Adam Bandt (Melbourne, Australian Greens) Share this | Hansard source

I move:

(1) Schedule 2, item 2, page 30 (lines 24 and 25), omit "credit card contracts entered into", substitute "transactions and payments made under a credit card contract whether the contract was entered into before, on or".

This bill contains some very important reforms and very important protections. A credit card is something that millions of Australians have and use every day. For many people who are struggling to make their daily obligations, it has become something that they will use with some regularity and often to supplement their income. Many would be surprised to know that some of the reforms in this bill are necessary. I think many people would have assumed that, when they make their payment on their credit card, it goes to pay off the highest amount. Many people might have presumed that there were some prohibitions on fees that could be charged when people came up to their limits on their credit cards. To the extent that those reforms are being introduced, we welcome that.

That comes in the context where banks who are the providers of many of the credit cards are doing very well, with combined annual profits of $20 billion in the last year. On fees alone—not just credit card fees but all fees—the revenue raised in Australia is in the order of $5 billion per annum. In that context, moves to limit unfair fees that banks can charge are welcome. But many might also be surprised to know that this bill will not apply to existing credit cards. Those parts of the bill that apply to access limits and the order of payments—so the payments going to pay off the highest interest-earning components—do not apply to existing credit cards.

In the Standing Committee on Economics inquiry and elsewhere, the point had been made by some of the banks said that it could not apply to existing credit cards. The National Australia Bank did not. They made the point—correctly in our view—that, although there might be some argument about compensation on just terms if you sought to deal with the way banks apply money for existing debts, there could be no argument made under the Constitution with respect to purchases made after the date of introduction of the bill. In other words, there is no legal constitutional barrier to having the provisions of this bill apply to purchases made after the bill comes into effect. That, of course, makes sense. These are not property rights that have accrued. It is a future transaction about which there is currently no regulation.

The amendment that we are moving would have the effect, without infringing any constitutional prohibition or without exposing the government to any claims for compensation, that most Australians would think this bill would have, and that is that it would apply to all new transactions on existing credit cards. If this amendment is not passed, although there will be some great headlines about the effects of these reforms, for the millions of Australians who currently have credit cards it will mean very little difference. They will continue to pay unfair fees and when they make their payments on their credit cards it will not necessarily go to those parts that are accruing the highest debts. It is very easily fixed. The National Australia Bank agrees that it can be done, and I would urge members of this House to support these amendments because it will make a very real difference to everyday Australians.

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