Graham Perrett (Moreton, Australian Labor Party) Share this | Hansard source

I rise to speak on the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024. With these amendments, the Albanese Labor government is working to protect consumers by implementing much needed regulation for the buy-now pay-later sector of the credit market. Buy now, pay later—or BNPL, as it is commonly known—simply means you can purchase a product but delay paying for it. A third party pays the merchant for the goods or service, and then the consumer makes payments in instalments over a period of time. Consumers are not charged interest but are charged a fee for the service. It's a variation on the hire purchase agreement that was around back in the sixties and seventies. It does sound pretty good. There's no doubt it's an attractive form of credit, especially when times are tough, like during the current cost-of-living pressures that many people in my electorate are currently facing.

It's true that there are a lot of benefits to this Australian credit innovation. It provides cheaper access to credit in comparison to credit cards and expands the customer base for goods and services providers. The availability of buy-now pay-later increases competition and choice, and this is backed up by the statistics. Data released in March this year indicates that two in five Australians had used buy-now pay-later in the previous six months. However, some Australians are experiencing financial harm as a result of using buy-now pay-later services. The Australian government service Moneysmart cautions consumers that it can be easy to overspend and overcommit to spending what you can't afford when choosing BNPL. It can also be hard to manage multiple services at the same time and keep track of different payments. The biggest concern is the fees that are applied. Consumers are attracted by the 'interest free' or 'zero per cent interest' advertising. However, BNPL service providers may charge late fees if payments are missed, and these can be around $5 or up to $15, and then there are things like a monthly account fee of around $10. Some providers charge a payment-processing fee of around $3 every time a payment is made, and other providers charge an establishment fee to set up the account. This can be up to $110. Obviously all of these hidden costs can add up.

Moneysmart further advises consumers to be careful when it comes to late payments, as they can form part of a credit report, affecting the ability to get a loan for a car or a mortgage, something much more substantial, later down the track. The number of Australians paying late fees has increased significantly from January 2020, when about five per cent of Australians were affected by those fees. In 2023 and more recently, we have been at 20 per cent of BNPL consumers having to pay late fees, which has increased the cost of the capital. As the Minister for Financial Services said, 'The risks of BNPL disproportionately impact upon vulnerable Australians, including First Nations Australians and those struggling financially.' Obviously that is significant.

You can trust a Labor government to enact protections for consumers. In 2022 we made payday loans and consumer leases safer and applied better regulation to that sector. Now, with this bill, we're going after buy-now pay-later—that part of Australia's consumer credit regulation laws. This will bring buy-now pay-later products into line with other forms of consumer credit such as personal loans and credit cards. The current lack of regulation for BNPL can lead to poor product disclosure, excessive fees if the consumer defaults, unaffordable lending arrangements that lead to stress and hardship, and limited access to dispute resolution services. These reforms will require buy-now pay-later providers to have an Australian credit licence. They will also be required to comply with the requirements of the credit act, which implements standards for product disclosure, dispute resolution and, more importantly, hardship assistance.

The measures are proportionate as well. Buy-now pay-later providers must meet responsible lending obligations. However, providers of products that have strict fee caps which fall into the category of low-cost credit will be able to comply with a modified responsible lending obligations framework. These amendments mean Australians can still benefit from buy-now pay-later, while receiving enhanced consumer protections.

The bill also contains six other schedules. The first of these focuses on encouraging investment in the build-to-rent industry. Build-to-rent housing is typically multiunit buildings, where all of the units are rented out through a single management organisation. This is an established practice in places like the United States and Great Britain and only an emerging industry in Australia. In the past, it has primarily been used for luxury developments, but, with these amendments, the Albanese Labor government is focused on more affordable housing. As I'm sure all MPs know, there is such a housing crisis at the moment. Encouraging the development of build-to-rent dwellings will increase rental supply at a time when it is most needed, part of the Albanese Labor government's drive to build 1.2 million homes by the end of the decade.

