Michele Bullock reveals why business failures are at highest level
The statement uses the euphemism of slowing capital and labour reallocation when talking about weak productivity growth. You want a 10% rise in unemployment. Do you need a 10% rise in the number of bankruptcies and business failures to achieve your outcome? Average ratios recovered, their debt servicing went down. So it wasn’t a surprise that there were many businesses in those circumstances who were actually doing quite nicely in the balance sheets were doing. Doing well coming out of that with interest rates rising, yes, I think some of those businesses that were perhaps being kept running because they just had really low interest rates and and propped up balance sheets because of COVID like subsidies, they’re going to find it more difficult and I think we are starting to see that we we we’re seeing now bankruptcies go back to around about the level they were historically. It’s a share of businesses. So they are starting to come up. The other factor here is. Is tax and I’m not a tax expert, but I do know that the tax office is also looking for repayment of debts to the tax office as well.