Rebekha Sharkie (Mayo, Centre Alliance) Share this | Hansard source

'Just Nimble it and move on' is a simple slogan that fails to capture the long-lasting consequences of payday lending, a practice that this government, the opposition, the crossbench and even the National Credit Providers Association have unanimously stated should be addressed as a matter of urgency. However, it would appear that the government's definition of urgent is a little perplexing. Over a thousand days have gone by since the government accepted almost every single one of the recommendations of the independent review of the Small Amount Credit Contract, and it is nearly two years since the government released its own exposure draft legislation, incorporating the majority of the recommendations. It is shameful; it really is.

Notwithstanding the years of reviews, reports, recommendations and consultations, the government has not yet introduced any legislation into this parliament to address the issue of payday lending. And just last month at the Meeting of Ministers for Consumer Affairs they again agreed that urgent action is needed to address the harms caused by payday lending. But what do we have? Nothing. In response, the Assistant Treasurer has stated that the government continues to review public submissions following the review. There was no mention of the draft legislation or when, if ever, the government might decide to take it off the shelf, dust it off and finally introduce it into this place.

So, in the absence of action by the government, it is my intention to introduce the government's own exposure draft as a bill. The bill will provide critical consumer protections that need to be enshrined in law, including capping the amount payday lenders can take out of a consumer's pay to no more than 10 per cent of income received each fortnight. We know that many people are paying obscene interest rates—from 100 per cent up to 400 per cent. It's hard to know whether we should call them small credit loan businesses or loan sharks—because that's what they are. We need changes to the legislation to ensure people have enough money for food, rent and bills. As the Salvation Army noted during the 2019 Senate inquiry into credit and financial services targeted at vulnerable Australians, behavioural science tells us that people in crisis experience cognitive overload which impacts their decision-making and their focus.

When people are in crisis, they do whatever they need to do just to survive. They need to find a way to pay rent so that they won't be evicted. They need to find a way to pay the car loan so the car doesn't get repossessed. They need to find a way to pay their bigger-than-expected electricity bill to keep the lights on. They will access whatever finance they can, and we know that it is a slippery slope—one loan becomes two—and a constant catch-up.

We should not underestimate the aggressive and targeted marketing by payday lenders. The Senate inquiry heard evidence that payday lenders were concentrated in areas of high unemployment, with a large proportion of single-parent families parents on low gross incomes—the companies targeted areas of social and economic disadvantage. Online campaigns are also targeted at young consumers online through Facebook ads and other digital marketing strategies. Evidence provided to the Senate inquiry showed that the fastest-growing demographic was young people aged 15 to 20 years of age, with rates of lending doubling in the last 10 years and the amount of outstanding debt tripling.

Introducing the government's own legislation is an unusual step but, given the apparent influence of the friends of payday lenders within the government ranks, it would seem we have little option in this place but to take the matter into the hands of members of parliament who have a conscience. I remember the now Deputy Prime Minister, at a function in parliament, bemoaning the fact that people were buying vacuum cleaners valued at a couple of hundred dollars but ended up paying thousands of dollars for these products.

Troubling research commissioned by the Consumer Action Law Centre shows that around 15 per cent of all payday borrowers will find themselves trapped in a debt spiral within five years. Again, people are facing financial ruin for the sake of what was initially a few hundred dollars, and the government is doing nothing about it. The fact is that government members cannot even be bothered speaking on this important motion. I commend the member for Oxley for his work in this area and note that this will actually save taxpayers money if it goes through.

See this speech in context