Tuesday, 23 October 2018
Matters of Public Importance
I have received a letter from the honourable member for Brand proposing that a definite matter of public importance be submitted to the House for discussion, namely:
The Government's failure to reform payday lending.
I call upon those honourable members who approve of the proposed discussion to rise in their places.
More than the number of members required by the standing orders having risen in their places—
I rise today to introduce this matter of public importance—namely, the government's failure to reform payday lending. It is an undeniable matter of fact that the government have failed to reform payday lending. There are no ifs and no buts. They had the opportunity to reform the payday-lending sector, which preys upon the vulnerable consumers of Australia. They created their own admirable opportunities to introduce payday-lending reform. But it's not like they've crab-walked away. No, they've gone much further than that. They have gone into a full, fast retreat down the road, led by the Liberal 'parliamentary friends of payday lending', convened by their general, the Assistant Treasurer, opposite me here today.
Mr Robert interjecting—
Yes, you run the parliamentary friends of payday lending, and we do know that.
We can just have a quick look back at the history of payday-lending reforms that have been introduced in the interests of consumers in this country. In government, Labor enacted the National Consumer Credit Protection Act 2009. For the first time in Australia, that act implemented a national regime for the regulation of consumer credit. Labor strengthened the regime in 2012 in response to growing concerns about improper behaviour by payday lenders, including by strengthening protections for consumers of these products.
Part of Labor's plans—you might like to know, Assistant Treasurer—also mandated a built-in review mechanism of the new national consumer credit protection regime. That review commenced in 2015 under the Turnbull government. The Review of the small amount credit contract laws was handed to the government in March 2016, and the government published its response in November 2016. Today marks over three years, or 1,173 days, since this reform process started with that credit contract review. And today marks yet another day that this government has failed to protect Australian consumers. It's another shameful day that rests on this government.
We all know on this side of the House that those on very low incomes have little capacity to absorb financial shocks such as your car breaking down—
Mr Bowen interjecting—
yes, an unexpected internet bill, perhaps—or a dentist bill or the like. With little disposable cash after the bills are paid and with few savings put away for a rainy day, one of the obvious options is a payday loan. We've all seen the ads, sadly: 'Just Nimble it.' These loans are often in conjunction with further loans and include crippling interest fees and penalties.
Financial Counselling Australia—I know that many people in this House, I think especially on this side of the House, have gone and visited a financial-counselling service, and I'm yet to see how many from the other side of the House have taken up that opportunity—have shared many case studies that set out what is happening to vulnerable lenders in the Australian community. They get involved in, sadly, multiple contracts for payday loans. These contracts show exorbitant interest rates that take advantage of their vulnerable financial situations. They underestimate their living costs. They miscalculate their financial situation. This leads to overdrawn-account dishonour fees, further entrenching vulnerable Australians into larger and larger debt. It is a vicious cycle. It is a terrible circle of debt that people are unable to climb out of.
There are many harrowing examples of the predatory behaviour seen from these payday loan sharks. We know that, just this week, Cash Converters settled a class action for $16 million due to charging customers interest rates upwards of 600 per cent. It's an absolute disgrace.
There are now over 800,000 Australian households who have fallen victim to the payday-lending rip-off. This number has more than doubled in the past decade, including 150,000 new households in Australia signing up for payday loans in the last 18 months alone.
Then, of course, there are the rent-to-buy consumer leases that we're all well aware of. This is where a consumer can enter into an arrangement by which they rent a consumer good—a vacuum cleaner, a fridge, a dishwasher or whatever—from a company. They rent for a period, and at the end of the period they get to keep that good. It's becoming increasingly common with mobile phones and therefore attractive to younger people. Many popular rent-to-buy schemes involve extreme repayment requirements, with customers often paying far more than face value for the products, up to 884 per cent more than their retail value, let alone their wholesale value. So fridges that may cost $1,000 end up costing a lender $6,000. A dryer worth $345 has reportedly cost someone more than $5,000. It's an absolute shame. This is all going into the pockets of the payday lenders and rent-to-buy rip-off merchants.
Sometimes these things can play a valuable role in helping to smooth out the challenges in people's budgets. But they are not just for essential goods. These have proliferated into covering extra-large TVs. What have we seen in the stories we have heard from Financial Counselling Australia and other organisations that seek to help people in financial distress? Customers are solicited. They may have got a whitegood, an essential good, but then they are solicited by SMS messages for non-essential products, such as gaming consoles, oversized televisions or electronic devices. Consumers are locked into multiple long-term contracts, paying excessive rental repayments at rates well above retail prices and additional personal loan repayments.
Financial counsellors have told us that:
In addition to this rental companies are often only providing clients on a Centrelink income with one option for payment, via Centrepay deductions. The direct implication is that the rental company is receiving their payment as a priority over rent, electricity, food and medications.
