Thursday, 15 February 2018
Questions without Notice: Take Note of Answers
That the Senate take note of the answer given by the Minister for Finance (Senator Cormann) to a question without notice asked by Senator Marshall today relating to payday lenders.
I know it's some time ago, after all of the debates we have just held, but the topic of the answer that I am taking note of concerns the government's continued failure to take action against payday lenders. It's not surprising that they are failing to take action against this insidious form of credit, because, if you believe half of the media reports that are circulating at the moment—the ones not about the Deputy Prime Minister—it seems yet another parliamentary friends group has been created in this place: the 'Parliamentary Friends of Payday Lenders'. If there were one organisation or group in the community you would want to associate yourself with, you wouldn't have payday lenders up there, but it seems a number of government members are cosying up to payday lenders, defending their interests against the needs of poor and vulnerable people, and have brought pressure to bear on the government to the extent that the government has withdrawn legislation it was working on.
It's particularly disappointing that some of the names circulating as those who've been fighting hardest for the interests of payday lenders in this parliament have been National Party members—or LNP members, as we call them in Queensland—who represent rural and regional electorates with great degrees of poverty. We know very well that payday lenders prey particularly on the poorest and most vulnerable people in our communities, people who have run out of other credit options and who are forced into a position where, simply in order to pay their bills and get by from week to week, they take out loans at exorbitant rates, which spiral up, with the result that they owe, in some cases, hundreds or thousands of dollars more than they originally borrowed. I'm very surprised, for instance, to see the member for Dawson, Mr Christensen, being one of the most vocal supporters of payday lenders. He knows very well that his electorate has substantial pockets of poverty in it. Rather than coming into this house and defending his constituents from the rapacious payday lenders who are ripping them off, he's siding with those very same payday lenders.
I'm pleased, though, with the significant efforts by Labor representatives who've taken up this cause in parliament of late—in particular, our shadow minister for consumer affairs, Tim Hammond, and my Queensland Labor colleague the member for Oxley, Milton Dick. I know that builds on the work of Senator Cameron and many others on this issue over many years. We want to see much tighter regulation of payday lending. We think that it is a good idea to put some caps on the amount that debts can climb by, so that people don't get themselves into a situation where they might borrow to buy an appliance whose shelf price is a few hundred dollars, only to find a couple of years down the track that they've ended up being charged in the thousands of dollars, because of the outrageous interest rates that are imposed upon those borrowers by payday lenders. Those figures are no exaggeration. There are many instances where people are signing up to initial loans for hundreds of dollars which, by the end of their loan, end up being thousands of dollars, literally. That is absolutely wrong, and we should be taking action against it.
That's why Labor has introduced a private member's bill to take some action against these payday lenders. It's very surprising that, because of this pressure that has been imposed upon ministers by government members such as the member for Dawson, they have backed off introducing legislation that would have done something about this problem. But rather than let this issue lapse, Labor is grasping the nettle. We have introduced a private member's bill in exactly the same terms as the bill which was proposed by the government. If they are not prepared to take some action against payday lenders, then Labor most certainly will. Far too many people in our community are hurting as a result of payday lenders, and this kind of legislation will make a difference. When this bill goes before the parliament, it will be a real test for people like the member for Dawson, the member for Capricornia and the member for Forde—LNP representatives of areas with great poverty and people being ripped off. If they're on the side of their constituents and want to stop the rip-offs, they'll vote with Labor, but if they want to side yet again with Prime Minister Malcolm Turnbull and his big business mates, they'll vote against it.
It is a pleasure to rise and speak on the matter asked about by Senator Watt earlier today. It is refreshing to actually speak on something that is of relevance to ordinary Australians, as opposed to the subject matter we covered for most of question time today and a good period of time post question time. I take into account the points that were made by Senator Cameron on the doors—that Australians are sick and tired of talking about things that don't matter to them. It's a refreshing change to talk about something that is relevant to ordinary Australians and how they manage their household budgets.
