Senate debates

Monday, 20 August 2012


Consumer Credit Legislation Amendment (Enhancements) Bill 2012; In Committee

12:30 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

On behalf of the coalition, I indicate that we also will not be supporting the Greens amendments. Those Greens amendments are broadly in line, if not entirely in line, with some suggested amendments that were circulated by various consumer action groups about 10 days ago. If I could, I will make some brief comments in relation to each of the three issues that Senator Hanson-Young raised.

In relation to the limits on repeat borrowing, this bill does impose statutory limits on repeat borrowing. The government's legislation does make some exceptions in the case of refinancing of another loan with the same provider. However, the bill also provides that the burden is on the lender with an assumption of hardship if the borrower has two or more short-term loans. In effect, this means that the lender would breach their responsible lending obligations with associated penalties if they did not take this into account. The use of presumptions rather than prohibitions, in our view, allows for greater flexibility and offers significant new protections for vulnerable borrowers.

In relation to garnisheeing income that Senator Hanson-Young has raised, the bill does provide protection for Centrelink dependent consumers with repayments capped at 20 per cent of their income. The complete removal of the ability of the lender to gain repayment via employer authorities when a borrower is employed would be counterproductive, offering a moral hazard where there would be an incentive for loans to be left unpaid.

Finally, in relation to the security over loans from $2,000 to $5,000, we believe it is reasonable that a loan of between $2,000 and $5,000 involves security. If security were prohibited, this segment of the lending market could well disappear or move into the black market. Both outcomes would be detrimental to potential borrowers and industry.


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