We spoke with River Paul, Chief Economist and Statistician at the Australian Financial Security Authority.
The Australian Financial Security Authority (AFSA) is responsible for administrating and regulating personal insolvency and personal property securities regimes. There are several types of personal insolvency but the one most people are familiar with is bankruptcy. AFSA is Australia’s largest trustee of bankruptcy, there is also a private practitioner which they regulate.
AFSA administers around 30,000 personal insolvencies a year, regulates the industry and prosecutes debtors who might have been hiding assets.
This is their third year sponsoring GovHack. In the past, AFSA has focussed on the personal property securities register but this year the focus is on personal insolvencies. A common way that people might use the AFSA is when buying a used car, to check that there isn’t money owing or that it’s stolen or written off. (River mentioned that the the most likely cars to be stolen are red cars made before engine immobilisers were built in).
When would a bankruptcy check be done?
If you’re lending money you would check and certain occupations forbid bankrupts (this depends on state laws).
This year’s prize (to be announced on Friday night), is to help AFSA on the regulatory side of things by getting ideas from GovHack competitors about what data might be missing that would help to predict where someone might not comply with their obligations. Examples are a report from a creditor about money being owed when an asset is being hidden.
AFSA’s experience over the past three years of sponsoring GovHack is that competitors come up with brand new ideas that hadn’t been thought of from just working in the field. For example, last year’s winner gave AFSA some thoughts that informed their strategy out until 2020.
Available data on insolvency
The department has a great deal of data available from its web site http://www.afsa.gov.au that is based on feedback on what would be useful. Once you enter in to a formal personal insolvency you are listed on the National Personal Insolvency Index and that can have consequences. Bankruptcy is usually something that happens because something unexpected tips someone over the edge. The most common scenarios are divorce, where you’re suddenly maintaining two households, or illness where you’re not able to work any more. People who enter in to bankruptcy tend to earn below average incomes and a life event has tipped them over the edge.
Bankruptcy can be avoided by having savings and budgeting. The ASIC Moneysmart website https://www.moneysmart.gov.au has a lot of resources to help.
If you are having trouble and starting to feel like you’re getting in to real problems there are free financial resources available through the financial counsellors association in all states and territories. Sometimes it can be as simple as establishing a budget or calling creditors to sort out a payment plan before enter in to a formal bankruptcy or insolvency. Once you enter in to a formal personal insolvency you are listed on the national index and that can have consequences.
The system has to keep a balance between the interests of creditors and the bankrupts themselves who need a fresh start.
Is bankruptcy more or less common than in the past?
Bankruptcy as a type of insolvency has been falling over the last few years although it did just increase in 2017/18. Mostly there is a shift to debt agreements, which are legally binding and still a form of personal insolvency that AFSA administers. Debt agreements seem to correlate with the underemployment rate while bankruptcy rates tend to correlate with unemployment and divorce rates.
AFSA supports some academic research which is undertaking studies to analyse what these trends mean and how the decision making process operates for these people. As debt agreements have reached record highs over the last several years, AFSA encourages research to understand the dynamics of this.
Working as a statistician, what tools do you use day to day?
Econometrics modelling is done in Eviews and Tableau is used for dashboards. While we have facilities for things like R and python, but generally River uses called FrontlineSolvers which appears as a tab in Microsoft Excel and gives high level options like generate a cluster model, so it’s very good for exploratory analysis. Econometrics modelling is done in eBiz and Tableau is used for dashboards.
AFSA has a data warehouse for capturing and reporting on data. It’s the single source of truth as well as being the playground for analysts such as River.
GovHack participants are a really diverse group of people. What AFSA has learned over the years of sponsoring GovHack is how valuable it is to make sure staff can attend not only connections events, on the weekend and also when the prizes are announced.
Staff get a lot out of hearing diverse perspectives from people who don’t work in government and don’t understand the way it operates. It makes staff step back and think. Staff are really inspired, they meet fantastically smart people, who just want to help make the world a better place for citizens, and they’re giving up their own time to do it. Last year, some of the AFSA staff only had about three hours sleep over the weekend because it was all so exciting. GovHack validates what AFSA does, as public servants, in a lot of ways.
Data this year
AFSA has a lot of data and this year they’ll be releasing about 32MB and staff haven’t had time to play with that so being able to draw on the expertise in the GovHack community is really handy. AFSA knows from experience that they actually use what GovHack participants give back.
Written by Peter Marks for GovHack.
Peter Marks is a software developer and technology analyst.
He is a regular contributor to ABC Radio National and blogs at http://blog.marxy.org
Cover image taken from AFSA website