It is interesting, as always, to listen to Senator Watt make his contributions on taking note. He's a very articulate man. I'm sure he does his research well. But he did make the point that a lot of what he was talking about is based on media reports around a particular supposed friendship group which exists in the parliament and fulfilled certain functions. It is one with which I'm not familiar and one I've not heard of myself but one, nonetheless, Senator Watt refers to in vague terms while trying to claim that this group of individuals who are members of it wield some amazing amount of authority in the party room. I think it may just be salacious reporting, but we'll have to wait and see as time goes forward.
No-one in this place, I think, denies that we need to ensure that vulnerable members of our community are well looked after and protected from predatory entities that may be preying on those who do require certain amounts of cash in short time frame. We've heard reports of this quite often, particularly in communities like those Senator Watt referred to: regional and rural communities, where sometimes work is hard to come by and it is a struggle to make ends meet. So you have families who, maybe in order to buy their kids their school uniform for the beginning of the school year, to pay the power bill or things like that, need to access funds in a very short time frame. And often these payday loans, as they've been referred to, are a product that these people access. It's important to ensure that the laws around these entities are ones that protect the consumer, because we've sometimes seen larger financial institutions and some smaller ones do things that could be construed as taking advantage of vulnerable consumers.
Of course, it's important to point out that there was a review into small-amount credit contract laws and whether these particular laws should be extended to consumer leases. That review was undertaken under the requirements of the National Consumer Credit Protection Act 2009. The government was fulfilling an obligation which came out of those laws which was specifically targeted at protecting individuals and ensuring that the rights of consumers were protected.
That report came back to government in March 2016, and the response to that particular report was released in November of 2016. Of course, the government's response supported the vast majority of the review's recommendations, including retaining existing price caps on small-amount credit contracts, extending the small-amount credit contract-protected earnings amount requirement to all consumers and lowering it to 10 per cent of the consumer's net income. It also talks about introducing a cap on total payments on a consumer lease equal to the base price of the good plus four per cent of that price per month and introducing a protected earnings amount requirement for consumer lease providers of 10 per cent of net income for all consumers. Also, it's important to note that the government did release an exposure draft to implement the response in October of last year.
These are all important steps the government is taking. This is quite the contrast to the suggestions being made by Senator Watt, that there's this group of mysterious individuals roaming the corridors of this building—members of this 'friendship group'—trying to dictate to government what they'll do when it comes to consumer protection in relation to credit products. It's important, but, as I said at the beginning of my contribution, it's refreshing to talk about something that is actually relevant to Australians, rather than the matters that we've been discussing in question time. (Time expired)
In answer to the question that I asked of Minister Cormann today, I got a response that has been backed up rather feebly by Senator Duniam. He said, 'Of course we don't have reckless National Party members dictating to the government on economic policy.' But the reality is very different. If we are to believe Senator Duniam's assurances, he's also going to say that this is a mysterious group and it doesn't exist. But the problem with that argument, really, is that Mr George Christensen has self-identified as part of that group. It's not a mysterious, secret group; it is a group. He's out there, and it's reported in the press. And it is being reported in the press because he's told them so! He's directly quoted as being part of that.
Now, the assurances that we received from the ministers and that we received from senators on the other side is that they actually care about the issue, 'We're considering our response, we've got things in train and we've got some legislation ready to go'—even though we haven't seen it yet—'but trust us; it's going to get there because the National Party isn't the tail that's wagging the Liberal Party dog.' That's what they try to tell us: the National Party is not the tail wagging the Liberal Party dog.
Now, you might think that that could be true, based on the numbers in the National Party versus the Liberal Party, unless we look at the track record. Let's look at the track record of the National Party tail wagging the Liberal Party dog. You only have to look at one of the biggest issues where we saw a backflip: the royal commission into the banking system. How many times did we see the very minister here today saying: 'The Nationals aren't dictating our policy to us on the banking royal commission. There's no need to have one. We don't need one; it's all under control, it's all happening'? But the very same National Party members who were pursuing that proposition kept at it and at it and at it, and where did we see that land? All of a sudden, the government takes the position: 'Oh! We've now had another think about it: we do need a royal commission into the banks'—something that we'd been telling them for a long, long time. But it took those same National Party people from within their coalition to actually make them do it. Why? Because they are the tail that is wagging the Liberal Party dog on economic policy.
