Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

I am pleased to rise to speak on this motion on payday lending moved by the member for Indi. I can appreciate the concerns of the member for Indi on this. There is no doubt that many people in our society get trapped in payday lending, and there is no doubt that some of the interest rates are completely outrageous and, in fact, are a complete rip-off. I agree 100 per cent with that, and I respect the member's concerns. But we need to be very careful when we legislate in this place. Ultimately, no-one forces a person to sign that contract. What we need to be careful of when making legislation is not to deny credit to people who need it in emergency circumstances. There are many times when people in our society need credit in emergency circumstances. When we put restrictions on that, all we do is to create adverse and unintended consequences of policy, even though it may be very well intentioned and even though it may be done in the belief that we are helping people. If you reduce the limits of credit available to people you will simply deny people access, perhaps at times when they need it.

I agree that the high rates of interest are quite outrageous, but the reason that those rates of interest are often so high is that those loans have high rates of default. We've had some of the credit providers in the parliament, and we've had discussions with them. We've asked them: 'What is your biggest cost of doing business?' Their biggest cost of doing business is the bad loans that they have to write off. Sure, we could mandate a maximum rate of, say, 10 per cent across the board and say they can't charge more than 10 per cent. That would be wonderful in an ideal world, but all that would mean—

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