Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to table to table an explanatory memorandum relating to the bill.

Leave granted.

I table an explanatory memorandum and I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

SOCIAL SECURITY (ADMINISTRATION) AMENDMENT (CONSUMER LEASE EXCLUSION) BILL 2015

The purpose of the Social Security (Administration) Amendment (Consumer Lease Exclusion) Bill 2015 is to amend the Social Security (Administration) Act 1999 to provide that consumer leases are excluded goods for the purposes of Part 3B of the Act.

This Bill is needed to remove the potential for Centrelink clients to suffer financial harm as a result of entering into one or more consumer leases for household goods which are currently available for people using Centrepay.

Labor will not stand by while low-income, vulnerable Australians are exploited.

Our system of social security should protect the poor and the vulnerable, not leave them open to financial exploitation by businesses.

Centrepay is a free service through which Centrelink clients may pay recurring bills and other payments via debit from their welfare payment.

It is a valuable service when used appropriately but there is considerable and growing evidence that it is becoming a tool for financial services businesses to exploit low income and vulnerable Australians.

Consumer advocates and financial counsellors regularly encounter significant numbers of Centrelink clients under financial stress as a result of entering into one or more consumer leases for household goods.

Common household goods obtained under a consumer lease can cost up to seven times more than the usual retail price for the same goods.

For example, a mid-range stroller retailing for $300 can cost up to $1330 if it is obtained under a consumer lease.

A basic washing machine retailing for around $450 can cost between $1100 and $1500 if it is obtained under a consumer lease.

And a child's cot retailing for $270 can cost up to $1550 if it is obtained under a consumer lease.

And at the end of the lease and after all that expense, the consumer does not own the goods.

The problem is widespread, but it is particularly acute in indigenous communities.

The Consumer Action Law Centre, the Australian Council of Social Services and Financial Counselling Australia have campaigned for some time to have consumer leases excluded from Centrepay because of the financial harm caused to financially vulnerable Centrelink clients.

The Micah Law Centre observed in 2007 that consumer leases are not genuine leases, but "loans in lease clothing".

Consumer leases are fringe credit products offered in the main to financially excluded consumers in the sub-prime end of the financial services market.

Many of the businesses offering consumer leases also operate in the payday lending market and similarly, cause significant financial harm to the most financially vulnerable people in the community.

There is evidence that consumer leasing businesses are using the fact that they are approved Centrepay service providers as a de facto government endorsement of the product in their marketing materials.

This Bill will ensure that Centrepay is prospectively closed to consumer leasing companies, for the same reasons it is closed to payday lenders.

I seek leave to continue my remarks later.

Leave granted; debate adjourned.