Joanne Ryan (Lalor, Australian Labor Party) Share this | Link to this | Hansard source

by leave—At the request of the member for Oxley, I move:

That this House:

(1) notes that:

  (a) it has been more than four years since the Government established the independent Review of Small Amount Credit Contracts (SACC);

  (b) the review panel provided the final report to the Government on 3 March 2016, listing 24 recommendations relating to the SACC and consumer leasing laws;

  (c) the Government released its response to the report on 28 November 2016, in which it agreed with the vast majority of recommendations in part or in full;

  (d) the Minister for Revenue and Financial Services at the time said 'the implementation of these recommendations will ensure that vulnerable consumers are afforded appropriate levels of consumer protection while continuing to access SACCs and leases';

  (e) the Government released draft legislation on 23 October 2017, whereby the Minister for Small Business and now Deputy Prime Minister said that the 'Government will introduce legislation this year to implement the SACC and consumer lease reforms';

  (f) the Assistant Minister to the Treasurer pledged in May 2018 that SACC and consumer leasing laws would be progressed in 2018;

  (g) former Prime Minister Turnbull confirmed the Government supported the vast majority of recommendations from the independent Review of SACC and also pledged to introduce legislation enacting the recommendations in 2018;

  (h) the Assistant Treasurer in December 2018 also noted the importance of protecting vulnerable consumers from harmful financial practices, but would wait until the conclusion of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry;

  (i) the Royal Commission has now been completed, however there is still no legislation before the house to enact the 24 recommendations from the independent Review of SACC;

  (j) on 22 February 2019 the Senate Economics References Committee completed an inquiry into credit and financial services targeted at Australians at risk of financial hardship, which recommended that the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2017 exposure draft released by Treasury be introduced, and passage facilitated by the Government; and

  (k) the Government has continuously broken its promises to legislate these important reforms; and

(2) calls on the Government to introduce legislation without any further delay so that Australians are given the protections they need from harmful pay day lending practices.

It is distressing to rise today to move this incredibly important motion. It's distressing because this is the 16th time that I have risen in the federal parliament to speak on the issue of small amount credit contracts legislation and on this government's failure to bring forward its own recommendation, from its own inquiry, to bring its own draft legislation into this place, despite all of the efforts on this side to get that happening. I have spoken 16 times in this place; the member for Oxley has raised this issue 22 times in this parliament.

A sorry saga has gone on. It is four years since this government called for an inquiry. It is three years since that inquiry handed down its recommendations and, despite changes of ministers responsible, we still have no action. Today, the member for Deakin is the minister responsible in this space. He has had one round at it and has failed to bring this into the parliament. As the minister responsible, he has a second chance now to bring this into the parliament. I rise because this is an issue in my electorate, but I believe it is an issue across the country, including in Deakin, the responsible minister's own electorate, where, in September last year, we set up a round table, spoke to the financial counsellors there and heard the same stories we've heard all around the country. Financial counsellors expressed their distress at having to support people in their negotiations with what can only be described as exploitative payday lending practices. This is something that this government can act on now.

What I want to focus on today are the things that this means. It's a sorry saga. There's a history a mile long. As recently as 30 August, the New Zealand and Australian ministers for consumer affairs met and said:

State and Territory Ministers acknowledged that urgent action is needed, particularly now that Small Amount Credit Contracts are being provided through cash loan machines and online.

This industry is steaming ahead while this government fails to act to curtail the exploitative nature of what some are practising, and we know that this is the case. We know that this is the case in my electorate, as I've raised before, but I have an update from WEstjustice, our local CLC. I've raised before that, when they did a survey at our local mental health facility, 25 per cent of the people there had payday loans. The update is that, in the period of three months from April to the end of June 2019, there was a minimum of five patients who ended up in a psychiatric ward. One of the five had five payday loans ongoing—from Cigno, Cash Converters, Cash Stop, Sunshine Loans and rent4keeps.

The information that we've been given is that this shouldn't be able to happen. You shouldn't be able to have multiple loans. But the practice is ongoing. This shows the lack of oversight of this system. These are people with a mental illness who are being loaned money at incredibly exorbitant interest rates, and we know what they look like. We know that some payday loans can attract an annual interest rate of between 112 and 407 per cent. This is an industry that needs regulation, and this government has draft legislation that would regulate this industry, but it has failed to bring it into this House. It has failed time and time again, regardless of the number of times we've called for it.

It's important in my electorate. In Werribee CBD, in the heart of my electorate, we have four shopfronts within 500 metres of one another where people are coming off the train on the way to do their shopping. We have people hanging out of doorways to catch customers, give them a cup of coffee, sign them up for another loan and send them on their way. We have case study after case study of people like Bill, who has an intellectual disability and is in receipt of the disability support pension. He has numerous small consumer leases for everyday items such as a bed and a vacuum cleaner.