That is very wrong. This is what our financial counsellors around this country, those people working at the coalface, helping out people in financial distress, see every day. Rental companies are being bankrolled by the government through exorbitant fees and charges paid out directly through Centrepay. It's a disgrace and it needs to be stopped.
Some small amount credit contract providers will waive fees and create a special payment scheme for people in extreme circumstances, with companies such as Good Shepherd Microfinance trying to help out people in budget distress. What we need is robust consumer protections. However, this Morrison government just sits by and does nothing, just like the two governments before it, led by Prime Ministers Abbott and Turnbull. Vulnerable Australian families are continuing to be ripped off every day by the loan sharks in this out-of-control industry. Reforms such as this are vital to protect Australian consumers, yet the government have done nothing on this. Well, actually, they started doing things on this and then they more than crabwalked away; they ran away at high speed.
Labor have introduced a private member's bill which replicates the bill brought to this parliament in draft form by Minister O'Dwyer. The member for Indi introduced a similar private member's bill this week. The government could have supported our private member's bill, it could have brought on its own legislation or it could have supported the member for Indi's legislation. We know the member for Oxley has been conducting community roundtables on this issue. My colleague Senator McAllister, alongside the shadow minister for financial services, Clare O'Neil, and I have announced an inquiry to examine financial services that were excluded from the terms of reference of the royal commission. That Senate inquiry will look at things that include payday lending rorts.
It seems that everyone in this place is willing to govern and to progress reform to protect the vulnerable consumers of this country except the government itself. This is a government far more interested in its own party than Australian consumers. The Assistant Treasurer, gift cards aside, has done next to nothing for Australian consumers except to ensure that payday reform in this country does not happen. We know he's been very busy doing the numbers in the previous challenges for the leadership of the Liberal Party. It's unsurprising, though, considering his personal stake in the loan rip-off scheme. The Assistant Treasurer was part of the irate backbencher revolt when Minister O'Dwyer had guardianship of the payday reforms. Who could forget that role of 'parliamentary friends of payday lending'? It was yet another example of the chaos and dysfunction of the Abbott-Turnbull-Morrison government. It's such a shambles they have small groups of backbenchers rolling decisions of cabinet. What a way to run a country! It's a disgrace.
As I said at the start, it's been 1,173 days since this government began the process of reform, and now we hear the Assistant Treasurer is going to wait for the outcome of the royal commission to do anything. That will take us to about 1 February, and that's only when you start thinking about the response to the royal commission. All this government is doing is ensuring it will do nothing to reform payday lending. It's doing nothing. By the Assistant Treasurer's own time line, he will not respond, he will not produce any reform to payday lending, he will not bring in the legislation his own government produced two years ago. He just puts it off to the never-never. What we do know, what Australians can be assured of, is that the Liberal government will never ever reform payday lending. They will never work to protect Australian consumers from payday loan sharks. It's a crying shame and they should just quit.
What a joke! Seriously, what a complete and utter farce! Those opposite seem to forget that it was this government that established a review into small account credit laws and whether those laws should be extended across to consumer leases, as the customer bases are similar. It is something those opposite failed to do—failed to consider it and failed to implement it.
Everyone recognises that small account credit lenders and consumer lease providers play an important role in the economy by providing credit to customers who are vulnerable, with low and irregular incomes and perhaps poor credit histories, and in many instances are unable to access mainstream forms of finance. But this is not really about vulnerable workers, is it? This is a typical Labor stunt. Labor sit there and argue about undue delay—
Mr Keogh interjecting—
while at the same time stacking up more inquiries in the Senate. It's either one or the other. An instructive view of the history of this actually might help those opposite understand the issue.
Ms Keay interjecting—
For those who don't understand, small account credit contracts are loans for between 16 days and 12 months with a value of up to $2,000. There are more than 200 authorised SACC providers. Consumer leases, on the other hand, are leases for household goods, with terms greater than four months, excluding novated leases. As of the second half of 2017, there are approximately 500 lessors in the market, predominantly around four large firms. SACC consumers, on average, take out about 3½ SACC loans a year, and 30 per cent of households with a SACC consumer have one or more SACCs at a particular time.
The history of this goes back some 20 years. It was the Liberal-National government back in the late nineties that put in place the construct of Centrepay. Centrepay provides a capacity for people to have bills and otherwise paid for out of their Centrelink benefit. There are nine service categories and, of course, one of them deals with the area of consumer leasing. Payday loans in themselves are not possible through Centrepay. Centrepay today puts out $2.6 billion worth of bills that are paid for vulnerable Australians. It's quite extraordinary. There are 646,000 consumers using Centrepay to assist with paying bills and invoices over nine different sectors.
In 2009 the National Consumer Credit Protection Act came in and the states ceded their authority. In 2010 those opposite, to their credit, limited consumers with over 50 per cent of their income from Centrelink to no more than 20 per cent gross for small account credit contracts. Nothing in consumer leasing was done by those opposite at the time. In 2013, again to the credit of those opposite and in response to COAG, the small account credit interest rate was limited to four per cent per month, or 48 per cent across the board, with a 20 per cent establishment fee. Again it was for SACC, and, again, there was nothing in the consumer lease space.
