The claims come from economist Mark Wooden, who says that without a surge in unemployment to Depression-era levels, household debt will remain manageable, reports The Australian.

Professor Wooden, deputy director of the Melbourne Institute of Applied Economic and Social Research, says "fears of a debt crisis in Australia are largely unfounded".

In an address to the institute's Public Economics Forum in Canberra today, he will review income data which shows wealthier households, those with the most capacity to get themselves out of financial strife, hold the bulk of the nation's private debt.

"While aggregate data on household debt in Australia may appear alarming, our analysis of ... individual households show that relatively few households were carrying unsustainably high levels of debt in 2006," Professor Wooden said.

"Most Australian households hold relatively little debt and, among those that do, the evidence suggest the burden is mostly within the income earning capacity." The HILDA data reveals that, pre-crisis, less than 10 per cent of Australian households had debt levels that could be considered excessive.

Professor Wooden says individual households, both rich and poor, could find themselves in serious financial difficulty if jobs are lost.

"But barring very large and very widespread declines in household income (as would arise from Depression-level unemployment rates) ... debt serviceability will remain manageable for the vast majority of households.

"The median household had debts that amounted to just 8 per cent of assets, meaning that in the event of a sudden drop in income the repayment obligations, could, in the worst case scenario, be avoided by selling at least part of the household wealth."

In the Budget, the Government forecast a jobless rate of 8.25 per cent by mid-2010, compared with 5.4 per cent in April this year.

But the monthly ANZ jobs survey released yesterday showed the rate of decline in job ads had eased almost to a standstill.

Professor Wooden says his main concern is less well-off Australians encouraged by big first-home owner grants to take on too much debt.

"This would be the sector I worry about," he said. "Wealthier households will likely be able to cover themselves, finding another job, moving to a smaller house.

"(But) even if house prices were to collapse, the nature of the Australian mortgage market and the distribution of household debt make the proliferation of 'toxic assets' held by lenders in the US highly unlikely to arise."

Professor Wooden says taking on debt has generally served Australian families well. "Far from being a problem, the increased prevalence of private debt in the Australian economy since the 1960s is generally to be regarded as a positive development," he said.

Read more in The Australian.