We've not only seen it there, we've seen it in numerous examples all over the place. So when we get the rather feeble assurances from those opposite, and the rather curt assurances from the minister, forgive us for thinking that we don't necessarily believe those. That's why we've introduced a private member's bill that does exactly what they say they as a government should be doing with respect to payday lenders.
So they'll have an opportunity, even though they'll hedge and they'll try to squib it and try to avoid the issue, because the National Party, as we know, will keep undermining the proposition and setting up friends of payday lenders groups to lobby the government. We've seen the effectiveness of that in the past. But they will still have an opportunity to do what's right, because we will make them do it. We will give them that option, to actually do what's right and to implement what they know they should be doing—and that is, cutting back the opportunities for predatory lending behaviour in this country.
They know it's a problem. It's a significant problem. And the irony is that it's in National Party seats that it's one of the biggest problems—that's where it's one of the biggest problems. It's a problem across the country, but it's one of the biggest problems in those seats. Some of the seats that have the lowest socioeconomic groupings in this country are National Party seats, and they're where a lot of this problem of predatory lending happens. We see all the time people who have borrowed hundreds of dollars to get themselves out of an immediate problem and then, in a process of multiplying interest rates—incredibly high interest rates—it leads, in some cases, to tens of thousands of dollars due to be paid back, simply for a couple of hundred dollars.
People never get out of that downward spiral, and it's because some of these predators—and I call them 'predators'—feed on the opportunities that they have to exploit people in vulnerable positions. We want to move to regulate that. The government know they ought to be doing it, but the National Party won't let them do it, and the government need to stand up to the National Party. (Time expired)
I wasn't hiding, Senator Moore—I was in plain view. As alluded to by Senator Moore, I have been out of this place for a little while. But, when you consider that Senator Marshall has just said he hasn't seen any legislation from the government in relation to this supposedly very important issue, you wonder what he was doing on 23 October last year, when the draft exposure legislation was released by the government.
Where was he? He said he hadn't even seen it. He comes into the chamber, expressing such concern about the importance of this issue, and yet he has not even read the exposure draft of legislation that was released by the government last year in response to the inquiry that this government set up into small-amount credit contracts.
This government has taken action in respect of the issue. It's conducted the review. It's received the recommendations. It has responded to the recommendations, as Senator Duniam said before. About the only thing the Labor Party has is some conspiracy about a mythical phantom group that has one member—one member is all we know of. Now, George is a big guy, but he's hardly a group! He's just one person. Just because he's talking about it in the media, it doesn't mean that that's what the rest of us think. We acknowledge that consumers need appropriate protection around this matter. For the opposition to come into this place, complaining about the urgency and the importance of the issue and to then admit that they haven't even seen the exposure draft of the legislation completely puts paid to any semblance of reality about the supposed concerns.
In respect of the government's response to the review on small amount credit contract laws, as Senator Duniam said, the government's response supports retaining existing price caps on contracts, extending protected earnings amount requirements to all consumers and lowering it to 10 per cent of the consumer's net income—and it's a lot higher for some other people in the current circumstances—and introducing a cap on total payments on a consumer release equal to the base price of the good plus four per cent of that price per month. So there are some realistic changes to the way the current process is working, supported by the government: introducing a protected-earnings amount requirement for consumer lease providers of 10 per cent of net income for all consumers, equivalent but separate to the requirements for small-amount credit contracts.
Of course we have released exposure draft legislation. But the opposition claims it hasn't even seen the legislation. I think what we have here this afternoon is little more than a National Party-bashing exercise. That's about what we have: an extension of question time and the events immediately after question time. It is just a National Party-bashing exercise, and the Labor Party has nothing to show for it. It claims that it's concerned about this issue. It puts nothing on the table about that. It talks about development of a private member's bill, yet it hasn't even read the existing piece of exposure legislation that sits there for it to have a look at. What is your perspective on the exposure draft? Do you have a view?