Those opposite had numerous opportunities in previous governments to deal with the consumer lease space and did nothing—nothing! It is this government that has stepped up with a review to understand the issue of consumer leasing and how it works.
Mr Keogh interjecting—
In 2013 there was a review into Centrepay, which continued through to 2015. It was put in place by the Minister for Human Services, and the current Minister for Foreign Affairs, Minister Payne, and I were the ones who finished the review and implemented it. We were the ones—it was this government—that knocked off all the dodgy providers within Centrepay.
Ms Madeleine King interjecting—
It was this government that knocked off hundreds and hundreds of the loan sharks that were going after Aboriginal communities, selling insurance products or products that were into funeral insurance to 10-year-old Aboriginal kids. The rorts were outrageous. It was this government and human services ministers on this side who knocked all of those dodgy providers out. We see, as of now, about 14,815 Centrepay businesses. Back then, the number was about a thousand higher. But it was this government that knocked all of those providers out. It was this government, in August 2015, with the then Assistant Treasurer, Josh Frydenberg, that announced a review of the small-amount credit contract laws. Consumer leases were also considered as part of that review, building on what we had done in Centrepay. It was this government that decided to look at the issue of consumer leasing following the inactivity of those opposite. A report was tabled in March '16, with a final report in April '16. Public consultation then followed. On 28 November '16, the government responded to the review, supporting the vast majority of the review's recommendations, including a whole bunch of stuff to make things a lot better and easier for those on low incomes.
Twelve months ago, the government released an exposure draft bill to implement the government's response: removing the ability of SACC providers to charge monthly fees; providing lessors, creditors and assistance providers with the undertaking of door-to-door selling of leases at residential homes; introducing a broad range of anti-avoidance protections to prevent SACC loan and consumer lease providers from circumventing the rules; and strengthening penalties to increase incentives for SACC providers and lessors to comply with the law. During the consultation phase for the draft legislation, the Treasury received over 140,000 submissions, over 100 of which were from individual franchisees of consumer lease providers. The government has been considering the draft legislation in light of feedback during this consultation process. It would have been helpful if those opposite had also considered some of the feedback after the draft legislation came out rather than just taking the draft legislation as a stunt and putting it into the House. The whole point of consultation is to consult and listen and update legislation based on broad community feedback—something those opposite seem to have missed, as they missed six years of dealing with the issue of consumer leasing.
This government doesn't rush to failure like those opposite. This government actually sits down, it consults, it looks at issues widely and then it implements sensible policy. At the same time, the government has noted the comments of Commissioner Hayne regarding the consumer credit industry, in the interim report of the royal commission into misconduct in the banking, super and financial services industry. In particular, Commissioner Hayne has made some interesting observations regarding consumer credit and has asked a range of policy questions, the answers to which may have an impact on the approach government takes in this space.
The government notes that the seventh round of the royal commission's public hearings will focus on key policy questions arising from the first six rounds, upon which the interim report is based. The government will consider the extent to which the issues raised through the next round of hearings of the royal commission will impact on the drafting of the final SACC legislation. On the one hand, those opposite want us to rush to failure and move now. On the other hand, those opposite want us to consider, sensibly and diligently, the outcomes of the royal commission. Well, which one is it? Should we sensibly consider the outcomes of the royal commission as they pertain to the SACC legislation or should we, like those opposite, like a bunch of lemmings towards a cliff, rush towards unintended failure? Well, this government doesn't do that. This government carefully considers the issues of the day, and we will carefully consider what the royal commission has got to say in this space. We will carefully consider the policy options at the next range of hearings and then the government will act.
I also note that Labor's provided notice of its intention to move a motion in the Senate referring the issue of payday lending and consumer leasing for a whole new inquiry by a Labor chaired Senate Economics Reference Committee. Not content to wait and see what the royal commission's going to do, not content to wait and see what the policy outcome hearings are going to be—oh, no; Labor knows better than everyone else and is launching itself into a new inquiry, perhaps embarrassed by six years of inaction when it comes to consumer leasing and doing nothing. Now, at the 11th hour, Labor is rushing into an inquiry to work out what it actually believes. We'll sit and wait for the royal commission's advice. We will look at the policy hearings and then we will move forward and we will act sensibly, because that is what sensible governments do.
While the Assistant Treasurer wasn't able to fill his time in this debate, members on this side have got more than enough to say. I've got to say just how distressing it is for the Australian consumers, the 1.8 million households in Australia under financial stress, to hear the Assistant Treasurer stand up in this House and say after three years he's got 'a bunch of stuff' to talk to us about. But there is not a bill before the House. There is nothing here to actually look at. There is nothing here for us to discuss, debate, look at amendments. But we've got a bunch of stuff happening over there. Well, I can tell you that the people of Newcastle won't be too reassured by the minister's words here today.
