House debates

Tuesday, 23 February 2010

National Consumer Credit Protection Amendment Bill 2010

Second Reading

Debate resumed from 10 February, on motion by Mr Bowen:

That this bill be now read a second time.

4:39 pm

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

I welcome the opportunity to speak on the National Consumer Credit Protection Amendment Bill 2010. The bill supports the referral of state powers under the National Consumer Credit Protection Act which was passed by the parliament last year. The credit act implemented a number of reforms, including a national licensing regime for all providers of consumer credit and services across Australia, including responsible lending conduct requirements for licensees. In principle, the coalition supported the credit act and the efforts to enhance the national regulation of consumer credit by harmonising laws across states and territories. We worked with the government to enhance the bill’s operation by making amendments in the Senate which would require credit providers to verify information provided in a preliminary credit assessment and provide reasons for rejecting applications for hardship variations and stays of enforcement.

Consumer credit is an important area of the Australian economy. Households need to know that they are borrowing with a strong national regulatory system in place. Demand for credit has dropped significantly over the course of the global financial downturn. RBA statistics on personal lending show a drop in demand of around 10 per cent since the peak in May 2008. This is a drop of some $16.4 billion over the 19 months to December 2009. It is estimated that consumer spending accounts for around 70 per cent of demand in the economy. Therefore, any significant drop in credit demand and the availability of credit has an impact on the economy as a whole. Consumers need the confidence of a national system to borrow and purchase under the backdrop of a stable regulatory environment. The Howard government recognised the need to standardise credit regulation and started the process of uniformity by releasing the national consumer credit code in March 2006. In the two years after the code was released, demand for personal credit jumped by $32.8 billion to March 2008—around a 28 per cent increase.

The uniformity of credit regulation is the logical outcome of the introduction of the credit code and COAG discussions under both the Howard and Rudd governments. A stable regulatory environment for credit is needed, particularly when the government’s spending and massive debt threaten to push up interest rates and limit the ability of consumers to afford credit.

The amendment bill allows the Commonwealth to assume responsibility for national credit regulation by allowing an effective referral of state powers. This will allow the legislation to commence on 1 July 2010. The states agreed with the Commonwealth to modify the credit act in December last year to insert carve-out provisions allowing certain subject matter to be excluded from the state referral bills. The carve-out provisions allow the states to protect their constitutional rights over certain powers such as state taxes and duties as well as powers in relation to real property registrations. The states will have the option of adopting the Commonwealth’s legislation or enacting their own referral bill.

Under the amendment bill, a state’s referral will remain effective if the referral act provides that the referral will terminate in certain circumstances where the uniform regulation will impede upon state powers or where amendments to the credit act do not include excluded items. This will ensure that the states can refer their powers without limitation whilst ensuring their constitutional rights are protected. The amendments have no impact on the operation of the credit act and will simply allow an effective referral. The coalition support the national credit regime and we support this bill, which allows the regime to operate effectively. I commend the bill to the House.

4:43 pm

Photo of Graham PerrettGraham Perrett (Moreton, Australian Labor Party) Share this | | Hansard source

I rise to speak in support of the National Consumer Credit Protection Amendment Bill 2010, and thank the member for Cowper for his contribution. If you go up to level 2 of Parliament House, you will see a piece of legislation in one of the display cases there. It is a piece of legislation that came out of the British parliament and it was signed in July 1900 by Queen Victoria. It is an act of the British parliament that creates a country called Australia. At the time, the colonies of Australia came together and went off to their parliament, their Queen, and said, ‘We’d like to be a country.’ They got together even though they had lots of differences. They had different customs houses, where there were lots of arguments between the states. I am sure most of us in our youth would have seen some of the remnants of those cross-border divisions, like the customs house in Brisbane, a beautiful old building, which is now used by the University of Queensland for functions and the like. My mum grew up in a border town called Goondiwindi, which I think is in your electorate, Deputy Speaker Scott. The customs house in Goondiwindi is where the New South Wales and Queensland governments squared off over putting excise on each others’ goods et cetera.

Back in 1900, when Queen Victoria signed off on the legislation to create Australia, state borders were significant; they meant a lot of things. In 2010, we look at state borders and see—I am sure the minister at the table would agree—that they are only particularly relevant on things like State of Origin night, when our border is very important. When we are transitioning to a modern economy capable of meeting the challenges of the future these borders have to become almost redundant when it comes to business. As we know, Australian businesses, large, medium or small, are not interested in state borders. They are interested in government getting on with cutting red tape so that they can continue to create jobs and keep our economy humming along.

Late last year I was pleased to address the South West Chamber of Commerce in the electorate of Moreton about the government’s reform agenda. This is a terrific group representing the interests of local businesses and community groups, and I am proud to be its patron. Thanks to people like their president, Alice Langford, their vice-president, Robyn Kennedy, their Treasurer, Scott McDonald, their secretary, Ian Dorrepaal, and their publicity officer, Travis Windsor, the South West Chamber of Commerce are supporting business people throughout my electorate. They are good, they are getting better and they are also getting bigger. For any minister who wants to come along, I am sure I can arrange a meeting with the South West Chamber of Commerce. It is groups like this that are telling government we need to succeed in cutting red tape and introducing other measures to boost our nation’s productivity. I am sure anyone who read the Intergenerational report, or even the media coverage of it, would know that it is a horror story—though not a work of fiction—and that we need to do what we can to improve productivity.

