i thought i would focus my remarks today on some aspects of australia ’ s finances. in particular, i want to deal with three questions that often come up when i talk to analysts and bankers from overseas. these are : are australian households over - geared? does australia have too much foreign debt? and do australian banks rely too much on foreign wholesale funding? before i move on to these questions, i should note that, in my experience, foreigners never ask about government debt in australia, or corporate debt for that matter. it is not hard to understand why, as both government and corporate debt in australia are low by international standards. household debt let me then start with household debt. the reserve bank monitors developments in household debt very closely as they have significant implications for the economy. glenn stevens summarised the bank ’ s view on this last week when he noted that, while households had coped well with current levels of debt, it would not be wise for there to be further big increases in household indebtedness. as you know, household debt has risen significantly faster than household income since the early 1990s. at that time, households on average had debt equal to half a year ’ s disposable income ; by 2006, debt had risen to around one and a half years ’ income. since then, however, the ratio of debt to income has stabilised ( graph 1 ). most of the rise was due to housing debt, including debt used to fund investment properties. other household debt, which includes credit card debt, car loans, margin loans and so on, has not changed much relative to income over the period. the current household debt ratio in australia is similar to that in most developed countries ( graph 2 ). 1 significant exceptions are germany and france, where the ratios are lower, at around one year ’ s income, and the netherlands, where the ratio is much higher – almost 2½ years ’ income – due to the tax incentives for households to stay geared up. all countries have experienced rises in household debt ratios over recent decades. clearly, therefore, the forces that drove the rise in household debt ratios were not unique to australia. the two biggest contributing factors were financial deregulation and the structural decline in interest rates. one of the consequences of financial deregulation was that the availability of credit to households greatly increased. up to the 1980s, the various controls on the financial sector meant that the ability of households to obtain credit was constrained. even obtaining a housing loan

d ) investment plans for all industries and enterprises for fiscal 2020 was negative. given that the impact of covid - 19 has been expanding after the release of the tankan, downside risks to business fixed investment have been significant, mainly in the face - to - face services industry. with regard to the substantial decline in the real gdp growth rate for the april - june quarter of 2020 and the pick - up for the subsequent quarter, it seems that japan's recovery lacked momentum compared with that in the united states and europe ( chart 3 ). a comparison shows that domestic demand components, such as business fixed investment and private consumption, have been relatively weak in japan compared with those of the united states in particular ( chart 4 ). the relative weakness in private consumption in japan could be attributable to the fact that there is a large population of seniors, who remain strongly vigilant against covid - 19. such weakness in business fixed investment could be because japanese firms have not been as active as u. s. firms in making digital investments. in my view, the lack of momentum in economic recovery in japan is due to various challenges it has been facing for a long time. i will return to this later. b. price developments let me move on to price developments. the year - on - year rate of change in the consumer price index ( cpi ) for all items less fresh food, or the core cpi, has been negative since spring 2020, when the impact of covid - 19 intensified ( chart 5 ). its recent decrease is partly affected by the past decline in crude oil prices and a discount on hotel charges through the " go to travel " campaign - - the government's program to promote domestic tourism. these factors are likely to eventually push up the cpi, mainly through a rise in the purchasing power of consumers. it is becoming increasingly important to clearly identify and examine demand trends of individual items composing the cpi baskets and information gained through interviews with firms and individuals, instead of focusing solely on the fact that the core cpi has been negative. for instance, the december 2020 opinion survey on the general public's views and behavior shows that the proportion of respondents who answered that prices have gone up compared with one year ago and of those who answered that prices would go up one year from now were both about 60 percent. less than 10 percent of respondents answered that prices would go down for the same question ( chart 6 ). based on the survey results and other information, price