🦘 Business Insolvencies On The Rise, Sydney’s Attempt at Tackling Housing Crisis, ANZ’s Big Banking Shift

G’day everyone!

Here’s what we’ve got in store for you today:

• Business Insolvencies On The Rise

• Sydney’s Attempt at Tackling Housing Crisis

• ANZ’s Big Banking Shift

Let’s have a look at the market snapshot before jumping into the news:

Business Insolvency Storm Hits Australia, With More Turbulence Ahead

Australia is witnessing an alarming surge in business insolvencies, setting a new undesirable record as companies buckle under the strain of rising interest rates, soaring costs, and tepid consumer spending.

CreditorWatch reports that business failures have spiked by over 22% from last year, driven by a potent mix of cost pressures and aggressive tax debt collections.

Particularly hard-hit sectors include construction, where companies grapple with material costs and tax defaults, and the food and beverage industry, which faces the dual challenge of high operating costs and declining consumer spending.

The situation is exacerbated by a slowdown in the mining sector, despite being traditionally more resilient. 

Geographically, the pain is most acute in Western Sydney and South-East Queensland, contrasted by the relative stability in Regional Victoria and inner Adelaide.

This trend reflects a broader economic challenge, as older businesses and communities with lower debt levels show greater resilience.

CreditorWatch warns of worsening conditions, expecting trade payment defaults to rise as businesses struggle to meet their financial obligations amid persistent high interest rates.

Sydney Boosts Build-to-Rent Developments with New Incentives

Sydney is tackling its housing crisis head-on by incentivizing developers to increase build-to-rent (BTR) housing projects.

In a bold move, the City of Sydney plans to offer up to 75% additional floor space for new builds and conversions, provided they're completed within a five-year window.

This initiative is part of a strategy to enhance urban density and provide more stable rental options, a formula that has seen success overseas. 

Sydney's Lord Mayor Clover Moore highlights the high occupancy rates of BTR units, which contribute to urban vibrancy and avoid the pitfalls of vacant investor-owned properties.

Additionally, the city is encouraging the development of co-living spaces, particularly targeting students and low-income workers in central areas like Haymarket.

These measures are part of a broader effort to make Sydney more livable and affordable, with the city seeking public feedback on the proposed changes until mid-May.

This proactive approach aims to create a more dynamic and inclusive urban environment, addressing the pressing needs of Sydney's diverse population.

Biden Clears Student Debt, Pressure Mounts on Albanese

President Joe Biden is making significant strides in addressing the student debt crisis in the U.S., with plans to eliminate the debt for 30 million Americans.

This move, designed to alleviate financial stress, aims to boost consumer spending and home ownership while improving borrowers' credit scores.

In contrast, Australia's Prime Minister Anthony Albanese faces growing calls to offer similar relief. 

While Australian student loans are more flexible than those in the U.S., with repayments contingent on income levels, the debt still increases annually with inflation. 

This system saw a substantial hike last June due to unusually high inflation rates, prompting calls for reform.

Proposed changes include adjusting debt increases to be the lower of wage growth or inflation rates, and rethinking how repayments impact eligibility for home loans.

These measures aim to soften the financial burden on Australians and streamline the transition to a more manageable student loan system.

Cheque Books Check Out at ANZ

Starting June 16, ANZ is ditching cheque books for both old and new accounts due to declining use. 

This move aligns with a broader national trend away from paper checks, with the Australian government planning to phase out cheque usage entirely by 2030. 

ANZ's decision will affect various account types, including Access Advantage and Pensioner Advantage, among others.

While current cheque book holders can still order replacements through certain channels, they won't be able to do so online.

This change comes as digital banking methods gain popularity, offering quicker and more convenient transactions for users. 

The shift away from cheques, which have seen a dramatic 90% drop in use over the past decade, is part of a wider strategy to streamline banking operations and enhance digital offerings.

Customers can still deposit cheques into their accounts for the foreseeable future as the nation gradually moves towards a cheque-free financial ecosystem.

You Made It!

If you’ve read all the way up to here, we just wanted to let you know that you’re an absolute legend!

Time to go to work and show off how clued up you are about what’s going on in the business world 💪

Keep an eye out for tomorrow's newsletter. Until then, we’d love to get your feedback below!