Alex Antic (SA, Liberal Party) Share this | Hansard source

I rise to speak in relation the Social Security (Administration) Amendment (Protecting Consumers from Predatory Leasing Practices) Bill 2020. This is a bill that the government does not support. The purpose of this private member's bill, as described in the explanatory memorandum, is purported to be amending:

… the Social Security (Administration) Act 1999 to provide that the department secretary may not make any deductions requested by a person from their social security payments if the deductions relate to goods hired under a consumer lease entered into by the person

But, if passed, the bill would impact Centrelink customers who want to use consumer leases and who want to use Centrepay as their preferred payment method. This bill, in my respectful submission, fits comfortably in the remit of the statement: if it ain't broke, don't fix it.

Centrepay is a free and voluntary service that allows people to pay their bills and expenses as regular deductions from their Centrelink payment to approved businesses. People can start, change or cancel their Centrepay deductions at any time. As we heard earlier this morning, it was introduced in 1999, effectively as a bill-paying service to support customers in paying household and utility costs. As the deduction is taken out before the income support payment is made, the program is designed to reduce the default risk for the customers as well the businesses themselves. It's unique in this respect, compared to other financial products such as, for example, direct debit. Since this time, Centrepay has grown and expanded into more than just a means to pay a bill. In fact, in the last five years, 46 per cent of all Centrepay customers have used the service for more than one service reason, suggesting that it's actually being used as a financial management tool. The categories of goods and services that are approved for Centrepay use include, but are not necessarily limited to: accommodation, education and employment, health, utility costs, household goods, travel and transport costs, social and recreational costs, sometimes legal and professional services costs, and, indeed, the costs of financial products. Around 75 per cent of the monies dispersed through Centrepay are actually for accommodation and utilities.

Payday lenders, short-term repayments and schemes known as buy-now pay-later schemes are actually excluded from Centrepay and have never had access to the scheme. It's important to note that all consumer lease businesses which are actually accessing Centrepay must have other payment options available, such as cash or credit card. Those using Centrepay are not forced to do so. It's actively used by government and non-government entities, such as state governments for matters that include court fine repayments, and sometimes by not-for-profit organisations offering low- and no-interest loans.

We know that there are presently 94,000 customers, or 14 per cent of customers, who use Centrepay to manage the purchase of goods using consumer leases. The value of Centrepay deductions for consumer leases actually represents nine per cent of all of the deductions made under this scheme. Entering into any consumer lease and using Centrepay to make payments due under a consumer lease are, as we've said, voluntary. Deductions from the customer's payment can cease at any time, although this doesn't necessarily cease obligations pursuant to the consumer lease itself. Customers must provide informed consent before a deduction arrangement using Centrepay can actually be put in place. To help protect customers and so as not to unduly restrict access to their finance, Centrepay only allows consumer leases which are covered by the regulatory framework under the National Consumer Credit Protection Act 2009. It requires consumer lease businesses to be properly licensed and to properly comply with responsible lending obligations as overseen by the regulatory body, ASIC, the Australian Securities and Investments Commission.

The history of accessing consumer leases is now 20 years old. Since 2001, consumer leases for household goods have been allowed. On 1 July 2015 the then Department of Human Services introduced a new Centrepay policy and terms which excluded unregulated consumer leases for household goods and funeral insurance. Unregulated leases are those which are exempt from the National Consumer Credit Protection Act and are less than four months or indefinite in duration. By 17 February 2017, all leases that were not regulated were removed from the scheme. Due to the gap in accessibility for some consumers to access microfinance and money for emergencies, regulated consumer leases now remain on Centrepay as a viable option to acquire household goods.

The government takes its responsibility to consumers very, very seriously. While Labor will tell you that this bill helps protect consumers and ensures low-income, vulnerable Australians are not exploited, they seem to have missed the crucial outcome of this bill were it to be passed; that is, the bill would allow for discrimination against people who are currently on Centrelink—individuals who may not otherwise have access to payment terms because of this predicament—or people on lower incomes who may lack a credit rating or have a low credit rating. I'll remind this chamber that, unfortunately, many of those who are recipients of welfare may actually be unable to access some forms of credit, such as credit cards. For many, regulated consumer leasing is one of the very, very few ways to obtain essential household goods in an expedient manner. Often we're talking about very basic, fundamental items like a fridge, a washing machine, a freezer—something of that nature. Any bill that would seek to discriminate and result in the unfair and detrimental treatment of those in our society who are most in need, purely because of their financial predicament, shouldn't be supported.

