Tim Hammond (Perth, Australian Labor Party) Share this | Hansard source

I move:

That this House:

(1) notes that:

  (a) the Government established a panel to review the Small Amount Credit Contract (SACC) laws on 7 August 2015, which provided its final report to the Government on 3 March 2016;

  (b) the Government released its response to the SACC review on 28 November 2016, in which it agreed with the vast majority of the recommendations in part or in full;

  (c) the Minister for Revenue and Financial Services said at the time that 'the implementation of these recommendations will ensure that vulnerable consumers are afforded appropriate levels of consumer protection while continuing to access SACCs and leases';

  (d) the Minister claimed in an interview on Lateline on 28 February 2017 that Treasury was drafting legislation to implement the review's recommendations; and

  (e) in response to questioning in Senate Additional Estimates by Senator Gallagher on 1 March 2017, Treasury's head of the Financial System Division confirmed that drafting had not commenced for a bill to enact the SACC review recommendations accepted by the Government;

(2) acknowledges that consumer credit contracts and consumer leases have been shown to cause unnecessary hardship to vulnerable consumers, and that the Parliament should act to protect vulnerable consumers;

(3) recognises that the delay in introducing legislation for consideration by the Parliament, to implement the SACC review recommendations, results in an unnecessary continuation of hardship to vulnerable consumers and their families;

(4) congratulates the consumer advocate groups who attended Parliament House on 27 March 2017 to raise the profile of this important issue; and

(5) calls on the Government to immediately prepare legislation for consideration by the Parliament, to implement the SACC review recommendations.

I don't need a seconder yet? No. I'm glad there are learned heads here, much more learned than I.

Mr Pasin interjecting—

I wasn't referring to the member for Barker in relation to that assessment, I can tell you right now!

Mr Pasin interjecting—

All good things to those who wait, I suggest! In government, Labor enacted the National Consumer Credit Protection Act 2009. That act implemented for the first time in Australia a national regime for the regulation of consumer credit. Labor strengthened the regime in 2012 in response to concerns about improper behaviour by payday lenders, including by strengthening protections for consumers. Part of Labor's plan also mandated a built-in review mechanism of the new national consumer credit protection regime. That review commenced in 2015. The small amount credit contract review was handed to the government in March 2016 and the government published its response last year.

This will not be a motion where one side or, presumably, the other will spend much time being overly critical of the approach taken by respective major political parties in relation to addressing this crucial issue. I think it's fair to say that, when one looks at the way in which both parties went about unanimously backing the recommendations of the review, there appears to be significant uniform community goodwill in relation to making sure meaningful steps are taken to protect vulnerable consumers who may fall prey to small amount credit contracts.

Let me briefly expand what I mean when I talk about small amount credit contracts. Put very simply, they are more colloquially known as payday loans or rent-to-buy schemes. Both of them have real pitfalls for vulnerable consumers who are spending much more time than any of us would like focusing on just meeting day-to-day needs for them and their families. The reality is these payday loans and rent-to-buy schemes are almost exclusively used by people on low or very low incomes to try to keep their heads above water. We've all spoken to those people in our electorates. We know that people on very low incomes often have little capacity to absorb financial shocks—simple things like a washing machine breaking down, ill health leading to worklessness or a parking ticket. With little disposable cash after bills are paid, and with little savings put away for a rainy day, one of the obvious options is often a payday loan. We have all seen those adverts on TV, often late at night or extremely early in the morning, saying, 'Cash while you wait' and 'Loans via apps'. It all looks very warm and fuzzy until such time as the rubber hits the road and these vulnerable consumers are faced with the spectre of having to pay back those loans plus crippling interest which they hardly foresaw.

There are also rent-to-buy consumer leases, where a consumer will enter into an arrangement in which they rent a consumer good, say a vacuum cleaner or a fridge, from a company for a period. At the end of that period, they get to keep the goods. It's also becoming increasingly common with mobile phones. So while the unconventional arrangements have existed in one form or another for many years, and we all recognise that if properly in check they can play a legitimate role in smoothing out the swings and roundabouts of challenges for low-income families, there is still a systemic and regulatory failure in relation to the small amount credit contracts that see some of our lowest income citizens being trapped in a cycle of debt.

I will use my remaining time simply to implore the government—the time is long overdue for us to make some legislative changes to the laws relating to small amount credit contracts. This is the reason why it's such a shame that we are where we are. The government commissioned this review in 2015; it reported in March 2016. The government's response, which was very favourable to the review, was in November 2016, and there was light at the end of the tunnel. The minister indicated in February 2017 that drafting was underway. The problem is that the March 2017 estimates revealed that this was not true. Drafting had not commenced, and we haven't seen any evidence yet that the drafting instructions have even been drafted, let alone the legislation. What I'm hoping we will hear from those on the government side today, through this motion, is that there is some real progress in making sure that all sides can wrap around this issue, protect vulnerable consumers and just make sure that their lives can be improved in some small way.

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