I've got to say there is almost universal opposition to the dodgy practices of payday lenders. Let's just pause for one moment to think about those people who have added their voice to why it is you'd want to stand up and do something about these dodgy operators out there. There's CHOICE, Care Inc., Consumer Action Law Centre, Financial Counselling Australia, Financial and Consumer Rights Council, Financial Counsellors Association of New South Wales, Financial Rights Legal Centre, Good Shepherd Microfinance—I haven't even got to the people in my electorate that speak up on a daily basis, asking me, 'What the hell is this government doing?' We had a review three years ago. The Minister comes in and says he's doing a bunch of stuff, but there is not a shred of evidence for that. Maybe that's what he's been doing in all that time devoted to his internet searching—getting a bunch of stuff together. Well, it is not good enough from the Assistant Treasurer. There are payday lenders in this country who trade in misery, who prey on the vulnerable consumers in our country. They are the last people that you would want vulnerable Australians to have to turn to in their hour of need, in financial stress, because we know where that goes. We know that leads to a big spiral of debt that no-one gets out of.
Only last Friday I had representatives of some of the financial counselling services from my electorate sitting with me, and I can't tell you how many times they asked me why the government had not yet acted on that review. They all contributed to that review. There was an extensive consultation process—I've got to hand it to the government on that. There were great contributions from the financial counselling services across Australia. They were very happy with the review that went forward and with the draft exposure that's coming out. There was a little bit of tweaking to be done. They were very excited about the possibility that you guys might actually be onto some serious reform, that you might do something, that you might lend some kind of hand to those people who are hurting and hurting badly. But nothing. You don't want to hold your breath waiting for this government to act on this one. It's pretty damn clear that the day they appointed the Assistant Treasurer into that position this was not going to be any green light. We knew exactly what was going on. It's all very well to appoint your good mate into the position, but this was the same man that earlier this year campaigned inside the Liberal Party against any introduction of the payday lending legislation. The Assistant Treasurer was actively campaigning—part of 'friends of payday lenders group'. What a shame! How disgraceful that this parliament even has such a sort of collective.
This is at a time when there are pop-up instant cash machines showing themselves in tobacco stores, in little shops in my electorate and in the neighbouring electorates of Hunter and Paterson, deliberately preying on people. All you need is a bit of ID and your bank account details and, pop, you've got an instant loan at the smoke shop as you buy your baccy for the week. How disgusting is that? We need a ban on those instant cash machines. We need a government to stand up for vulnerable Australians and enact some real reform. (Time expired)
Well may they cheer that speech, because what that's all about is the sort of stuff that we will get from the Labor Party until the end of time. By the way, before I go any further, I do want do recognise the shadow minister for consumer affairs, whose dedication to this chamber is something that we should all, I think, take as a credit. But back to where I was. The Labor Party believe that people on low incomes and people who don't do what the Labor Party say shouldn't be allowed to borrow money. That's what the Labor Party's always been about: control, control, control.
Everyone in this House wants to see Australians live to the full amount of their potential, except for the Labor Party, because they believe that, unless you're a union official or unless you're a mate or an insider of the Labor Party, you shouldn't be allowed to borrow money. You shouldn't be allowed to borrow money from a bank, you shouldn't be allowed to borrow money from a consumer credit organisation and you shouldn't be allowed to rent fridges. What about women who are leaving domestic violence situations?
Opposition members interjecting—
Oh, they laugh! They don't care, because, of course, only they're allowed to talk about people who they think are worthy. The fact of the matter is: when women are leaving situations where they are experiencing domestic violence and they need to move into an apartment and they don't have the money for a fridge or a couch, what's the Labor Party's answer to that? It is: they should just go without. When it comes to people on welfare, who actually know how to run their lives better than people in Canberra, better than bureaucrats and better than the know-it-alls on that side, what's their answer to that? It is: no, they should do what they're told. That's because that's what the Labor Party have always been about.
The truth of the matter is that their private member's bill would actually put to an end people being able to lend to people. It would actually stop people from being able to borrow money to buy things like refrigerators, to buy things like microwave ovens and to buy things that they need to make their lives work and to be able to do that. See, the ALP believe that people shouldn't be able to make a decision on how they spend their own money, because no-one knows how to spend their own money better than the Labor Party do. The fact of the matter is that we on this side are actually about breaking the cycle of poverty that exists throughout this country, and you can't do that unless you give people freedom to make their own decisions in their own lives.
