Laura Smyth (La Trobe, Australian Labor Party) Share this | Hansard source

I am pleased to be able to lend my voice to this debate on the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Bill 2011 this evening. It is just another example of this government tackling those issues which particularly weigh on ordinary Australians—Australians such as those who are represented very much in the growth corridor in my electorate in south-eastern Melbourne. I certainly know that for many people in my electorate personal debt and particularly having a feeling of losing control of that personal debt not only have an impact on their personal finances and those of their families but also have a very significant impact on relationships and on stress within families and real consequences for the health, and particularly mental health, of those people who are concerned with their own personal debt. So it is particularly important that the government act in relation to issues of credit to support the needs of consumers, and I am very pleased to be able to say that this government has done so. It continues the trend that this government has set in endeavouring to create a fairer and simpler banking policy that will help Australians to get a better deal when it comes to credit cards and home loans. I am very pleased that this bill gives effect to that commitment, which we made towards the end of last year.

The government's overall aim is of course to create a much more competitive and sustainable banking system. We are doing this through a variety of means. We are banning exit fees outright on new home loans from 1 July 2011, something that the opposition has had a somewhat contrary position on. We are enabling the ACCC to more readily prosecute anticompetitive price signalling. We are introducing a mandatory key facts sheet through this legislation for new home loan customers to make it very much easier for them to compare mortgage products effectively. And we are putting forward this bill to get a better deal for Australians with credit cards. In addition to that, we are launching a national community awareness program which will give consumers much more control in their banking. These are some of the very practical ways that the government has embarked upon to ensure that consumers have ready access to information which allows them to better compare those products which they are about to enter into. We have heard from the opposition this evening, as we have heard in many debates before, that the government is seemingly embarking upon a process of unnecessary regulation and unnecessary intrusion into industry. Indeed, the last time that I heard this debate ensue from the opposition was during the course of discussion about the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011, where they said that they were very worried about shareholders, they made all the right noises and there were many speakers from the opposition ranks who spoke on the bill. Then at the very end of the debate the opposition, having said that we were as a government seeking to intervene unnecessarily in the operation of companies and were seeking to overregulate matters relating to executives, ultimately went and voted on behalf of the executives.

It pleases me to be able to say that this afternoon the Senate passed the executive remuneration bill. So, despite the opposition's bleating very loudly to the effect that the government was overregulating companies in relation to the remuneration of executives, we see once again this government standing up for the little person, for shareholders and employees and consumers and all those people who put their money into shares in our companies. The government is standing up for those people at a time when all the opposition could put forward was a claim that this government was seemingly overregulating, as though those people on the opposition benches are somehow free marketeers. It would be good if they in fact believed in a market and demonstrated that in any debate in this place.

We have also seen the extraordinary position in recent weeks of the shadow Treasurer boasting about his plan to put mortgage exit fees back in place. We have heard this regularly from the shadow Treasurer, who seems in fact to want to assist banks to stop customers from seeking out a better deal on their mortgages by keeping exit fees in place. The reforms that are being put forward in this bill, amongst other reforms that this government is embarking upon in order to enable better competition within the banking sector, have been supported by Choice. In relation to the question of mortgage exit fees, we have heard Matt Levey of Choice saying that business models based around trapping consumers in uncompetitive deals through complex and costly fees have no place in a reformed banking sector. He went on to say that removing exit fees will pressure lenders to compete on upfront price and customer service or else face the risk of customers moving their money to get a better deal. That sort of measure, together with the measures contemplated in this bill, is exactly what we are about—ensuring that there is appropriate competition within the banking sector, ensuring that there is appropriate competition to support the very many people within this country who rely on credit cards and who enter into home loans without appropriate information.

We should reflect upon the circumstances of many Australians such as those in my electorate who very much rely on credit cards. In considering this bill, I reflected on the RBA statistics from February this year which reveal that there was some $49.3 billion in credit and charge card debt outstanding, of which around $36 billion was accruing interest. We know that at that time the interest rate on credit cards was 19.7 per cent on a standard card and interest on low-rate cards was around 13.5 per cent. These are staggering figures and I am particularly concerned about these figures from the point of view in particular of young people getting into debt. I am also concerned about the circumstances of families, and in particular single-parent families, getting into debt. So any measures such as the measures included in this bill which go towards assisting those people make their mind up consciously in advance of entering into those levels of debt are very important.

I should say that my own electorate takes in the areas of Casey and Cardinia within the south-eastern growth corridor of Melbourne and I am troubled by the increase in consumer debt in that growth corridor. A submission from the Financial and Consumer Rights Council to the inquiry into home lending practices and processes identified a 35 per cent increase in bankruptcies in Victoria overall during the last two years. It also noted that in high-growth areas such as the south-east corridor in Melbourne there has been a 70.8 per cent increase in bankruptcies over the past six years. I am also very much aware of anecdotal evidence which has been provided to me through discussions with the Casey North Information and Support Service, which offers support to many in the southern end of my electorate and throughout the region who are facing financial difficulties. I know that they have received the assistance of the federal government through emergency relief funding to the service and also have received funding for a financial counsellor for the service, but I am certainly aware that they face ongoing pressure through the need for financial counselling in areas such as Berwick, where we have new families moving into the region, areas where families have struggled with debt for some time or who have taken out debt to meet household costs. As I said before, those problems very obviously create serious financial impacts for individuals and families but they also have very immediate social impacts, putting pressure on relationships and having health and mental health consequences which are of particular concern.

In response to all of those things which are happening in my electorate, as I am sure they are happening in many other electorates around the country, this bill is one of the things that the federal government is doing to ensure that credit card providers will be limited in their capacity to entice customers into increasing their limit well above what they are able to pay.

There are a range of other things that we know the federal government is doing to relieve financial pressure on families and those who are less well-off in our community, things like providing more financial support for families with teenagers who stay at school longer, providing income tax cuts over several years within our term of office, providing a more flexible childcare rebate, providing a Paid Parental Leave scheme—all of these things together go towards alleviating some of the pressure on families dealing with cost of living. And our credit card and home loan reforms are geared towards the same concerns, ensuring that there are practical measures in place for people such as those I represent to ensure that they are able to respond to personal debt and that they are able to meet their cost of living.

The bill before us introduces quite major changes to the relationship between credit providers and consumers in respect of credit cards and home loans. In the debate this evening we have heard already about some of the things that the legislation will do, but to recap: the bill will make it mandatory for credit providers to include key information in credit card application forms about the annual percentage rate; it will prohibit credit providers from making unsolicited invitations to consumers to increase their credit limits, except where there is consumer consent to it; it requires home lenders to display on their website and make available on request a key facts sheet about the products they offer. Each of these things in turn—

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