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

For some Australians, credit is a totally ordinary, mundane thing. They know their financial circumstances, their credit score and their superannuation strategy. They know how to deal with bankers, lenders and brokers. If there is something they don't understand, many of them have someone who can help: an accountant, a financial planner or parents and friends who are financially literate. For those Australians, getting into trouble is something that only happens with a significant life-changing event, such as a divorce or a death in the family, and they usually know what to do when that happens.

But that's not everyone. Many people in our community, in my own community of Mayo, are not financially literate. They don't understand credit and risk or have a budget. For many of those people, credit is a terrifying thing. They know how easily they can get into trouble. They've seen it happen to family members, to their friends or to neighbours. They've seen the terrible, enduring consequences that come from a loan going bad. They've seen people lose their homes, lose their rental properties, lose their relationships and lose their families. They also know it's necessary risk. There is no way that they can buy a home without credit—without a mortgage—or a car. And sometimes things go wrong and you just need a loan to cover a few bills until you're back on your feet.

For people who aren't financially literate, dealing with a lender can be stressful and anxiety ridden. They don't understand credit. They can't tell when they're getting a bad deal or when they're being taken for a ride. They have to place their trust in someone who may or may not be ripping them off. If you've read the submissions and the reports of the Hayne royal commission, you know that these fears are justified, because many Australians were, in fact, being ripped off time and again. For these people, consumer credit protections are the only thing that can actually prevent this from happening. It's not enough to keep them completely safe but it's something; it's some protection, and it's better than nothing.

So you can imagine how these people would be feeling when they hear the government wants to strip away these protections. You can imagine that these people, my constituents, would be feeling frustrated that the government is looking to undo the first recommendation—the first recommendation!—of the banking royal commission. They don't care about macroeconomic benefit to growth or private net capital investments. What they care about is losing their home and their future financial security, and ensuring that there's some protection so that their kids won't be ripped off by a dodgy lender or lose their credit rating.

I accept that there are complexities to this. The majority of borrowers in Australia are financially literate and they can handle credit well and don't require government intervention. They can access credit. Notably, Australia's household debt-to-income ratio has increased at a faster rate and to a higher level than most countries in the decade to 2018. As long as lenders act ethically, with integrity and decency, most people will be fine. But there are situations in which some people need protection. The policy challenge is that there is no silver bullet, not one thing that offers everyone the protection that they need. So we protect some people in the minority by strictly regulating products aimed at them, such as payday loans and consumer leases. But we don't do a very good job with these protections, and, for years now, members in this parliament have wanted to see change and tightening of the rules—even the government's own draft legislation brought into the parliament would be a good start. But at least right now there are some protections, and there are wraparound services such as financial literacy programs, counselling and zero-interest loans available. However, these are limited and they're not always easy to access, particularly if you're in a regional area.

So I can certainly understand the efficiency argument against the system we have; however, I don't think the government's approach on this is right. In all honesty, I could support a bill where there was greater emphasis on protection and support and funding, but there isn't. This bill just rolls back responsible lending obligations and strips away protections for the vulnerable. It places responsibility for unaffordable and unsuitable loans on borrowers, leaving them with fewer ways to combat the bad lending behaviour we heard about in the Hayne royal commission. It actually beggars belief. This is royal commission's first recommendation, and the government wants to take it away.

The bill removes the ability to access remedies for loss and damages suffered due to unscrupulous behaviour and implements watered-down reforms to payday loans and leases recommended by the small amount credit contract review in 2016. This bill would allow an employed person to contract to pay up to 40 per cent—nearly half—of their net income every week to payday lenders and consumer lease providers, or up to 20 per cent if the person is receiving Centrelink benefits. Consumer advocates know what this means for vulnerable people who present to them, needing relief for basic expenses like food because their incomes have been eaten up by repayments and then late fees on unaffordable loans. I can't vote for that and I won't vote for that. I would really encourage the government to take a long, hard look at this piece of legislation and actually assess who this bill is here to help. It's certainly not vulnerable Australians.

(Quorum formed)

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