The member for Newcastle says that there's almost universal condemnation of people who rort. Well, there's not almost universal condemnation—there's universal condemnation of the rorters in payday lending and the rorters in the consumer credit industry market. There's universal condemnation. There's no-one on this side of the House who doesn't believe that those people should be put out of business if not in jail. There's no-one on this side who believes that. But we don't believe that that should be done at the cost of people who simply want to get on with their lives not being able to borrow money to buy the simple essentials of life. When Good Shepherd Microfinance admitted that the Labor Party's private member's bill would shift people out of the consumer credit market and leave them with nowhere to go to borrow, their answer was that taxpayers should put a billion dollars into a consumer credit market. Where are your costings on that? There are absolutely none.
The Labor Party come into this House over and over and over again and claim that everyone's vulnerable. They claim that no-one can make a decision and that no-one understands how to run their life. The fact of the matter is that there are people in this country who may be on low incomes, but they actually have a much better sense of how they spend their money than some of the bureaucrats in the Labor Party do. They don't need you to tell them how to do it. That's because, let me tell you, they're aware of what they're doing. They're not vulnerable, and they understand what they're doing. They don't need the Labor Party to be constantly hectoring them and telling them that they have no idea how to run their lives. It's the sort of ignorance that this place has had enough of.
The member for Mackellar doesn't need to be in this place. He's on a margin of 15.74 per cent, which in the new paradigm is an ultramarginal Labor seat. So I'd get out doorknocking, if I were you, and start trying to get people to vote Liberal in Double Bay and Neutral Bay, before you come in here and lecture anyone about that.
I just want to pick up where the member for Mackellar finished. He said their government are not going to do anything; it was Labor legislation. I will tell you who was going to do something about this. They're all listening now. I've got a letter in my hand. In the days before Malcolm Turnbull was knifed by all of those opposite, he wrote to me: 'Dear Milton, legislation will be progressed this year, with the changes applying 12 months after its passage.' They've gone silent now, haven't they? A big talk by the member for Mackellar and the friends of the loan sharks, but it's in black and white from Malcolm Turnbull, promising the people of Australia that legislation would take place to crack down on payday lending.
Well, what happened? What happened? No wonder the people of Wentworth rejected the Liberal Party with the largest swing in Australia's history. This Prime Minister turns around and says: 'It wasn't that bad. We almost won it.' That's their excuse—no apology to the people of Wentworth, no apology to the people of Watsons Bay, Neutral Bay or Double Bay. If that's not your base, I don't know what your base is—through you, Mr Deputy Speaker.
We know that it's been 1,173 days. I know that the member for Mackellar sits on the leafy North Shore. He doesn't care at all.
The Northern Beaches—my apologies. He knows that, while they're sipping champagne, clinking their glasses, at the yacht club, they're making fun of those people and—what did he say?—the unintended consequences of this sort of legislation.
Well, I can tell you what the unintended consequence of not taking action on payday loans is. It's the pensioner in my electorate who was conned and tricked into buying an iPad that cost him $800 but ended up costing him $3,000. It was the mother of three who was conned and tricked into buying a fridge that cost her $4,000, which should have cost her $475. And it was the pensioner who was ripped off, who needed a car repair but was charged $5,000 for a $1,000 car repair. The excess, the greed, the rip-offs—and those opposite have the hide to talk about people taking control of their lives. If I were the member for Mackellar, I'd slink out of this chamber too.
Mr Falinski interjecting—
Well, come back and listen to what I've got to say. You're going to learn something.
Through you, Mr Deputy Speaker, I say to the member for Mackellar: listen to the words on this side of the chamber. He is going to learn something.
We know that we've had four ministers dealing with this. We know that the now Deputy Prime Minister promised to introduce your legislation. We know that the Assistant Treasurer took a bill to the cabinet that was endorsed by your cabinet until those—
Because the minister said so. The now Deputy Prime Minister promised:
The Government will introduce legislation this year—
to implement the SACC and consumer lease reforms.
Then the merry-go-round continued with the member for Deakin. But, time and time again, we know it all comes back to the former member for Wentworth, who promised in writing that this legislation would be progressed into this House. Well—through you, Mr Deputy Speaker, to all of those right-wing ideologues opposite—we've got two weeks to go in this parliament, two weeks so that consumers can be protected in Australia, two weeks to ensure that consumers aren't being ripped off by the loan sharks.
My electorate knows and every single Labor member knows that the only people who can be trusted with proper consumer affairs are on this side of the chamber. Time and time again, we've seen that side of the chamber, the government, siding with big banks. Now today it's been revealed that they're siding with loan sharks. Well, we won't stop this fight. We know that the over 1,172 days are too many days. All it will take is a Shorten Labor government to make sure consumers are protected in this country.
The first thing I'd like to do is to apologise to the people who are listening to this debate and to the misleading remarks that have come from some of the earlier speakers. I'm no friend of loan sharks. I'm no friend of crooks and rorters. But have you ever been in a position where you had no alternative, and you needed money—you needed money desperately? No matter what your station in life or your earnings, people sometimes get themselves into a position where—if you look behind their face, behind the glasses or behind the sunglasses—sometimes they're in a bit of trouble. And they don't have the alternatives that you and I have in this place.
