Joanne Ryan (Lalor, Australian Labor Party) Share this | Hansard source

In their current form, the small-amount credit contracts have become a blight on our community and on my community in particular. Payday lenders are preying on vulnerable low-income earners who are trying to keep their heads above water, with leases and loans that are causing them to spiral further into debt. We've all seen or heard the flashy advertisements in the media where payday lenders are promising quick and easy loans. We don't need to detail them, but the most affronting of those for me is the one that suggests that if your child's having a birthday party it might be a good idea to take out a loan. It all looks like a quick and easy fix to help in circumstances where the finances are tough. But these loans are ripping off vulnerable consumers and causing them further financial strain in the long term.

And it doesn't stop there. When I sat with the Victorian Consumer Action Law Centre more than two years ago, they told me that one of their major concerns was that people didn't have one of these loans or one of these contracts or one of these leases; people had three or four of them. In those circumstances you've got to wonder about the impacts on the anxiety levels in households and the flow-on effect of that anxiety to their children. As someone who worked in schools, let me tell you: for a child coming from a home filled with anxiety and financial stress, it comes into those children's lives in very detrimental ways.

So it's important that this parliament and this government do something about this. Labor knows this, and in fact the government knows this too, because this bill, the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2018, is identical to Treasury's exposure draft in every way—word for word. Others here have highlighted the sorry tale in which the member for Higgins did the work in this space and the now Deputy Prime Minister, Michael McCormack, completed the work—had the bill drafted. But what happened after that? Beyond reason, this bill has not been brought into the parliament. I believe the member for Deakin is the person who failed to do that—failed to bring it into this parliament to protect vulnerable people from seeking loans that they cannot afford.

In my electorate of Lalor we have three payday lending shopfronts within a 500-metre radius of the Werribee train station. Further to this, Digital Finance Analytics, in the report The stressed finance landscape data analysis, commissioned by the Consumer Action Law Centre, identified payday lending hotspots and indicated that the postcode 3030, including Point Cook, Werribee and Werribee South, was the ninth highest hotspot for small-amount credit contracts. This is the same area that last year was identified as having the highest mortgage stress and mortgage default rates and for many years had been in the top 10 for people being evicted from their rental properties.

So what we're seeing is layer upon layer of financial stress. You've got to start to understand that these payday lenders are acting with full knowledge of the stress these people are under, yet they're giving loans. They are providing loans when they know. Digital Finance Analytics recently estimated that over $1 billion in small-account credit loans would be written in 2018—that is, this year—and that there will be an increase of about 10 per cent in overall loans taken out this year. They know that families can't afford these loans. This legislation takes some small steps to make sure that, in situations where the loans are becoming easier to apply for, with 75 per cent estimated to be online, we need to take action now.

Amongst other important measures, reforms in this bill will prevent payday lenders from facilitating loans with consumers that exceed 10 per cent of the individual's net income and, further, these reforms will prevent lenders from offering loans for household goods that exceed more than 10 per cent of their net income. I welcome the bill into the House because it will crack down on unfair deals which are exploiting vulnerable people. I go further and suggest that we need a national database so that these lenders can be held to account when they give a loan to someone who is already in deep financial stress because they have a payday loan with somebody else.

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