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

I endorse the statements of the Chair of the House of Representatives Standing Committee on Economics, Finance and Public Administration on the tabling of this report, Home loan lending—inquiry into home loan lending practices and the processes used to deal with people in financial difficulty, and the Review of the Reserve Bank of Australia Annual Report 2006 report and express my appreciation of the tremendous support we get from the committee secretariat. With regard to the report before us, I particularly thank Mr Andrew McGowan for the work that he did.

This was an abbreviated report in that it was always intended to be a short-term process. We took submissions from invited people and had a one-day roundtable within which we had the opportunity to look at some of the issues that had been of some interest to committee members. I think it is fair to say that I had prompted this inquiry—perhaps to take the blame in some way; and the chair might appreciate why I say that—as a result of the fact that in the last 12 months, for the first time in my extensive three years in the parliament, I had presented to my electorate office two cases of people who had come into difficulty in repaying their mortgage and had found it extremely difficult to work through that process with their lender.

It caused me to reflect on the fact that, when I had my second son, which was 18 years ago, and had six months off without paid maternity leave—and it probably would not be too different these days—it became difficult for us to meet the mortgage commitments. We were a young married couple, and I was not a member of parliament then. I was able to wander down to my local bank branch to see the local bank manager, whom I had met on a few occasions. I had a chat with him and said that I had a definite return to work date and that I would be able to get back on top of the payments, and I asked whether we could organise some relief for a short period of time—and that was all very easy to do.

The two people I met with in my office had phone numbers that they rang where they ended up on those horrendous phone trees, saying ‘dial 1 for this’ and ‘dial 2 for that’, and they could not actually find their way through to a person to engage with about the difficulties they were having. They were, I would say, not particularly financially educated and so had no idea of the other advocacy organisations that they might be able to go to to get some help. One lady was in imminent danger of losing her home—a home that she had had for 17 years. She had paid mortgage payments regularly without fault for 17 years, had hit, as the chair of the committee identified, a particular life circumstance that had caused some temporary problems and was about to lose her home as a result. I am very grateful that, with the advice of the ombudsman, we were able to work through to a solution where she did keep her home. A concern in the other case was the fact that the person had been encouraged to withdraw their super funds—and we heard evidence of this situation at the roundtable. My concern is that it is being seen as a too quick and easy resolution in some cases—though in some cases it may be an appropriate response.

That is the sort of thing that we are seeing happen in the community. We all know that credit is much more easily available. I laughed with my committee colleagues about the fact that my sons looked at me like I had two heads when I suggested lay-bying as a useful way of purchasing items—the concept that you had to leave something there and you could not pick it up until you had paid it off. That highlighted to me how the attitudes of the generations had changed to the access of credit. I think that is a good development overall, but it does mean that families are under much more complex financial arrangements in terms of family budgets, and their working world is also much more complex and less reliable than it once was. We have to ensure that those who provide services to them, particularly with things as significant as financing for their home, are committed to making sure that, when there are difficulties, they engage with the borrowers and help work through the issues. I think the committee’s recommendation in terms of extending that credit regulation coverage to some of these new players is important, and having them come under an external dispute resolution process will assist advocacy groups like legal centres to better chase up and resolve those issues.

Finally, I would make the point that we did get very interesting evidence on predatory lending behaviour. I made the point that, on the morning of the roundtable when I typed in the words ‘mortgage defaults’, I got three companies offering to sell me finance products. We know they are out there and we know they are particularly looking into regions and areas where people are having financial difficulty. The legal centres told us at the roundtable that refinancing and refinancing down the chain to less and less regulated lenders is a large part of the problem. I think the committee’s recommendations are a first step in saying that this needs to be given serious attention. (Time expired)

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