Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

I welcome the new-found wisdom of the government. I only wish that on a series of other bills the government would display similar wisdom, in the words of the minister, in consulting the general community. The ones that come to mind are those in relation to the mining tax, the carbon tax, managed investment trusts withholding tax and, given the ministers at the table, Minister Shorten and Minister Bowen, people-smuggling—all displays of a lack of wisdom. The minister just eulogised himself, put himself on a pedestal for his newfound wisdom in consulting widely. If wisdom is the benchmark, I would urge him to encourage his colleague at the table to display similar wisdom. And I would urge him to, given that we are being so gracious as to—

Mr Shorten interjecting—

I would urge him to indulge me in this regard. The coalition will not oppose the Consumer Credit and Corporations Legislation Amendment (Enhancements) Bill 2011. The government, with its amendments, has acknowledged the flaws in the original bill that was presented to this parliament. We only wish that on so many other bills it also recognised its own flaws before proceeding with ramming bills through the parliament.

The government was forced back to the drawing board by the unanimous recommendations of the Parliamentary Joint Committee on Corporations and Financial Services. So not even the Labor Party's own people could bring themselves to support the original bill. This committee recommended that the government revisit the payday lending changes and undertake further consultation with industry. Under pressure, the government has agreed to increase the caps for small-amount credit contracts, shorten the term for small-amount credit contracts from 24 months to 12 months, increase establishment fees from 10 per cent to 20 per cent, increase the interest rate per month from two per cent to four per cent, allow an additional $400 fee to be charged for midtier loans between $2,000 and $5,000 and remove multiple-contract prohibitions on lenders under certain circumstances, and it has committed to prohibit loans with a term of 15 days or less by regulation.

These changes represent a significant concession to industry and recognise the great job done by my colleague Senator Mathias Cormann in identifying a whole range of problems with the original bill.

Mr Bowen interjecting—

Well, mate, you are working on the votes with your colleague next to you at the table, and the Attorney-General is over there, so you could turn around after 10 minutes and work on her vote as well. I would encourage you to focus more on your votes than worry about our votes. The proposed government amendments address many of the concerns raised by stakeholders during the parliamentary committee process. Those concerns included: the proposed caps on fees and interest charged on payday and small-amount loans would be uneconomic and would lead to many current participants withdrawing from the market; many of the businesses that could close down are small family owned and operated businesses—not that the government has not tried to close those down before; the reduction in the availability of payday and small-amount loans would result in many people not having access to the existing finance they rely on to meet unexpected expenses; and the banks have not participated in payday and small-amount lending for some time because it is uneconomic for them to do so and they will not re-enter the market to fill the gap if existing providers go out of business. The amendments also recognise the reduction in legitimate licensed payday and small-amount lenders. That reduction may encourage unlicensed and illegal operators to enter the market, which would reduce consumer protection. The amendments address those concerns.

The new caps on fees and interest charges will ensure that the vast majority of short-term lenders will remain commercially viable. Small family owned and operated businesses will not be adversely impacted, and that is hugely important. People who rely on these types of loans, which are not provided by banks, other than, arguably, through the credit card process, will continue to access the finance they rely on to meet unexpected expenses. And the ongoing viability of legitimate regulated providers will discourage the growth of unlicensed and illegal operators whose entry into the market would reduce consumer protection. (Extension of time granted)

While some of the provisions may not have been implemented by the coalition in government—and in my second reading speech I identified why, because we were doing the heavy lifting on getting the referral of the corporations power from the states to the Commonwealth, which was something that needed to be done; and, I might add, at the time, regarding the referral of power, the opposition—

Mr Shorten interjecting—

The minister should listen to this history, because he was still in shorts at the time that this was being negotiated. The Attorney-General would be interested as well. When the former Attorney-General Daryl Williams and I negotiated the referral of power from the states to the Commonwealth, I recognised that it was the two Labor Premiers who supported the referral of power.

Mr Shorten interjecting—

Mr Bowen interjecting—

This is the only accolade you are going to get from me, so you should listen.

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