Have you made any comments to the government in respect of the exposure draft that was released on 23 October 2017? What is your perspective? You claim to have real concerns about this matter and yet one of your senators comes into this place today and says that they haven't seen any legislation.
What rock have you been hiding under? Yes, I've been out of this place, but it's clear that the government has had a clear path of action on this matter over a period of time, and the opposition hasn't made a case in respect of the questions asked in question time. (Time expired)
We actually have seen that exposure draft legislation. We picked it up, word for word, and submitted it as a private member's bill, so they'll have an opportunity. They've done nothing. They've become captive to the payday lenders and the shonks out there. That's who they've become captive to. We're going to stand up for these people, so we've submitted a private member's bill. It's up to them to have a vote on it, but we know who they represent.
It has been an extraordinary week for the National Party in this place. We know that they've become captive to the payday lenders. We know that they've become the drivers of the 'Parliamentary Friends of Payday Lenders'. We've also seen in this extraordinary week how divided the coalition is in this place. We saw no better example of that than in the last hour, when the Deputy Prime Minister was under significant pressure. The Nationals did their best to defend him—it was pretty lame—but in the Senate did we see one Liberal stand up and defend him? Not one. This shows you the division between the Liberals and the Nationals when it comes to defending the Deputy Prime Minister.
This division also has consequences for people. The consequences are that people are being ripped off. They are being ripped off because this government won't progress the legislation that is going to crack down on the people doing this unscrupulous work. They try to dismiss the 'Parliamentary Friends of Payday Lenders', but George Christensen put his name to it. He was prepared to say that he was putting pressure on the government to back down. This is the same National Party that represents some of the poorest electorates in the country. I know that, in my own state of Queensland, Wide Bay is represented by a National. It shows you who they are prepared to defend—that is, big business, at the expense of those who can least afford it. We've seen continuing examples of George Christensen, the member for Dawson, dictating policy to the Liberal Party. It is something that is having a direct consequence on people in regional Queensland.
These predatory loan sharks and these shonky rent-to-buy traps have been exposed through the process, but the government is walking away from the reforms. Mums, dads and families have fallen victim to these unscrupulous operators and lenders and to those peddling the mercenary rent-to-buy schemes. That is the side that the Liberals and Nationals have chosen to be on over this week. They are either too distracted by their own internal problems or too paralysed by division—probably a mixture of both—to actually represent the people who need it.
I give full credit to my good friend the member for Oxley, Milton Dick, and the shadow minister and member for Perth, Tim Hammond, who have put maximum pressure on the government over that this week. This is so important. They've been working with community groups, church groups and other community organisations, to expose why this is actually an urgent proposition. The government's own report found some examples where families were paying over $3,000 for basic household goods that would usually cost just over $345. The response from those opposite is just to turn a blind eye—this isn't an important matter; there is no urgency.
Other examples include a person on Newstart buying goods valued at $1,550 for $5,668 and being told that the contract they were entering into was for one year; however, it was for two years. Furthermore, the customer thought that they were buying goods, but instead were only renting them. This is the type of behaviour that the government is letting continue.
Centrelink recipients have been shown to be ripped off by these unscrupulous practices as well. For instance, a freezer with a retail price of $319 cost one recipient over $1,000, with an equivalent interest rate of 372 per cent. One reported case had a consumer getting a loan from a rent-to-buy scheme for $350 to buy a washing machine, and it ended up costing the consumer over $3,500 to pay back because there was no tail end to it.
These are some of the practices that have been exposed through the government processes that led to the draft legislation, yet they continue to sit on it. So Labor will absolutely apply maximum pressure to the Liberals and the Nationals. We want them to deliver this legislation because this cannot continue. The Labor Party will absolutely stand up for those who are vulnerable to loan sharks and this sort of predatory behaviour.
Question agreed to.