Emma McBride (Dobell, Australian Labor Party, Shadow Assistant Minister for Mental Health) Share this | Hansard source

I rise to speak on the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020 and to support the amendment moved by the member for Whitlam. The key features of this bill, as others have discussed, are removing the existing responsible lending obligations and instead applying APRA's lending standards for most purposes for most lenders, including non-bank lenders not currently covered by APRA; enforcement of these lending standards staying with APRA for ADI lenders but being with ASIC for non-ADI lenders, creating two separate enforcement regimes; reducing verification requirements for lenders, replacing the current practice of lender responsibility with borrower responsibility; and exempting any business lending from protections regardless of the proportion of the loan that is for a business purpose, which replaces an existing predominant purpose test designed to prevent avoidance. The reform is also accompanied by some additional consumer protections and changes to the small amount credit contract and consumer lease protections, for which responsible lending obligations will remain—changes that do not line up with the recommendations of the government's own review of payday lending laws—and also by a requirement that debt management firms hold an Australian credit licence.

Responsible lending obligations were introduced as part of the reforms to credit law undertaken by the Rudd Labor government in 2009, which established a nationally consistent framework for consumer credit. This government is now removing key responsible lending protections as part of an attempt at a so-called simplification of Australia's framework. The changes will shift responsibility from lenders to borrowers, reducing protections for borrowers in the event that credit decisions are made on the basis of incorrect information. Recommendation 1.1 of the Hayne royal commission was explicitly against amending this framework.

On 25 September last year, the Treasurer announced the government would remove RLOs from most consumer credit products, except in relation to certain small amount credit contracts and consumer leases. The justification for these changes was that the current regulation is damaging the supply of credit. In his words, the removal of RLOs would 'increase the flow of credit to households and businesses'. He went on:

As Australia continues to recover from the COVID-19 pandemic, it is more important than ever that there are no unnecessary barriers to the flow of credit to households and small businesses.

Responding to this announcement and the Treasurer's words, Consumer Action Law Centre CEO Gerard Brody said:

The Commonwealth Bank recently said that the flow of credit is above pre-COVID levels and that lending is growing at a strong pace.

These are hardly the words of a sector crying out for laws to ease lending restrictions.

Last month, Financial Counselling Australia released its Save Safe Lending survey. Some of the key findings of this survey of their financial counsellors—and they would be no surprise to many—are that 97 per cent of financial counsellors surveyed think that responsible lending laws should remain, and 92 per cent of financial counsellors surveyed think that, if the laws are repealed, financial counsellors can expect to see many more clients with unaffordable debt. In their summary of this report, Financial Counselling Australia concluded:

Under current laws, financial counsellors are able to seek redress and help for their clients who experience irresponsible lending. If the laws are axed, financial counsellors will find it much harder to assist, leaving some of the most vulnerable members of society with debts they will struggle to repay.

Following on from this, in January I received a letter from a constituent who happens to be a financial counsellor for the Salvation Army, working with one of their local financial counselling services, and she was greatly concerned by the changes proposed in this bill. She wrote: 'I see many vulnerable clients as part of my role as a financial counsellor, including those impacted by physical and mental ill health, job loss and relationship breakdown, and others who are not skilled in basic money management. Many of our clients take out loans because they are in desperate situations.' She goes on, 'Even with the existing protections, I have seen vulnerable clients lent money when they realistically could not afford the repayments on many occasions.'

She went on to share the story of Albert, whose name has been changed. He took out many small loans to make ends meet and, already in a vulnerable position, was repeatedly lent money that he could not afford to pay back. These repayments quickly became unmanageable, and the overwhelming stress of his debt exacerbated his pre-existing mental health issues. Albert attempted to take his own life. He was then referred for financial counselling, and the Salvation Army were able to provide relief for many of his loans due to the current responsible lending laws and the obvious unaffordability of the repayments for a person who was the recipient of a Centrelink benefit. The point that she's making is that, without these lending protections in place, without the existing laws that this legislation is removing, his only option might have been bankruptcy.

At the height of the pandemic, on the Central Coast in my community, there were 36 jobseekers for every job vacancy and there were 4,902 businesses with 18,734 employees supported through JobKeeper—just in my electorate, on one part of the Central Coast. We see many people in a situation like Albert's where financial distress leads to a mental health crisis and then suicidal ideation. Sadly, this link is well established. In this economic recovery, when communities like mine and others across the country, communities built on tourism, hospitality and retail that have really borne the brunt of COVID-19, are only just getting back on our feet, the government does something like this—when we've already got vulnerable people at financial risk, in distress, who might be more exposed through this.

I met with a financial counsellor in my electorate who works at one of the community centres, and I sat in on a financial planning session that he had with a young parent who, like many, was fleeing family violence. She was there grappling with her bills. She had all the bills there and she was looking at how she could pay her rent, which was over $400 a week; how she could pay her utility bills; and how she could pay her phone bill to at least keep being connected with people. These are the people who are at risk in our community who will be more vulnerable because of this bill.

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released its report back in 2019. Recommendation 1.1, which I referred to earlier, stated:

The NCCP Act—

the National Consumer Credit Protection Act—

should not be amended to alter the obligation to assess unsuitability.