Labor argues in support of the bill by alleging that Centrepay is being used for the benefit of consumer leases or commercial contracts rather than in the interests of Services Australia customers, but this, of course, ignores the careful scrutiny of businesses taking part in the Centrepay program. Services Australia undertakes an assessment of business applications for Centrepay and compliance audits of approved businesses. Approved businesses have to meet and maintain essential criteria, and the assessment process may, in fact, consider items such as whether the business conducts its operations in a manner that is lawful and ethical and does not take advantage of customers. It must take into consideration the past behaviour of the business and the business's representatives. It has to take into account information provided by regulatory bodies, consumers or consumer groups, or law enforcement agencies, and it has to take into account previous dealings with the business and any complaints that have been made against the business. So this process is beyond rigorous. In the 2019-20 financial year, 326 compliance audits were completed, and most identified that noncompliance is actually remedied as part of the review process. If a business is unable to remedy the identified noncompliance concerns, it is either partially or fully suspended from the program, up to the point at which it complies or a decision is made by the agency to withdraw its approval.

Whilst businesses are required to meet the policy and the terms, they're also regulated through the industry's legislation and relevant regulators such as ASIC or the ACCC. These agencies will consider any noncompliance or active investigations with these regulatory bodies and, when notified, they'll review the business's ongoing approval. Where a business breaches Centrepay policy, including other laws and regulations, the agency reviews the business and, as I've said earlier, reconsiders its ongoing approval for Centrepay.

The policy terms and conditions of Centrepay retain the discretion for Services Australia:

… to not approve, or to withdraw or suspend the approval of a Business if, in the Agency's opinion, any of the following apply:

a. the Business (or its Business Representative) has not conducted, or is unlikely to conduct, its operations in a lawful manner

b. the Business (or its Business Representative) has conducted, or may potentially conduct, its operations in a manner that is unethical, inconsistent with the Centrepay objective or takes unfair advantage of Customers

c. the Business (or its Business Representative) fails to, or is unlikely to, fully comply with the Centrepay Framework

d. making payments to the Business through Centrepay would adversely affect the reputation of the Agency or the Australian Government

e. the Business (or its Business Representative):

i. is under investigation by a Regulatory Body or law enforcement agency

…   …   …

iii. has had enforcement proceedings brought against it …

So there are a range of different approaches and matters to be taken into account by Services Australia. The process is clearly extraordinarily rigorous. Services Australia will refer customers to programs such as the NILS, the No Interest Loan Scheme, or to set up other payment options to purchase. Services Australia staff also refer customers to the relevant support services for financial assistance and counselling.

I remind those in this place that entering any consumer lease arrangement is, as we have said and as some of my colleagues have said earlier today, a voluntary matter, and it wouldn't be for government to interfere unduly with one's personal choice. To do so would not be fitting in a society like ours. There can be little doubt that Centrepay has a proven track record of being a valuable bill-paying service that assists many Centrelink recipients with their ongoing expenses and their ongoing financial management, and as a government it's our view that we should aim to have as little interference in people's lives as possible.

Services Australia has provided targeted messages to Centrepay businesses to remind them of their obligations under this scheme. They remind customers to check their Centrepay deductions regularly. Particularly when there may not be a service at the moment to provide links to manage your money, Services Australia provides useful tools and information. In addition to this, Services Australia operates the Financial Information Service, or FIS, which is there to help Australians make informed decisions about their finances. The FIS, the Financial Information Service, helps people to understand a range of implications, including how financial products work and how they affect government payments. It helps them to understand the results of their decisions in the short term and in the longer term; to prepare for their retirement even while they're still working, which, of course, we know is critical; to access other resources; and to access the details of other groups that can assist.

In conclusion, it is my view—it's the government's view—that the Centrepay scheme must maintain its core features, including the voluntary nature of the program, the issue of consumer consent and the strong focus on the need for essential items in a timely manner in low-income households, such as utilities, essential household goods, as I've said earlier, and white goods. For these reasons and more, the government does not support this bill.