This government needs to act. It is well and truly time, and we will continue to call it out until we see the draft legislation in this parliament.

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

Is the motion seconded?

Katie Allen (Higgins, Liberal Party) Share this | Link to this | Hansard source

I rise to oppose this motion. No-one in this parliament disagrees with ASIC, with the Hayne commission, or indeed with the member for Oxley that small amount credit contract reforms need to be implemented. After all, the coalition government is on the side of all Australians and is committed to restoring trust in our financial industry and to supporting low-income Australians. That we all know. But, unlike the member for Oxley, what this government is not is one that rushes in legislation without diligence, without consideration and without patience.

Credit contract regulation is a complicated issue. It needs consideration and diligence and the legislation brought forward by this government to deal with it needs to be treated with patience if it's to be successful. That is what this government is committed to deliver: a considered response, resulting in a successful outcome. Unintended consequences from poorly considered legislation can have profound implications on the most vulnerable members of our community.

The member for Oxley is concerned about a lack of action. He says, 'Nothing is being done,' and that, like my son would say when he was five, 'He wants it now.' Let me remind the House, and the member for Oxley, what this government has achieved on this issue and what it will continue to achieve in the years to come. This government passed legislation on 3 April this year that provides ASIC with a product intervention power on all products legislated by the ASIC Act. This took effect immediately. The product intervention power enables ASIC to intervene in the distribution of a product, where it perceives a risk of significant consumer detriment. On 9 July, ASIC released a consultation paper setting out a proposal to use this new power to address significant consumer detriment in relation to short-term lending practices. The proposal would limit the total fees that can be charged by credit providers and their associates in relation to short-term credit and collateral services.

The government has also introduced design and distribution obligations for insurers and distributors of the financial products, including credit products, commencing on 5 April 2021, in order to provide the necessary transition time to ASIC and to industry. Design and distribution obligations ensure that financial products are targeted and sold to the right consumers. These measures will improve the accountability of financial product issuers and distributors. They will improve outcomes for consumers and make ASIC a more proactive regulator.

On 20 August, the government released the royal commission's implementation road map. It sets out a time line for implementing each of the government's commitments. In doing so, it provides clarity and certainty to consumers, industry, and regulators. The government is taking action on all 76 recommendations contained within the final report of the Hayne royal commission. By the end of 2020, all recommendations requiring legislation will have been introduced. As part of its commitment, the government will remove the point-of-sale exemption that retail dealers have from the operation of the National Consumer Credit Protection Act. This amendment will require third-party vendors, as well as lenders, to recommend only those loans that are suitable for the borrower. Vulnerable consumers will no longer be subject to unfair loans that they can't pay off and that cost more than they can afford.

The government is currently considering public submissions to consultation on a suite of reforms to small amount credit contracts and to consumer leases—following the review—contained in the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill. The member for Oxley says the government is delaying. He has no idea what he's talking about. Small amount credit contracts have a place in our society but they need to be carefully regulated. We should not make rash decisions that are driven by the 'flavour of the month' mentally possessed by the other side of the chamber. The government continues to deliver strong economic reform for all Australians. That is what Australians expect from their government and that is what we are delivering.

Luke Gosling (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

As in Newcastle, a whole heap of people in my electorate are being preyed upon by payday lenders; and the federal government, in its sixth year, has done next to nothing. Over on that side, they have the 'parliamentary friends of payday lenders'. Are either of you gentlemen a part of the parliamentary friends of payday lenders? They are helping businesses with a poor ethical basis for conducting their business to prey on the poor—those who are not educated or perhaps not financially literate, those who have not had the benefits of, and aren't as entitled as, some of those opposite. When you hear of Australians who have purchased something for $9,000 but end up paying $17,000, how do you sleep at night? It is unconscionable that you would not enact legislation that would put a spotlight on ,and clamp down on, that kind of behaviour.

Let's recap where we are at. Around 8,000 Australian households currently hold a payday loan. For some of those Australian families, a payday loan from an ethical payday lender is appropriate, reasonable and helping them out. But there are approximately 1.8 million households that are under financial distress. If you put those two things together, you will realise that a whole heap of people are being preyed upon by unethical payday lenders who are basically ripping off our fellow Australians who are in financial distress. How un-Australian is that?

