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

The purpose of the Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011, which has subsequently been varied by an indication of further amendments today, is to amend the National Consumer Credit Protection Act 2009 and the National Credit Code. The amendments in the bill aim to enhance access to hardship provisions under the code; to introduce protections against negative equity for holders of reverse mortgages; and to introduce a cap on the cost of small-amount credit contracts—and I will come back to that in some detail shortly, given that there have been changes in what is proposed from the original legislation—and also a cap on the annual cost rate for certain small-value transactions. The bill also aims to bring about some consistency between the treatment of consumer leases and credit contracts.

Madam Deputy Speaker, you would be interested, as I am, hearing colleagues talk about this issue. So often it is referred to as 'payday lending', and there is undoubtedly some concern and some hardship caused by an inappropriate use of that form of financing, but in some respects it seeks to guide one's attention to a very specific concern, a legitimate concern, without necessarily going into how the measures in this bill address that matter and in fact go far beyond payday lending. That is something that has caused great concern and consternation amongst the microfinance community—that a term such as 'payday lending' gets thrown around rather carelessly at times, as if that is all this bill seeks to address. That is not the case. This bill has far wider application and implications, and this in part is why there has been such concern about the consultation process that surrounded this bill and the amendments that are before the House today.

Short-term credit or microfinancing is an important part of our financial services system in Australia. The Centre for Social Impact report for the National Australia Bank back in May last year, called Measuring financial exclusion in Australia, found that 15.5 per cent of the adult population—that is 2.65 million Australians—are either fully or severely financially excluded. They are not able to access the kinds of financial services that many would take for granted. Amongst that group, more than half were unable to raise $3,000 in the case of an emergency. Faced with a personal or a family emergency, half of that group—so we are talking about 1.3 million people—were not in a position to raise $3,000. That is just a snapshot of the financial circumstances that a large proportion of the Australian population face. This is in part why we have seen the development of the microfinance industry, where there are cash advances of around $800 million plus each year to half a million consumers.

There are cases, there are examples and there are providers of payday lending and microfinance services that have let down an important industry. They deserve to be scrutinised and they deserve to be sanctioned for their conduct. They deserve to be highlighted as contributors to the hardship and stressors that led to the need to seek the finance in the first place and, in some cases, they have in fact compounded that financial distress by extending it from a potentially short-term period of hardship and distress into a longer term sentence that will colour and impact on a person's life for decades to come. That should be the focus of the work. That should be where the attention is given. Instead, the government has gone about regulating an entire sector as if all participants in it are characterised by the distressful circumstance that I just characterised, when that is clearly not the case. What we have seen and what the coalition has been concerned about is the way in which this has been progressed. The government has ignored best practice, the positive experiences, the valuable service that microfinance providers offer, how they go about their business affairs, their relationship with their borrowers and how positive that can be. That seems to have been pushed to one side to focus almost exclusively on the minority of cases where that positive experience is far from the case. It is like asking a doctor about the general health of the population. They only see sick people, and if they imagined that the only people in the population were sick people they would be misguided, yet that seems to have been the approach that some in the consumer advocacy area draw from. They only see those who are in financial distress. That is appropriate and they have an important role in advocating on their behalf, but there are hundreds of thousands of other Australians that they do not see for whom these short-term credit arrangements not only are important but are a positive and essential part of their own financial management, employment and life circumstances. What I am concerned about and what the coalition has been pursuing is the impact that these changes the government initially identified some nine months ago would have on a very positive and legitimate area of the market for short-term credit.

As was foreshadowed by the shadow Treasurer, it may be that the parliament will not sit again. There may be an election or something else may happen. There is a breathless haste to bring about a conclusion to this matter, given that it has sat around for some nine months. I had contact this morning from the industry groups and small businesses that are directly impacted by these changes. They have had no consultation about these changes whatsoever. They have not seen the legislation.

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