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

It is convenient for a Labor member to heckle, but he has not seen the legislation either. We have not seen the legislation and we are relying on briefings provided by the minister, and hopefully those briefings will be an accurate portrayal of the amendments when they arise and reflect the conversations with the coalition. So he might be more circumspect before he jumps in and should apprise himself of the facts. The legislation has not been seen by the industry and the opposition has not seen the legislation either. That is a simple fact. Those involved in microfinance are distressed by the fact that they, having been assured of consultation, now know, as we do, that the government will bring fairly detailed amendments into this chamber that no-one has seen yet. When I asked them what their position is in relation to these amendments, they said, 'We haven't seen them.' This was as recent as 10 minutes ago. That is the reflection of an industry directly impacted by these changes: they are distressed that they have not even seen what they are or the detail of them in order to be able to offer a considered view.

What they have done in the past when there have been opportunities for consultation is invest time and money in providing a more full picture of the microfinance space to make sure that those who rely upon microfinance are working cooperatively with competent and reputable providers and not overextending themselves. Where is that story in this debate today? It does not get the look-in it deserves. When the industry goes back to Minister Shorten to discuss foreshadowed changes—and there is no indication whether this will reflect the government's position or not, and we learned this morning that the government's position is having caps on establishment fees and monthly fees—the government has before it actuarial data that shows that that will present a loss-making proposition for many small microfinance providers on what are fairly common amounts of money that are sought from them. There are case studies that talk about a $320 loan and how under the construct of this bill and under some options that are being floated by Treasury there will be a loss of nearly $20 on that one transaction. Despite that, we are clearly under the impression that the government will push on regardless. What the coalition has sought to do is make bad provisions less bad. But I have not found anybody in the consultations who is happy with what the government is proposing, save to say they are less bad than the provisions that were originally in the bill.

I will point to some examples. In the community that I represent, centres like the Cash Loan Money Centre are run by extraordinarily decent people who are not just there as a finance provider; they have a relationship and an ongoing engagement with their clients. They are already registered with ASIC, and that is a good thing. They already need to pass the test of being responsible people, and that is a good thing. They need to satisfy police checks, and there are good reasons for that. The shadow Treasurer pointed to some of the less scrupulous providers of microfinance that live on the fringe, and they will continue to operate on the fringe, notwithstanding these changes, and may in fact get a leg-up from these changes because the more reputable providers will not be able to participate or survive. They have training requirements. I am talking about people with financial services degrees needing to get additional requirements. This is before they have even done anything. That is what is required of them, and those are reasonable things to make sure competent people and people of good standing are involved in this industry.

Then there are regulatory requirements that have already been introduced. Credit guides need to be provided, and this is an exceptionally good thing. These providers, like so many, engage in budgeting with people who are seeking money from them, even modest amounts, because that is an important contribution. They do credit checks on their clients. They seek three-monthly bank statements. They urge people to stay involved where a change in circumstances might make the full disclosed financial transaction that someone has entered into difficult to service. They do all that. Not only are they themselves registered and do they meet certain thresholds but the way in which they conduct their business is regulated and regulated, I think, quite reasonably to make sure that people are fully aware of what they are entering into and that there is advice and information provided to those intending to borrow so that people are fully aware of their circumstances. There are checks and balances, there are safeguards and there are risk management strategies that make sure microfinance is not to the detriment of the person seeking it, and nor is it a cost to the business that is making that facility available. Just recently there was a client who was earning an income of over $300,000 a year and wanted to borrow a few thousand dollars. Upon reviewing the bank statements it became clear that the individual was earning about $26,000 a month but spending a hell of a lot more through gambling. They were not provided with the facility that they were seeking, because the checks and balances are in place. But, not satisfied with ASIC registration and oversight, and all the preconditions to be a participant in this field, and then the regulations that are imposed—and they seem reasonable and fair with appropriate checks and balances—plus all the costs that are involved, now the government wants to say, 'For all of these services which we have found you to be a competent person to provide, with all the right systems in place, we are now going to tell you what you can charge.'

The simple reality for many of the small microfinance providers is that, in the bulk of the funding envelopes that they work within, these changes will make their businesses unviable. What will happen is that you will end up not protecting those people but actually pushing them into the shadowy areas where finance might be available: the bikie gangs, the consultants in avoidable problems who make money available without all of these safeguards. Or they might say, 'With these parameters in place, I know you only want a modest amount of $300 to $500, but why don't we lend you more, over a longer period of time?' So, notwithstanding the discipline that is needed by individuals who face an enormous range of stressors, or who have to cope with short-term changes in their financial situation, these measures actually encourage people who are thought to be at risk—if you listen to what the government says—to borrow more money over a longer period of time.

I mentioned earlier those who are on the periphery of the financial services industry in our country and who could not seek the 2.65 million people who are already fully or severely financially excluded, to encourage them to borrow more over a longer period of time—so these are confounding consequences as result of these changes. I am pleased that the minister has seen that a change needed to be made, and I am pleased that Senator Mathias Cormann and the shadow Treasurer have been able to negotiate changes. But this does not solve all the problems in this legislation; there is still work to be done. At least with these yet-to-be-seen changes the problems are a little less worse than they were before this morning. (Time expired)

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