Daniel Mulino (Fraser, Australian Labor Party) Share this | Hansard source

I applaud the member for Mayo for bringing this important motion to this chamber. It is a motion that rightly seeks to resist the repeal of important responsible lending laws and that also requests that the government ensure that there is appropriate regulation of the buy-now pay-later sector.

I'll deal with some of the key recommendations in this motion in reverse order. I'll start with the responsible lending provisions that are currently under threat by this government and point out that this was one of the key recommendations arising from the Hayne royal commission. Indeed, if one looks at recommendation 1.1, one sees the royal commission recommending that the National Consumer Credit Protection Act 2009 'should not be amended to alter the obligation to assess unsuitability.' It stressed, rightly, that consumer protection lies at the heart of appropriate regulation of our financial services sector. Indeed, Commissioner Hayne's report described the NCPP laws as 'a critical legislative step in enabling good-faith trading between credit providers and consumers'.

Really, what we're seeing with attempts to weaken these laws is a bad solution in search of a problem. We agree that strong credit flows are important to the economy, but we have not seen any evidence put forward that weakening consumer credit protections is a way of ensuring credit flows in parts of the economy where it might not be as strong as it ought to be. In the House economics committee last week, the Governor of the Reserve Bank did point to the dangers of investment growth not being as strong as we would like in some areas of business investment, but that reflects a failure on the part of the government to create the right business investment environment. It is not going to be remedied by weakening consumer protection laws, particularly for those who are most vulnerable in our society. Indeed, this is something that Treasury itself indicated in its submission to the royal commission. It said that responsible lending laws were providing stability to the financial services system overall. It said that these protections were not impeding the flow of credit.

We see the cost of credit at the moment in the economy as low as it's ever been. The solution to strengthening business investment is not to reduce protections for the weakest in our society; it is an entirely different one. A very broad church wants responsible lending laws retained. A coalition of more than 200 groups and individuals, including Allan Fels, Ian Ramsay and Kevin Davis, have signed an open letter calling on this House to block proposed changes to responsible lending laws. This letter was signed by many of Australia's most eminent experts in economics and financial sector regulation. The letter says the government's plans to ease lending obligations will inflict long term damage on the community. It is important to note that APRA and ASIC were not properly con in this. Sean Hughes, ASIC's commissioner with responsibility for credit, had no input and got no heads up. APRA heard about this process through the media.

This will hurt Australians. I hear many examples of vulnerable individuals who need this protection giving heart-rending stories to me and my staff in my electorate. They need these protections to stay in place. We can look at evidence from the Consumer Action Law Centre, from CHOICE, from Financial Counselling Australia and from the Redfern Legal Centre. They say:

… we are unable to say anything positive about the Government's plans. The repeal of responsible lending obligations for almost all forms of consumer credit is the most short-sighted, poorly thought out policy proposed by a government in credit or financial services in recent memory.

The key point I want to make to start off is that we must retain appropriate regulation for vulnerable consumers in our financial sector regulation. As to other elements of this motion, I think the member for Mayo rightly points out that the BNPL sector is one that is rapidly growing. We need to look at this in the context of maintaining and strengthening consumer protection, particularly for our most vulnerable. It is of concern that so much revenue in this sector is accruing as a result of late fees. It is of concern that many people who have missed a BNPL payment were using multiple providers. I say we need to strengthen consumer protection. We do not need to weaken it, particularly given where our economy is at and given the rise of BNPL providers.

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