. R