Increasingly, companies operate across state borders, and the various state laws that have evolved since Federation are one of the major hindrances to productivity. That is why, through COAG, the Rudd government is shredding red tape, removing duplication and delivering greater consistency across the country. It has been said that Australia, a nation of 22 million people, has more red tape than the European Community where there are approximately 300 million people. That is a bad accusation and unfortunately too accurate. Part of the Rudd government’s cooperative approach to deregulation, rather than the big stick style of our predecessors, is always to reach for the carrot first. We have the big stick in the other hand, just in case, but it is best to get the states working cooperatively.

All Commonwealth, state and territory governments signed an agreement for one national credit law in December last year, and we have already passed our national credit legislation in this parliament. This bill is another part of this process and part of our commitment to a uniform national credit law. It delivers on a request from state governments that we modify the referral bill to exclude certain matters, such as state taxation—I think that was a particular concern of the Victorians, and we have to keep them happy whenever possible—and it does so by amending the National Consumer Credit Protection Act 2009 to limit the scope of the referral power.

While these measures are relatively insignificant, they demonstrate the Rudd government’s commitment to working with the states and responding to their needs rather than steamrolling them through a Commonwealth agenda. The Commonwealth does not have constitutional authority to legislate in these matters, so without the agreed referral from our progressive state and territory governments these reforms would not have been possible.

Unified national credit laws are another cog in the flywheel of achievement for Australian businesses. We know that business is the engine room of the economy, so in response to the global financial crisis the Rudd government passed key measures to protect our small and medium-sized businesses especially. The government reduced quarterly PAYG instalments for small businesses during 2009-10. This initiative gave small business a cash flow boost when they needed it most. The government provided direct assistance to small businesses through a special small-business tax break. Small businesses were able to claim an additional 50 per cent tax deduction for eligible assets purchased before the end of 2009 and installed before the end of 2010. The tax break provided small businesses with an even greater incentive to invest in new capital items, such as computer hardware and business vehicles, to ensure competitiveness for the recovery—and they did invest. I am sure the member for Dawson, who is in the chamber, would note in his morning walks around his electorate that there are a lot of new utes out there. A lot of tradies took advantage of the initiative—the dual cab ute seems to be the ute of choice in 2010—and certainly the businesses in my electorate that sell such utes thank the Rudd government for that initiative.

Other Rudd government measures included an on-time payment guarantee for contracts of up to $1 million between small business and the Commonwealth government, a $4 million investment in small business advisory services, and making it easier for small business to participate in tenders to sell to the government. It is all part of the Rudd government’s efforts to build a seamless national economy by reducing inconsistent and overlapping business regulation.

Our reform program covers an unprecedented 27 areas of overlapping and inconsistent regulation across the Commonwealth, states and territories. For example, under one of the reforms, businesses that operate across state boundaries will no longer need to register their business names and pay a separate fee in each state and territory. They will have to register only once at a central national registry. And tradespeople who move from one state to another—and there are many of them—will not have to apply and pay for a separate licence in each state.

This is what we call the end of ‘rail gauge economics’. Things have moved on a little since the colonies came together back in 1900, when Queen Victoria signed that British act of parliament. Deputy Speaker, can I take you to a part of your electorate, Wallangarra, just south of Stanthorpe, which is a town that straddles the border. Once upon a time trains used to stop there to switch to the Queensland gauge, but now things have moved on. Wallangarra is a town with a great pub—I have spent a night there—but it is not as significant as it once was, even during World War II, when so many people had to get out of the train and get onto another one. Things have changed since then. Acacia Ridge in my electorate is similar.

Reforming business regulation by freeing up time spent complying with red tape obligations and restoring incentives for entrepreneurship is crucial to the success of the Rudd government’s productivity-raising microeconomic reform agenda. This bill is another step along the way. I commend the bill to the House.

4:52 pm

Photo of Chris BowenChris Bowen (Prospect, Australian Labor Party, Minister for Financial Services, Superannuation and Corporate Law) Share this | | Hansard source

in reply—I thank the member for Cowper and the member for Moreton for their contributions and I acknowledge the support of the opposition for this bill. The purpose of the National Consumer Credit Protection Amendment Bill 2010 is to amend the Commonwealth’s recently enacted national consumer credit legislation to ensure an effective referral of power from the states to the Commonwealth in relation to consumer credit. This bill will provide the flexibility sought by the states to enable them to refer their powers for consumer credit regulation to the Commonwealth.

In particular, this bill amends the National Consumer Credit Protection Act 2009 to recognise certain exclusions to the scope of the amendment power in the state referral bills and to enable an effective reference of the state power to be made either with or without any exclusions to that power. The bill will also allow the states to refer their regulatory powers in relation to consumer credit by adopting the Commonwealth’s national consumer credit legislation. Following the Commonwealth’s enactment of this bill, the states wishing to refer powers, excluding certain subject matters or using the adoption approach, will be able to do so by enacting their referral bills. As I noted in my second reading speech to this bill, the scope and effectiveness of the national credit protection regime will not be affected by any such variation to the referral or whether states refer or adopt the national credit legislation.

I am pleased to say that we are close to realising our vision of a single national credit regulatory framework. The development of this landmark reform has only been possible through the commitment of the Commonwealth and the state and territory governments, working in a spirit of cooperation, to realise this important COAG reform—a single, uniform, national consumer credit law, which is so important for productivity, efficiency and consumer protection. I commend the bill to the House.

Question agreed to.

Bill read a second time.