Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Hansard source

I rise to support the sentiment of the motion of the member for Calwell on the National Consumer Credit Action Plan. I commend the members for Calwell, Forde and Oxley for their contributions. It is true that this area of financial service is one that is not short of horror stories. There are a number of consumers that report very damaging impacts from participating in payday loan facilities and I concur with the general view that it is certainly an area of finance that does need a close examination and an understandable framework put in place that is nationally consistent. I think that objective is virtuous and I support that direction.

It is also worth adding to the comments of earlier speakers that this is a very legitimate area of financial service. It is a product that is well suited to particular people's circumstances. The idea that a short-term cash flow crisis emerges in a household is certainly something I am familiar with, although I have not had to resort to a payday lender. But sometimes an appliance unexpectedly turns up its toes or, in cases that have been reported more publicly, cars break down and need urgent repairs to make sure income continues to come into households. Even in the small business community, there might be a particular need for some equipment to generate income in the longer term. There are often very good and reasoned people participating in this financial service because it responds to their circumstances. It is also true, though, that this financial service can be unhelpful in many ways and, in a compounding sense, increasingly unhelpful for vulnerable families who end up pursuing payday financing as a way of addressing other debt-servicing requirements or who take out a payday loan to meet the financial responsibilities of another payday loan. That cascading process can lead to long-term financial harm and hardship.

I support the sentiment of the motion. We are very interested to see what the government actually produces. I am mindful that the government is already behind its own schedule in the state of New South Wales. There will be a need to put life back into its state based payday-lending regime, because the anticipated start-up date of the national scheme will not be met and there will be a need for a continuation of the patchwork arrangement that is currently in place. I will not be critical of the government for that, only because I am hopeful that that means it is doing its homework. I am optimistic that the justification for that is that the government is proceeding with some care given the way in which this legitimate financial service is characterised in some quarters as evil in every respect. I have put forward an argument that I do not think that is reasonable, but I have identified where there is considerable virtue in trying to put some reasonable parameters around the way in which this financial service in this industry operates. I hope the New South Wales government does not need to extend its arrangement too much longer. I am pleased that the government is engaging in meaningful consultation. I see that it is speaking with some international providers to get their insights. Cash Store Australia is probably the only listed payday lender around. I have spoken with Cash Store Australia and understand their commitment and willingness to engage constructively.

As the member for Oxley pointed out, it is not just the headline interest rate that is of concern—we have seen reports of that being anywhere from 300 per cent to over 1,000 per cent for loans of this kind—but there are also additional costs and charges. I am aware of some cases where you had to pay $25 to be told that you will be charged $25 for any correspondence that you receive from your payday lender. These bundled-up costs need to be clearly conveyed to consumers. With transparency and a clear understanding given to people considering this line of finance I think you will see a strengthening of the credibility of payday lending. The removal of surprises that are often financially punishing and the provision of a clear sense of what people are entering into will ensure that this legitimate financial service is not characterised in the way some would have it seen—that is, an area only inhabited by loan sharks. Some of the high fees and charges also suggest that competition is not quite what it could be, but I again agree that there is a need for a national framework to make sure that the industry is properly managed. There is a risk of heavy-handed regulation that might add to costs, but I am hopeful that the delayed start-up—

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