This amendment bill from the government flies directly in the face of this recommendation and its intention. Even the Treasury department said that appropriate responsible lending laws could enhance rather than detract from macroeconomic outcomes. It doesn't make sense for individuals and it doesn't make sense for our economy.

I will turn now to more of the mental health impacts of this legislation. It is clear that this legislation as it's drafted has the potential to have a significant impact on the mental health and wellbeing of many Australians, as the member for Dunkley mentioned earlier. As I said, in this patchy recovery, we've seen a rise in insecure work, and, instead of the government looking to strengthen employment and address underemployment and job security, they're exposing those in financial distress and vulnerable borrowers to greater stress by removing these RLOs.

In a news report last month, financial counsellor Kane Johnson, who works at the National Debt Helpline, day to day assisting people in financial crisis, was blunt about the impact these changes will have. Kane said:

The most important thing is … people's lives that are going to be impacted …

With these laws in place we get calls on a daily basis from people so stressed they can't sleep, their mental health exacerbated, a huge impact on their lives … and that's with these protections in place.

He went on to say:

It's just going to happen on a much wider scale if these laws are eradicated.

The Prime Minister has consistently said that mental health and suicide prevention are a No. 1 priority of this government, and I believe him. I believe that he's genuine in this. But this legislation has the potential to harm the mental health of many Australians. As pointed out by Financial Counselling Australia in a media release on their Save safe lending report:

These changes will harm individuals and families and are the last thing Australia needs as we chart a path to economic recovery. More debt is just a recipe for disaster.

Before I came to this place, I worked for 15 years in mental health and nearly 10 years as a specialist mental health pharmacist at Wyong hospital in my electorate on the Central Coast. I saw firsthand the very real consequences of financial distress, mental health crisis and suicidal ideation. It is clear from the response to this amendment from financial counsellors that the removal of these laws will increase the risk of people experiencing financial distress and, in turn, increase the very real risk to their mental health and wellbeing.

The National Suicide Prevention Adviser's interim advice recommended that the government should:

Develop a Commonwealth process for reviewing new policies or initiatives to ensure they assess any impacts (positively or negatively) on suicidal risk or behaviour.

I wholeheartedly agree, and I think the government should adopt this. They should cast a mental health lens over this legislation, which is being introduced at the very same time that the government is winding back JobKeeper, cutting JobSeeker and closing Centrelink shopfronts in communities like mine on the Central Coast at Ettalong, making it harder for people to get the help they need.

Last November, the government released the Productivity Commission's final report from its inquiry into mental health—five months after the government received the report, so missing any opportunity to respond in the October budget. Why I mention this is that, in the final report, the estimated cost of mental ill health in Australia each year—and this was recognised as a conservative estimate—was around $200 billion to $220 billion. This is, from the PC report, the estimated cost of the impact of mental ill health in Australia each year. This report has 24 recommendations and over 103 actions. And how does the government respond? They announce a House Select Committee on Mental Health and Suicide Prevention to review the report, which was worked on for over two years. This committee's first report, the interim report, is due on 15 April, and the final report is due in November. Again, this misses the opportunity after the May budget to respond to the mental health crisis in Australia. As I said, the government missed the opportunity to respond in last October's budget. It can't waste this opportunity by doing nothing in the May budget while it waits for another report.

As a former mental health worker—someone who has seen firsthand, from working in mental health acute adult-inpatient units, the impact that financial distress has on individuals, on relationships, on families and households—I see the very real risk. As I said, the Prime Minister has said his No. 1 priority is mental health and suicide prevention and to work towards zero suicides. But well-meaning strategies, reports or committees won't help lift mental health and wellbeing in this country if the government continues to introduce legislation which makes it easier for people in financial distress—vulnerable borrowers—to enter into more debt. No amount of funding for mental health services or projects or programs will help reach the towards-zero target if the government continues to introduce legislation which undermines the financial security of vulnerable Australians.

The Black Dog Institute, at the very start of the pandemic, identified those who were most at risk of mental health problems associated with the pandemic, and they've mentioned that the common consequences of disease outbreaks include anxiety, panic, depression, anger, confusion, uncertainty and financial distress, with estimates that upwards of 25 to 33 per cent of the community would be experiencing high levels of worry and anxiety during this pandemic. We heard from Lifeline recently that, on one Saturday in February, they had the most calls in their 58-year history—the most calls—from people in crisis seeking urgent support.

And what is this government's response? A confetti of announcements, sprinkling a little bit of money on a project here or a program there, while, at the same time, their whole legislative agenda as to industrial relations—like the legislation that we discussed in the House only in the last sitting—removes protections for gig workers or makes them more exposed or at risk. We know the very real risk of financial distress, mental health crisis and the consequences of that.

So there are enough concerns to suggest that removing the RLOs will increase the financial risk for people who are already facing financial distress. This pandemic has led to upheaval and uncertainty for so many Australians, especially those with pre-existing mental health problems. The recovery is a chance to build a fairer Australia and to give everybody the chance to live in a society that encourages and supports people's mental health and wellbeing. This legislation does the exact opposite.

(Quorum formed)

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