They don't have that position where they can get money from mum and dad, or this one or that one. They have no alternative but to go to a payday lender. What a terrible situation to be in! What a shocking situation to be in! I've never been there, but, like all of us, I know somebody who has, and I know the background of the situation, and it ain't good. There are a few things that go on in people's lives, as you in this place know, that lead them into a position where they have no alternative—no alternative whatsoever. What a place to be in, where you've got no alternative whatsoever.
I'm not a friend of people who rip off the system. But, in that whole process of listening to the arguments, I heard about the decent provider of rental products, and I heard about the crook who sat outside the chemist signing people up. I didn't even know about this issue until it became an issue within the federal parliament—until constituents came to me in support of a rental provider. I thought he was pretty good—and my constituents all backed him up—until I came here and listened to other members of parliament, from both sides of the House, who gave me a different point of view. So then I had to weigh up: who's telling the truth, what are the real circumstances of this, and what can government do about it? And the arguments I've heard today haven't got us anywhere, because you were right, Milton, and Jason was right too.
My commercial principles and practice teacher, Jack Kroger, whom I loved—and whose son Michael has some quite well-known traits—used to stand up and say, 'Let the buyer beware—caveat emptor.' There is a responsibility on the buyer. We must not, if we respect those people, take that responsibility from them. We should never take that responsibility from them. Who do you think we are to tell people how to run their lives?
If we can implement laws and actions that can ameliorate this, as to the opportunity for crooks to survive, then, fine; let's do it; let's find a way through it. But let's not come into the room like this, with black and white opinions of, 'You're all wrong,' and, 'You're all right,' because none of us are all right and none of us are all wrong. We are reasonable people in this parliament, trying to find our way through difficult issues. So I plead with everybody in this place: let's find a way through difficult issues.
I think there are lots of other things I'd like to be talking about today. I would like to be talking about something exciting, like putting more money and effort and opportunity into IVF in this country and helping a lot more people to have miraculous changes to their lives. I would like to think we were talking about positive things that will make a difference to the country. If we can make a difference to these people, well, then, good—but let's not have an argument in this place about personalities or about principles that are right and wrong, because we know there is a middle ground to find. How often in this place do we never seek to find the middle ground but rather criticise somebody else for their position?
I'm happy to speak on this matter of public importance on the government's failure to reform payday lending. I particularly thank the shadow spokesperson and my neighbour, the member for Oxley, for the great work that he has done in this area. Anyone who actually goes to the local pawnshops—that's P-A-W-N; sorry, I was an English teacher in another life!—I recommend spending a day with Relationships Australia or Financial Counselling Australia. I recommend that for those opposite as well. I recently got to sit in with Vicki Cella at Relationships Australia and one of her clients and talk through how they got into difficulty where they were paying close to 884 per cent interest.
Whilst I know up-front that interest is a great thing and gives opportunities to young people and other people to do all sorts of things in life, excessive interest hikes are not something that the Labor Party can support. While waiting for the government to act on this, we've seen so many more people—in fact, 150,000 new households—sign up for payday loans in the last 18 months alone. So many of those people are going to be paying excessive interest rates. We know the story. It can be something as simple as your car running over a nail and getting a flat tyre and you don't have a spare tyre. That could change someone's household budget. These are the people we're talking about. It could be something as simple as the washing machine breaking down and not being able to put clean clothes on your kids to send them off to school. Or, as we've heard from some of the other speakers, there are all of those tempting loans when you're having a beer. There are all of these sorts of instant credit lures, basically.
We're concerned about it. What did we see from those opposite? We saw the member for Fadden actually organising within the Liberal Party a 'friends of payday lending' group. Unbelievable! And how was he rewarded? How was this numbers person for the Prime Minister rewarded? How was this data bandit, someone who's prepared to pay $38,000 back to the government because of his wi-fi data—$3,000 a month he's been paying for data—able to come in and say, 'Put me in charge of payday lending'? If you think paying $3,000 a month for data is normal, you are not going to have problem with someone paying 884 per cent interest rates for a spare tyre for their car or a replacement washing machine. You need that car to get to work. This the difference that we see. This can be the difference between food and fear for a household, the difference between having a home and living in harm's way, the difference between kids being able to sleep at night and the waking nightmare that can be that debt trap that the shadow minister referred to, that spiral down into debt where you cannot get out. That is why we need funding for things like Relationships Australia. It's because people get caught up, tricked and trapped.
Yes, I do believe in free will and people making choices, but—I tell you what—the rates that I can get with a good credit rating at a bank is nothing like the situation for some of the constituents I have spoken to. People go in to a payday lender looking to hopefully have enough money to buy their kid a second-hand bike for their birthday and come out having ended up paying $1,000 or $2,000 for a TV. So people can be tricked into believing the heavy-handed sales techniques that are used.
