Energy bills are up between 10 per cent and 30 per cent this year, thanks to lockdowns, more people working from home and other pandemic impacts. This has meant bigger bills at a time when millions of people are earning less.

So, how did we pay them?

Unfortunately, some people have been forced to use their JobKeeper or JobSeeker payments, or early super draw-downs, to pay their bills. Tens of thousands of others have simply deferred them.

The Australian Energy Regulator reported last week that:

  • Long-term residential electricity debt increased by 21 per cent from March to November
  • There was a large increase (from 109,000 to 189,000) in the number of customers with short-term debt (30 to 60 days) between June and November
  • Almost 60,000 households have deferred paying energy bills under their retailer’s COVID-19 relief programs
  • 43,000 homes would have been disconnected if not for COVID-19 rules that prohibited people being cut off for most of the year.

Energy bills are just one piece in a larger picture of bad debt but they are a canary in the coal mine because every home and business has one.

Include 300,000 deferred mortgage repayments – down from 900,000 at their peak – plus rents, telco bills, insurance premiums and other deferred costs and there is a looming crunch time for household budgets. And with airconditioning in about 75 per cent of Australian homes and a hotter than average summer forecast, get set for another round of record high energy bills.

The end of JobKeeper is likely to lead to the collapse of some businesses and to permanent job losses.

Small business energy debts were up about 30 per cent from March to June, so not only do they have to deal with the loss of government support but they also have to pay their back bills, too.

However, it is not all bad news.

Australians have paid down more than $7.5 billion in credit card debt this year and there is evidence that some of us are stashing cash under the mattress: demand for $50 and $100 notes is up by 23 per cent and 15 per cent, respectively.

However, it is hard to see how many families and businesses doing it tough will pay 2020’s debts off, unless governments and businesses formulate a grand plan to help them do so.

There is no vaccine for bad debt. We need a plan, and the clock is ticking.

Useful links for those in financial distress:

Up to $3000 No-Interest Loans to help with utilities:

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