Since the government released the payday lending report, almost $2 billion has been borrowed through payday lending. It has been over 800 days since the government announced it would take action against dodgy payday lenders. Eight hundred days—they have been flat out over on that side of the parliament! There have been times in recent sittings when you have run out of legislation. But you can't bring this one forward—this one that will help Australia's most vulnerable people! No, you are too flat out with other legislation, too flat out with other scare campaigns and other distractions to take Australians' minds away from the fact that there is no real plan over on that side.

Labor announced 800 days ago that it would support your proposals. We even tabled legislation affirming the current government's position. But here we are, 800 days later, and nothing has happened. Nothing! Nada! This is while 1.8 million households are under financial distress and many hundreds of thousands of them have arrangements with unethical payday lenders.

As I said, in my electorate, and in the Northern Territory more broadly, we have had many instances of individuals being ripped off by payday lenders and 'rent to buy' operators. In one instance, a payday loan client who borrowed $100,000 was told by a payday lender to repay over $1,000 within six weeks. We had a Centrelink recipient who had four 'rent to buy' payments deducted from her payment each fortnight, leaving her with only $50 to feed her family. That is wrong. If we need to, we will bring back your legislation so that we can get some action on behalf of these Australians. I urge the government to present its bill to the parliament so we can support it and protect these vulnerable people.

Rebekha Sharkie (Mayo, Centre Alliance) Share this | Link to this | Hansard source

'Just Nimble it and move on' is a simple slogan that fails to capture the long-lasting consequences of payday lending, a practice that this government, the opposition, the crossbench and even the National Credit Providers Association have unanimously stated should be addressed as a matter of urgency. However, it would appear that the government's definition of urgent is a little perplexing. Over a thousand days have gone by since the government accepted almost every single one of the recommendations of the independent review of the Small Amount Credit Contract, and it is nearly two years since the government released its own exposure draft legislation, incorporating the majority of the recommendations. It is shameful; it really is.

Notwithstanding the years of reviews, reports, recommendations and consultations, the government has not yet introduced any legislation into this parliament to address the issue of payday lending. And just last month at the Meeting of Ministers for Consumer Affairs they again agreed that urgent action is needed to address the harms caused by payday lending. But what do we have? Nothing. In response, the Assistant Treasurer has stated that the government continues to review public submissions following the review. There was no mention of the draft legislation or when, if ever, the government might decide to take it off the shelf, dust it off and finally introduce it into this place.

So, in the absence of action by the government, it is my intention to introduce the government's own exposure draft as a bill. The bill will provide critical consumer protections that need to be enshrined in law, including capping the amount payday lenders can take out of a consumer's pay to no more than 10 per cent of income received each fortnight. We know that many people are paying obscene interest rates—from 100 per cent up to 400 per cent. It's hard to know whether we should call them small credit loan businesses or loan sharks—because that's what they are. We need changes to the legislation to ensure people have enough money for food, rent and bills. As the Salvation Army noted during the 2019 Senate inquiry into credit and financial services targeted at vulnerable Australians, behavioural science tells us that people in crisis experience cognitive overload which impacts their decision-making and their focus.

When people are in crisis, they do whatever they need to do just to survive. They need to find a way to pay rent so that they won't be evicted. They need to find a way to pay the car loan so the car doesn't get repossessed. They need to find a way to pay their bigger-than-expected electricity bill to keep the lights on. They will access whatever finance they can, and we know that it is a slippery slope—one loan becomes two—and a constant catch-up.

We should not underestimate the aggressive and targeted marketing by payday lenders. The Senate inquiry heard evidence that payday lenders were concentrated in areas of high unemployment, with a large proportion of single-parent families parents on low gross incomes—the companies targeted areas of social and economic disadvantage. Online campaigns are also targeted at young consumers online through Facebook ads and other digital marketing strategies. Evidence provided to the Senate inquiry showed that the fastest-growing demographic was young people aged 15 to 20 years of age, with rates of lending doubling in the last 10 years and the amount of outstanding debt tripling.

Introducing the government's own legislation is an unusual step but, given the apparent influence of the friends of payday lenders within the government ranks, it would seem we have little option in this place but to take the matter into the hands of members of parliament who have a conscience. I remember the now Deputy Prime Minister, at a function in parliament, bemoaning the fact that people were buying vacuum cleaners valued at a couple of hundred dollars but ended up paying thousands of dollars for these products.

Troubling research commissioned by the Consumer Action Law Centre shows that around 15 per cent of all payday borrowers will find themselves trapped in a debt spiral within five years. Again, people are facing financial ruin for the sake of what was initially a few hundred dollars, and the government is doing nothing about it. The fact is that government members cannot even be bothered speaking on this important motion. I commend the member for Oxley for his work in this area and note that this will actually save taxpayers money if it goes through.

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

There being no further speakers, the debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.