We have seen this delay. We have soaring interest rates, skyrocketing fees and a person in charge, the Assistant Treasurer, who after—what?—10 years in parliament comes in here and says he is 'doing a bunch of stuff'. That was his considered response, with all the resources of his department. It didn't address the delay. It didn't address the hardship that is experienced by so many Australians because of his tardiness and his delay. We know that hardship is blood in the water for these loan sharks. As soon as they see people doing it tough, they jump on them and try to make their life even more difficult. That's why we should— (Time expired)
It's a great pleasure to rise to speak on this MPI. There has been some very good contributions from both sides of the parliament as part of this debate. In my view, this is an industry which I simply don't like. I really don't. I don't like the fact that it exists. I don't like the fact that it does what it has to. But I know that in places it is necessary. This is not about what I may or may not like, because I do not walk in the shoes of these people. We are in a fortunate position here. We are well paid. We have a position of great privilege and we are here to fight for those people.
In my electorate, we have a per capita net income for the year of just $34,000. It is the lowest in the country and has been for some 20 years. So the people that I represent use this industry. Would I like them to make good decisions at every single opportunity? Yes, I would. Would I like them to not get the big-screen TV and the PlayStation before they get the fridge and the washing machine? Yes, I would. But I also take the point from the member for Mackellar that, on the occasions when they are short of money, when they have a punctured tyre, as the member for Moreton mentioned, and they have no other mechanism by which to pay their rent or power bill, they do take these opportunities. So this is a difficult issue, a difficult issue indeed.
I recognise the contribution of the member for McMillan. It's not usual that we hear Latin in this place, and I've got to say, in my schooling, it wasn't something that we focused on or had as a subject. But it was a good contribution. But how do we regulate free will? How do we regulate so that people make the right choices? In my view, I don't think we can. As I said, I might not like the industry or the fact that it exists; however, it is a necessary evil.
So what we must do is ensure we put more money into people's pockets. There is a better way to deal with this, and that is to ensure that people actually have more available cash. It really is. And, in my view, the simplest way to do that for all Australians is to do what the Minister for Energy said today in his announcements around energy, because one of the biggest cost-of-living issues is the price of electricity. If you are in a low-income household and your quarterly bill goes up to almost $2,000, how do you pay that? I have seen people in my electorate who simply can't pay. We have one of the highest disconnection rates for nonpayment of electricity bills in the state. What can we do about this at a federal level? Well, the minister made some announcements today about electricity prices. Unfortunately, in my area, every single component of that price is controlled by the Queensland state Labor government—every single one. They have the only retailer in town. They own all of the transmission, all of the poles and wires, and 70 per cent of the generators. They set the price through the QCA. The Queensland Labor government could fix this tomorrow with a single signature. Annastacia Palaszczuk, the Premier of Queensland, could change the price of electricity in those regional areas. But they refuse to do it for one simple reason: they are milking over a billion dollars out of that industry every single year. It is an electricity tax, pure and simple. It is paid for by some of the poorest people in this country, and I think that is unacceptable.
We're talking about those who have to go to a payday lender to get $50 or $100 to get them through to next week. Do I like it? No, I do not. I do not like the fact (a) that they have to do it or (b) that there are some exorbitant and questionable practices, and I say that on the record. But the best thing we can do for all of them is drive down the cost of living. It doesn't matter whether it is the water bill, the rates bill or the power bill; we have people who simply cannot pay.
The announcements today by Minister Taylor are very substantial, I think—the proposal that will go to the market to look to build more generating capacity. In Far North Queensland, there is an opportunity to build a hydro power station. I know those opposite are very keen on renewables. Well, this is one that works. It is traditional hydro at Tully-Millstream—600 megawatts at an existing station which will add capacity into the market. Capacity into the market is demand and supply. The more supply you have, the less demand you have, the lower the price. But the Queensland Labor government—
Mr Perrett interjecting—
And the member for Moreton knows this; he knows this. The price of electricity in Queensland is absolutely 100 per cent controlled by the Queensland Labor government. There is no-one else. There is no other retailer. There is no other provider. There is no-one that sets the price but them. I say again to the Premier: you have an opportunity to help the people of Queensland right now. You have an opportunity to help the people of Queensland and the businesses of Queensland, and those who have to use these types of facilities from payday lenders. You can drive down the price of electricity at the stroke of a pen, and I suggest you do it and do it quickly.
I am very, very pleased to join the member for Brand today, the shadow minister in this area, First, before the member for Hinkler leaves: he spent two minutes criticising the Queensland government for price settings when he's part of a government that could fix this right now. They could fix this today. In fact, they've done all the preparation work to fix this scourge on our vulnerable people today.
There are the questions raised by those opposite. They want to know: how do you regulate free will? Well, let me tell you how you regulate free will. You bring in more severe penalties for the shonks and the shysters who are ripping people off. That's how you regulate free will. How do you regulate free will? You cap the repayments. This is your draft legislation. These were your plans, and you have lost your way. Rather than minister after minister responsible for this space coming in here and putting it to a vote, knowing full well that they will have support on this side and that we could have this legislation through, we could change these practices today and we could protect vulnerable people from the debt spiral that you've heard about from my colleagues.
