Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Hansard source

I certainly welcome the opportunity to speak on this motion in the House this evening. I think it is very important that we encourage financial counselling and improved financial literacy, because we live in an age which is thriving on credit—or which was, until recently, thriving on credit; now it is actually suffering a backlash from too much credit. I think we had a situation where banks and financial institutions, in competing for market share, were very aggressive in their lending practices—very aggressive: lending to 100 per cent of valuation, or 105 per cent of valuation. It really called into question the ability of the borrowers to repay. I think that many borrowers would not have got into the predicament in which they find themselves had they had the financial skills to think through for themselves their ability to repay those obligations that they were taking on.

It is very important, when we have such large loans, that we note the fact that interest rates can go up as well as down. So, whilst we have borrowers who may be quite comfortable at current interest rates, when the economic cycle turns—as it inevitably will—we will see rising interest rates again, and that will call into question the ability of many borrowers to make the repayments which they will be committed to. So I think it is a very important notion that we encourage financial literacy and that we assist people to manage their affairs as best we can.

Financial institutions certainly have a substantial community obligation to ensure that the people to whom they lend can repay the money that they have borrowed. It is in no-one’s interests—it is not in the interests of the shareholders of a financial institution—to lend money to people who cannot repay it. And that is the ridiculous nature of the subprime crisis in the US, where funds were loaned to people with no capacity to repay. They did not have the financial skills to assess the situation in which they were going to find themselves. Having proper financial education in schools, perhaps at TAFE colleges and in higher education, would give people the skills they need to operate in a financial world that is far more complex than it once was. So I very much commend this motion, in the few remaining moments I have available to me. I think it is a motion very worthy of the time of this parliament and that improved financial literacy is something that we should be encouraging.

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