Andrew Laming (Bowman, Liberal Party) Share this | Hansard source

I welcome the member for Mayo's motion today, which points out some very important observations that have been made in previous inquiries, particularly around buy-now pay-later arrangements around the country. You can see in this debate that we have this general tension between providing credit to more and more risky clients and making sure that it's done in a way that is fundamentally safe that gives them an opportunity to access the credit system like the rest of us. The member for Mayo provided some evidence, which is obviously already on the record, of buy-now pay-later clients missing payments, using multiple accounts and, finally, going without the essentials in order to meet those financial obligations. I recognise those concerns.

From the government's perspective, we're trying to make sure that every Australian, if they are going to access what we call credit at the margins, does it in as a safe a way as possible. We all know that we hit speed bumps along the way—paying the rego for one's vehicle can be a major shock, coming every 12 months or so—so these short-term credit arrangements provide a level of flexibility that allows someone to obtain credit over, say, a 16-day minimum through to a month or a few months to be able to meet that obligation. Clearly, that means that, by definition, they're going to have to go without at some point in the cycle, if you're looking at household expenditure, in order to meet those obligations. And, yes, there's going to be interest on top of that. Of course, if we make it too safe for people, then those people are the first who will get no credit whatsoever. That's the complexity around this matter.

I'm glad that the member for Wentworth initially laid out some of the important work that's done by Zip and Afterpay, because, in Zip's case, just one per cent of their revenue comes from late payments. I think that's a reasonable assessment of what they are doing. While it doesn't fully and forensically pull apart their revenue model, it shows that late fees are clearly not an important part of their revenue model. Also from the member for Wentworth is the incredible expansion of these services and that the late-fee and penalty component of them has not increased in any way like the amount of overall lending that's occurring. By that point, we could argue that they have been responsible by making sure that the overwhelming group to whom they are lending have had careful and prudent financial hardship provisions ready. They've also been expected to see that these clients have sufficient disposable income over the period of that lending to ensure that, if they do hit a subsequent hurdle, they can still meet those payments. Remember that these providers will, again, change the conditions of that lending if financial hardship appears. Clients always have the option to make it clear that that has occurred, and then these lenders are obliged to do that. Obviously there have been announcements in the budget about financial inclusion and the importance that SACCs play in that respect.

I think that the balance has to be right. The only balance we can really see here is with the overall lending in the sector, which is a very good indication. Before we get too alarmed by the number of late fees, we need to remember how many and what proportion of all clients are actually meeting those financial obligations. It's true that many may say, qualitatively, that they've had to go without essentials in order to make those payments. That's quite right: someone who's on a small income is almost certainly going to do it, by definition. But they went into it with their eyes wide open. They went into it knowing what the repayments were. They were forensically, one would hope, interviewed to establish exactly how they would meet those payments. Ultimately, that is the job of the entity providing the credit. The fact that most of their income is from merchant fees and not late fees is also very encouraging.

At every level there will never be a terribly clean sector, but I think as a nation we need to be mindful that every Australian deserves a right to access some form of credit that is consistent with their financial position. These groups do it in a very difficult way. I think the final point to make here is that, as long as late fees are not a substantial contribution to it, the sector should continue doing their work, with adequate prudence as they go.

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