Let's go to some of that. It is 1,173 days since the results of the review were tabled—1,173 days of unconscionable inaction from those opposite. It is an absolute disgrace. In my electorate, these are the stories that I hear and that the people in my electorate hear and care about. Our local CLC, West Justice, did a survey at a mental health clinic day that they do. They found that 23 per cent of the people who were in an in-stay situation in our local mental health institution had a payday loan. These people are incredibly unwell—unwell enough to be hospitalised, and they've got payday loans. Of those, 25 per cent had more than one payday loan. When I first started getting interested in this, I sat with Consumer Action Law in Victoria. They told me that there were, supposedly, regulations already in place that said people could only have one loan. So how on earth do people have more than one loan? They have more than one loan because there is nobody regulating in this space. There's nobody observing this space. There's nobody ensuring that things that are already in place are being looked after.
When Labor were last in government in this space, we did bring in some regulations and it's our belief now that what we did then needs further work. We agree with the government's draft legislation. We agree that a measure of vulnerability is not limited to people who are in receipt of social welfare. It's not limited. I know lots of working poor in my electorate. I know lots of people who have full-time jobs and are struggling to pay their rent and I know lots of working people who are looking to payday loans to get them over those humps in the road. I've got no problem with this industry existing. What I want to see is an industry that's clearly regulated. What I want to see is ethical compliance to a set of regulations that will protect the vulnerable people in my electorate. I want this government to give the Australian public some assurance that the banking royal commission is not a farce; it's not a sideshow. We can't wait. The assistant Treasurer thinks we can wait until after those findings. People in my electorate who are victims, who are already in this debt spiral, deserve better from this government. The people who are now contemplating taking out a payday loan deserve better from this government. The Australian public deserve better. They deserve action where it is agreed that action needs to be taken. They need a government prepared to stand up to active lobbyists and say, 'No, not on our watch.' They need a government to stare down the lobbyists and say, 'We will act in the best interests of the Australian public and not in the best interests of those people who want to exploit them and make money from them.'
I'm pleased to rise to speak on this matter of public importance. I'd like to start by acknowledging the contribution from the member for McMillan, who brought some sense to this discussion. We all think that interest rates of 48 per cent are outrageous. I personally think credit card interest rates of 18 per cent are outrageous. We as the government hear the call: 'You're in government. Get out there and legislate it and put caps on.' That's what we hear from the other side. But the minute we do that—the minute we decide that we should put a cap on what the interest rate should be—we limit the funds and opportunity that some people will get. That's what we do.
The reason why that 48 per cent interest rate is charged is that the reality is that a lot of the customers of these payday lenders simply don't pay it back. There are very high rates of default, and that is why that interest rate is, unfortunately, so high. Certainly we'd all like to see those interest rates come down. Often you think it would be great if we just legislated that. But what would be the consequences of doing that? We would be harming the very people that we think we are helping. That's what we would be doing, because there are many people in our society, unfortunately, who have poor credit records and can't access finance from our banks or the normal financial institutions. When they face an emergency situation, regrettably, they are often forced to go to a payday lender. If we put legislation in that prevents that, what are these people going to do? What are they going to do if they face an emergency where they desperately need cash if we in government have put legislation in that actually prevents them getting it because we think we are trying to protect them and save them? This is why this area has to be thoroughly thought through. Time after time in government, we see the law of unintended consequences apply, where we think we are doing the right thing and yet what looks moral and correct—'Yes, we're helping the poor'—is not thought through properly and it harms those very people we expect and try to help.
One of the reasons, as the member for Hinkler mentioned, that people need payday loans is the shocking price of electricity in this nation, and nowhere is the price as shocking as in the state of South Australia, the state that decided it was a brilliant policy to have a 50 per cent renewable energy target. What's happened? We see the results. The Australian Energy Regulator's recent report shows the average residential electricity bill in Queensland is $580 and in New South Wales it's $653, but in South Australia, the state with these wonderful renewables, it is $900. If we look at the electricity disconnections in South Australia, 10,902 households last financial year had their electricity disconnected and cut off because they couldn't pay for it. If we look at that in percentage terms, you are seven times as likely to have your electricity disconnected if you live in South Australia as if you live here in the ACT. That's the effect of the policies of pursuing reckless and ideological renewable energy targets.
Yet members of the Labor Party want to copy the South Australian policy, which has delivered the highest number of electricity disconnections in the nation. If they really care about the poor and if they really care about people having to access payday lending at high interest rates, they should drop that 50 per cent renewable energy target, because we know exactly where that will lead—it will lead to South Australia. We've seen the results of this failed experiment. I call on the good members on that side to drop that policy. (Time expired)