Graham Perrett (Moreton, Australian Labor Party, Shadow Assistant Minister for Education) Share this | Hansard source

I rise to continue my speech on the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020. I point out that Labor, when in government back in 2009, had brought in measures that were designed to protect the consumer. They only applied to consumer credit contracts, not to credit contracts for a commercial purpose, like small business lending. Commercial credit is primarily regulated by state governments. When Labor brought in those protections, that was a good thing to do for consumers. They required the lenders to take some responsibilities—not drastic measures, but just turning their mind to the person in front of them, rather than to the credit profits that would flow to the person providing the credit.

The Treasurer announced in September last year that the government would remove responsible lending obligations for most consumer credit products. The Treasurer's rationale was that the RLOs were damaging the supply of credit. The changes in the bill before the House today mean that lending decisions would be regulated by APRA for authorised deposit-taking institutions—that is, banks and credit unions. APRA's mandate is primarily concerned with ensuring systemic stability by ensuring the banks do not make lending decisions that destabilise the bank or the financial system. APRA does not have a consumer-facing mandate, as every politician in this place would know. Lending institutions that are not authorised deposit-taking institutions will be regulated by legislative instruments set by the Treasurer and enforced by ASIC. What the government is seeking to do with this bill before the House today is to have consumer lending regulated by three separate sets of rules and two different regulators, depending on the nature of the credit provider and the credit contract.

It doesn't sound like sensible reform to me, as was mentioned by the member for Whitlam. And, not surprisingly, these changes directly contradict recommendation 1.1 of the banking royal commission. Royal commissioner Hayne said that responsible lending obligations should not be amended. It also contradicts the Treasury's own submission to the banking royal commission, which noted that appropriate responsible lending laws could enhance rather than detract from macroeconomic outcomes. Consumer groups are very concerned that watering down the rules to protect consumers will result in significant consumer harm. The Consumer Action Law Centre said in their submission to the Senate inquiry:

Confusingly, ASIC would remain the regulator for bank misconduct such as unconscionable conduct and misleading and deceptive conduct, but not lending conduct. This overlap of conduct and prudential oversight will be confusing and inefficient. It will not be competitively neutral, and it will create conflicting regulatory objectives for APRA.

The Law Council of Australia noted in their submission:

25. Under this regime, non-bank lending to consumers will not be judged by whether unsuitable outcomes for consumers result but rather by whether:

(a) the systems and processes conform to the criteria in the regulatory

declaration; and

(b) the assessment of suitability was made in accordance with those systems and

processes.

26. Respectfully, the Law Council submits that this does not represent a simplification of RLOs, but rather makes enforcement of the standards complex and difficult. It would also make it highly difficult for a consumer to assess whether or not their own lender has breached the non-ADI standards.

Banks are also confused about these regulatory changes being championed by the Morrison government. Suncorp Group Ltd said:

Suncorp believes there is a lack of regulatory alignment between ADIs and non-ADIs which compromises consumer protections by incentivising credit applicants to use non-ADI lenders who have simpler credit assessment standards and less regulatory oversight.

These changes may have an even more sinister impact. Several stakeholders told the Senate committee that they were concerned the bill would negatively impact victims-survivors of family violence and leave them exposed to the risk of continued and increased financial abuse. Labor senators on that committee said in their dissenting report:

When responsible lending obligations (RLOs) are correctly implemented, they can help to prevent economic abuse because the lender will make reasonable enquiries about each applicant's financial situation, the accuracy of information provided and suitability of the loan. This process is an effective mechanism to expose undue influence, imbalance of bargaining power and the underlying dynamic behind economic abuse.

As Ms Dacia Abela, senior lawyer for economic abuse at WEstjustice, a member of the Economic Abuse Reference Group, told the committee:

If this bill is passed, we expect an increase in the number of loans being approved in circumstances of economic abuse, and victims-survivors will have reduced options to seek an individual remedy against those lenders. Whilst lenders will still be expected to consider the affordability of a loan, the bill removes entirely the requirement for lenders to make reasonable inquiries of the borrower's requirements and objectives. This represents a missed opportunity to identify red flags of economic abuse.

In regard to APRA being a body for consumer lending, Ms Abela went on to say:

Lastly, and importantly, APRA has probably not had to think much about how family violence intersects with financial services, whereas bodies such as AFCA and ASIC are developing practices and knowledge of how to deal with family violence issues. So APRA would effectively be moving into new territory with virtually no knowledge of or set practice in the area.

We know that it is crucial that professionals working with victims and survivors of family violence understand the complex dynamics of family violence. We heard much about that during the debate in this parliament when the government pushed through their bill to abolish the Family Court of Australia. I can't believe that the Morrison government still does not understand that family violence is complex—that perpetrators will try to game every law and regulation they can find to maintain control over their victim.

The Prime Minister and his cabinet colleagues don't need to walk very far today to hear from women who have been in this very situation. I know they were busy at lunchtime, but today there were people who gathered outside this building because they were angry and they wanted to talk about this situation. Many of those women who gathered on the front lawn of Parliament House today would be able to tell the Morrison government firsthand what it's like to suffer financial and economic abuse due to the actions of a former partner. If only we had a Prime Minister or a Treasurer or a Deputy Prime Minister who could find the time to go outside and listen to those women. There is nothing more important than the Prime Minister listening to the women of Australia. I hope he has got that message.

Sadly, we know this government has form. They don't listen to the experts. They don't listen to stakeholders. And they especially do not listen to women. It would be hard to hear the voices of the women in the Liberal Party, there are so few of them.

Despite what the coalition government says, it is abundantly clear that this bill before the chamber is not designed to benefit consumers. It will actually overwhelmingly benefit the lending market, banks and lending institutions. The government claims that the primary purpose of these amendments is to provide timely flow of credit to the Australian economy. But at what cost to real people—at what cost to consumers?

We've seen the same approach by the Morrison government to economic recovery measures that have been introduced. Last week, the government announced a tourism support package, which has gone down like a lead balloon—I won't quote Phillip Coorey on this occasion! The announcement allowed for a great photo op for the Prime Minister, pretending to pilot an aeroplane, waving a ticket to nowhere. But, beyond that, it will do nothing for the one million Australians who will be taken off JobKeeper in less than a fortnight's time. The tourism support package will give Australian travellers access to 800,000 half-price airfares to a limited number of destinations around Australia that, strangely, seem to be in marginal seats or in seats that the coalition need to win at the next election. There is only one eligible destination in Victoria and only one eligible destination in the most populous state, New South Wales.

There are four eligible destinations in Queensland, but Queenslanders will not benefit from the half-price airfares if they're travelling within Queensland, and I know—being married to someone from Cairns—how desperate that area is at the moment. On visits up there recently, it has seemed that every other shop is on reduced hours or is boarded up, almost.

Sadly, we saw this government—even though they're in coalition with the Nationals—forgetting regional centres. They've been almost completely ignored.

There are a million Australians on JobKeeper and two million Australians who can't get a job or the hours they need to work to support their loved ones. Support for the tourism industry is welcome, but the announcement from the Prime Minister was nowhere near enough and it will be no substitute for a JobKeeper payment. Cutting JobKeeper too soon is a ticket to unemployment for too many Australians. It's estimated that between 100,000 and 200,000 Australians will join the unemployment queue when JobKeeper is cut. It is too soon to be cutting support. It is too soon to be cutting JobKeeper. Many Australians were hoping for an extension of JobKeeper or some other kind of substantial support. What the government has announced is a measure that will be very targeted to a limited number of destinations and will only benefit businesses in those destinations if the people travelling there have the spare cash to spend—

See this speech in context