This bill contains two tax incentives for new and eligible build-to-rent developments. Firstly, it reduces the final withholding tax rate on eligible fund payments such as distributions of rental income and capital gains from management investment trust investments to 15 per cent, bringing it down from 30 per cent. The second tax incentive increases the depreciation rate for capital works in eligible projects to four per cent per annum. That's up from two per cent per annum. This will cut the depreciation period from 40 years to 25 years.

There are also specific conditions which must be met in order to guarantee housing supply. Some of the aspects are that the buildings must contain at least 50 or more units and the minimum length of lease must be three years, giving a stable roof over people's heads. At least 10 per cent of the units must be tenanted on an affordable basis as we need to guarantee a long-term, affordable housing supply. This means that the affordable homes must have their rents set at 74.9 per cent or less than the market rental of a similar home in the same building. The affordable and market-rate dwellings in the same building must be comparable and have equal quality finishings and fittings. To be eligible to rent an affordable dwelling, the household incomes of the tenants must be under the required income limits.

Labor's housing reforms are the most significant in a generation. Our ambitious housing reform agenda has already made significant progress in tackling the housing challenges that were left to us by the opposition, where not as many houses were built. As we know, supply is the issue. Labor is helping more Australians into their own homes, and we're committed to our partnerships with the states and territories to keep doing this necessary work. It was good to hear from the housing minister today that the Queensland government is onboard and there will soon be more roofs put over the heads of people that are doing it tough. Bolstering the build-to-rent sector is another important way of building more homes for Australians. I want to particularly say that this week I've been dealing with one of my cousins, who is the same age and has had similar opportunities in life but is now living out of his car. So things can go off the rails very quickly.

Schedule 3 of the bill concerns an amendment to the Medicare Levy Act 1986. It will exempt eligible lump sum payments in arrears from the Medicare levy from 1 July this year. The unlawful underpayment of employees' remuneration was identified in the Senate economics committee's inquiry from March 2022. The amendment ensures that taxpayers who receive an eligible lump sum payment to fix a previous underpayment do not incur an additional Medicare charge.

Schedule 4 meets a core election commitment to ensure increased transparency in the tax dealings of large multinational corporations. Certain of these corporations will be required to publish tax information related to the jurisdictions in which they operate. This will provide Australians with more information about how much tax these corporations pay relative to their activities. That is the old 'set up a subsidiary in another country and then charge for the IP' or all those shonky practices—sharp practices, I should probably say, but close to shonky—that corporations were getting away with. Well, the world is now turning its gaze to corporations that do that.

The affected corporations are those with an annual global income of $1 billion or more and with at least $10 million of turnover in Australia. These new rules for public country-by-country reporting put Australia at the forefront of a global trend for increased transparency and accountability for the tax affairs of multinational corporations. We are the 13th biggest economy in the world, so we can be a responsible leader when we work with like-minded countries, making sure that we hold these corporations to account.

Schedule 5 of this bill adds several new entities as new deductible gift recipients, bolstering the not-for-profit sector and encouraging philanthropy in our community. Schedule 6 of the bill concerns the new National Skills Agreement. This bill amends the Federal Financial Relations Act to implement Commonwealth payments to the states and territories in accordance with the National Skills Agreement. Labor is directing $12.6 million in the voc ed and training sector to address skills shortages. The final raft of changes of this bill implement the 2024-25 budget initiative to extend the $20,000 instant asset write-off for small businesses by 12 months, something welcomed by many small businesses. So those small businesses in Moreton with an annual turnover of less than $10 million will be able to deduct eligible assets until 30 June next year. This will provide cash-flow support and simplification benefits for up to four million Australian small businesses, helping to ease some of the financial pressure they are currently enduring.

The wide-ranging measures in this bill provide additional protections for Australian consumers, and they'll lead to additional rental supply and require more transparency from big business while supporting small businesses. I commend this legislation to the House.

See this speech in context