Thursday, 25 February 2021
National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020; Second Reading
I'm pleased to make a contribution to the debate about the legislation before us today, the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020. I'm also pleased to follow my friend the member for Oxley. I say 'friend', but he's also a great colleague, and we have lots of things in common, not least of which has been our advocacy in the space of payday lenders and the damage they're doing in communities across this country. The legislation before us does two things: it removes the responsible lending obligations from the banking sector, and it seeks to implement changes in the space of payday lending. We call them 'small amount credit contracts', but, for those tuning in at home, these are the payday lenders and loan sharks that you've heard me speak about many times. The government want some credit today for implementing changes in the payday lending space. The problem is that they had their own review into this in 2016 and what's before us today has failed to put in place the recommendations of that review, so they're not even listening to themselves or addressing what they uncovered in their own review.
The bill will do something, but not enough, to protect people in my community and in communities across this country who are preyed upon by businesses to buy debt and pay it back at exorbitant rates. To get to the nub of the matter, the recommendation from the review was that 10 per cent of someone's income should be the upper limit of what they could be required to pay back. The government have ignored that recommendation and taken that limit up to 20 per cent. They've flagrantly ignored their own recommendations, after waiting four years, since 2016, to bring in any new regulation in this space, and this is despite them recognising the need for it. The other thing this legislation does is ignore the first recommendation of the Hayne royal commission into financial services, which was: do not undo the responsible lending laws, which were implemented after the global financial crisis.
Like many here, I know that when I was first elected I sat with victims who eventually gave evidence to the banking royal commission and I heard their harrowing stories—they were absolutely harrowing stories. I want to put on record today how disappointed I am that they've been ignored. I also want to make the point that part of this legislation has no friends. The legislation before us has no friends. The big banks haven't asked for this and the community legal centres have been at pains to explain to us why this will be a disaster for vulnerable people in our communities, and even for the not-so-vulnerable people in our communities. The Consumer Action Law Centre in Melbourne and my own community legal centre, WEstjustice, have met with me time and time again around this. Financial Counselling Australia wrote to us and outlined what they perceive to be problems with this legislation. I've even heard from my local mortgage brokers; they don't like this piece of legislation either. And the academics don't like it.
So it has no friends, but here we are in this parliament, under the cover of COVID, undoing something under the banner—looking at the name of this legislation—of the National Consumer Credit Protection Act. What we're doing in this chamber today is opposing the government for undermining and taking away consumer protection. I've been listening, as have my colleagues, to those opposite, and I was particularly perturbed to listen to the member for Longman, who spoke about the battling Australian communities that he represents in this place. He went on and on about a supposed impossibility, because of the recession, for people to get credit. Let me tell him what the outcome of this will be: there are people in my community who, while the responsible-lending laws are in place, are now working with community legal centres in trying to weave their way out of debt and trying to get the banks in this country to act responsibly under the existing law. And the member for Longman is going to allow that to be removed, leaving these people with less capacity to weave their way out of the problems they have got themselves into because institutions have been too quick to give them credit when they didn't have the capacity to repay it.
There's one case that I know of locally which I think is worth considering in this space. This is a couple who have a mortgage with one major bank, and they then have four separate loans across the four banks. This is under the current legislation, which says that the banks shouldn't lend if there isn't a demonstrable way to pay it back. This family couldn't possibly pay back all of those loans on their income. That was pre COVID—they couldn't possibly do it.
Let me just be really clear for the folk listening at home: working in schools for most of my adult life, I know what this kind of financial stress does to families. I know the chaos that this kind of financial stress brings into kitchens. I know the pressure it puts on children who are living in that chaos, who are getting up in the morning and going into the kitchen to find a stressed-out parent sitting at the kitchen table with 17 bills in front of them and wondering: 'How am I going to get through this week? Which bill should I pay first?' This legislation is going to make that happen in homes in my community. This legislation is going to enable the banks to give loans to people who cannot afford to pay them back, with full knowledge of what that's going to do to families. It's going to mean that there are children sitting in classrooms who have come from a chaotic morning where parents have been yelling at one another because they're stressed out.
Financial stress has emotional consequences, and those emotional consequences are felt by children around this country. Do you want to do us all a favour? Go back and give this some more thought. Nobody thinks this is a good idea. Nobody thinks that allowing the banks to give credit to individuals when they cannot afford to pay it back is a good idea. Nobody does.
We know what the impact of this legislation will be. For those members opposite who somehow think that this about credit for business, that's not what this is about. This is about credit for individuals. This is about people being able to take out loans to get through this week but, beyond this week, only driving themselves down into a debt cycle. The impacts will be very real, and the government are being incredibly irresponsible to even think about bringing this into the parliament. They're ignoring the royal commission. We know they voted against it 26 times. We know they didn't want to hear. We know they didn't want to sit with the victims of the banks through that period. But to have them actually undermine recommendation 1 is appalling.
As to the outcomes of the royal commission's recommendations, I sat with mortgage brokers in my community and I listened to their concerns about some of those recommendations. I just want to share with the House a mortgage broker's response to this. He's written to me to say that he's obliged to put the customer's interests first but this legislation will mean the banks don't have to. They won't be held to the same standard as a mortgage broker.
We have countless examples given to us by Financial Counselling Australia and others who work with people to try and undo this harm, to try and find a way through. They think that the responsible lending laws should stay. They believe the laws protect consumers. They use the laws to help their clients. They predict they will see more clients with unaffordable debt if these laws are scrapped—in other words, if this legislation goes through this parliament. They believe scrapping the laws will hinder the economic recovery from COVID-19. They're very concerned about the impact of repealing the responsible lending laws on their clients and on the broader community, and they believe such a move will be harmful to individuals, families and the public. And they're tired. They're tired of working with people who are being preyed upon in both spaces here: in the credit space and in the payday lending space. They're incredibly disappointed that the payday lending recommendations will not be fully implemented by this legislation—the recommendations, as we've said, that the government itself put forward—and they're absolutely disappointed that this government would be acting under cover of COVID to undo laws that were designed to protect people in our communities, at a time when people are under enormous financial stress anyway, as well as suffering anxiety about their futures.
So, from this government, what we're seeing is layer upon layer upon layer. 'We want to make workers less secure in their jobs.' That's what this government is doing in this place this week. 'Then we want to be able to give them credit they can't afford to repay.' It leaves me wondering which planet those opposite live on. Do they live in the same Australia as those of us on this side do? Do they sit at tables in their electorate offices, speak to real people on the ground and hear the impacts that their ideology has in real homes, on real people? Do they understand that the laws we make in this place have very real impacts in the community?
This piece of legislation is absolutely reprehensible. It flies in the face of logic. Most importantly, it flies in the face of the government's own recommendations around payday lenders and loan sharks, and it flies in the face of a royal commission—the first recommendation from a royal commission. It is really difficult to walk back into this chamber day in, day out and watch this government pass legislation that is actually going to mean real harm to the people in the communities that I represent.