Fall in regional bankruptcies linked to improvement in rural industry confidence

A SHARP fall in the number of insolvencies across western Victoria has been partly linked to an improvement in rural industry confidence, particularly dairying.

Personal bankruptcy fell from 35 cases in the March quarter to 26 in June while business-related insolvency fell from seven cases to five. 

In December the figures stood at 32 and five respectively.

Figures from the Australian Financial Security Authority show the region stretching from Warrnambool district to the Otway Ranges had an even split of 10 bankruptcy agreements and 10 debt agreements for the June quarter, while  the Glenelg-Southern Grampians region had four bankrupts and six debt agreement debtors.

It was a similar trend across the nation, where personal insolvency fell 10 per cent and business insolvency by 18 per cent for the quarter, while across regional Victoria the rate fell 15.6 per cent for personal and 14.3 per cent for business debt.

Warrnambool accountant Gary Smith, who was an adviser to the Farmer Power lobby group, said the figures came at a time of renewed confidence in the dairy industry after a disastrous period in 2012-13.

“We can underestimate how important primary industry is to other businesses in the region,” he said.

“I would hope the small business sector is starting to improve as primary industry improves.

“I did hear of quite a few farms where administrators were appointed.

“This year we are seeing better prices for dairying and a better season.”

However, he cautioned that a true reflection of the economic situation was yet to be revealed because of  a new compulsory mediation requirement in Victoria which meant about 12 months of  debt discussions before a  decision.

“Before banks can act they need to go to an independent person to discuss the situation with the bank customer before going down the path of official insolvency,” Mr Smith said.

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