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

I rise to speak in support of the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 as a whole, but I will raise particular concerns I have with parts of the bill. It's almost like an omnibus bill when you're not having an omnibus bill.

Initially I'd like to talk about build-to-rent schemes—multiunit buildings where units are rented out through a single management entity. These are commonplace throughout Europe, the United States and Japan, where institutional investors build houses, and they are managed by a professional landlord. The benefit is that it encourages long-term investment in housing purpose-built for rent. The Property Council articulated that benefit. The challenge is relatively low rental yields for investors. Tax reforms such as those included in this bill will help to address this. Reducing the final withholding tax rate on eligible fund payments—rental income and capital gains from managed investment trust investments—from 30 per cent to 15 per cent is a welcome step, as is increasing the deduction rate for capital works in eligible developments from 2.5 to four per cent per annum. This should encourage investment in build-to-rent, which I support as a means to foster a global proven model to address housing affordability and availability. We need to have lots of different options out there to build our stock.

I've previously tabled a housing report which recommended reforms to help build-to-rent take off in Australia. The bulk of these reforms is that investors must provide for at least 10 per cent of dwellings in new dwellings accessing these measures to be rented out on an affordable basis, to deliver long-term affordable rental supply. That's really critical. We need to make sure that we have a really robust tenant mix.

A measure that I have been championing for seven years in this parliament is buy-now pay-later. I'm really pleased to see that it is part of this bill. This bill is a good start, but I believe that the consumer protections that are in this bill could even be improved further. I have, as I said, advocated for many years on this. Really my advocacy for this came from about 15 years ago, or maybe more than that, when I was working in an electorate office. We had a lovely elderly gentleman come into the electorate office. He had a television. He had had this television for about 15 years, and it was one of those tiny 36-centimetre televisions. I calculated that, with what he had spent in renting this television, he could have bought a huge flatscreen television. The problem was that every month he would make a payment—I think it was $10 a week—but he was never able to pull together the money to do the balloon payment at the end, which was $150. This was for a product that, if he had gone to sell it on Gumtree or Facebook Marketplace or whatever, perhaps would have only got $40 or $50 at the time.

It was heartbreaking to see somebody who I felt had been taken advantage of in this system, so I'm really pleased that we are going to have some protections around here. With respect to that gentleman, I contacted the organisation and did a bit of a full Karen on them, and they managed to waive the rest of that contract. But, for all the people that don't come in, that don't visit a member of parliament and that keep paying those amounts, it is heartbreaking.

The government estimates that there are now seven million buy-now pay-later accounts in Australia. I have previously identified concerns in consultation with consumer advocates, including the accumulation of buy-now pay-later contracts which were not able to be effectively serviced, resulting in millions of dollars in late fees every year. And that's where they're making their money—the late fees. Yet not until now have lenders been bound by responsible lending obligations, which is extraordinary. Applying the credit act to buy-now pay-later contracts is a move in the right direction.

Providers will now be required to hold Australian credit licences and to comply with new credit regulations created for a new category: low-cost credit contracts. Low-cost credit providers will choose between a modified responsible lending obligation framework or the existing framework under the credit act. They will be under an obligation to determine that any credit they provide is affordable and meets the consumer's needs, and that's critical. Regulatory impact will depend on risk factors such as the nature of the products and the provider's harm mitigation strategies. Small amounts below $2,000 will be regulated less rigorously as a small-amount credit contract or continuing credit contract. The government states that this will provide appropriate and proportionate consumer protections.

Concerns have been identified, however, regarding the levels of consumer protections in this bill. The Consumer Action Law Centre and CHOICE say that they intend to provide a joint submission to the Senate economics committee, which will be inquiring into this bill. It is often the case that the government wants to appear to push the bill through the House. I appreciate that, and I appreciate the time constraints in front of us. It's frustrating that that often happens before a Senate committee reports, but hopefully we may see some further amendments to this. In the interim, I have consulted with the Consumer Action Law Centre, and they are keen to see this bill passed in this place.

We need to see some regulation in the credit space. Those hardships are particularly keenly felt with those who have the least opportunity to access legal advice and consumer advice and those who often desperately need the funds to be able to get out of a very tight spot. Or, in many cases, they are young people. When I've talked to young people and we've talked about the amount of interest with the late fees and what it equates to in interest, many of them are completely shocked. Honestly, I would love to see this as part of our education system. When we're doing maths, particularly in high school, we should have a good understanding of credit card interest and interest on other things, such as payday lending, and even how to calculate that interest. I think that we need to do more in that space to ensure that a lot of the next generation do not fall into debt traps.

With respect to this bill, this bill grants concessions to the buy-now pay-later sector by not subjecting them to certain requirements, and consumer advocates argue that this concession is not necessary. I think we can do more in this place to strengthen this bill. Under watered down credit obligations for buy-now pay-later, only a partial check would be required—and for under $2,000 contracts just a negative credit check is required. Two thousand dollars is quite substantial when you start adding in late fees and other payments, and very quickly the amount can balloon. A partial or negative credit check is not a holistic measure of a person's capacity to pay. They may capture red flags. If it's above $2,000 it will allow them to see what other money is loaned. However, they won't capture payday loans and other scenarios. A person with a good credit score may still be in financial difficulty, leaving them open to unsuitable buy-now pay-later lending. So this is a big, ugly and harmful concession to the industry.

My final concern is with respect to higher value buy-now pay-later products because the legislation places no caps on how much can be lent to a consumer. I think that is troubling in the buy-now pay-later sector. The lesser, watered down regulatory regime is based on the idea that providers can't charge fees. However, as I've said, even with low fees, if a person takes out a $30,000 loan the repayments will be significant. It would be better to have an upper cap of $5,000 or perhaps a maximum of $10,000, which is the bankruptcy threshold. If you can be made bankrupt by a loan, then the provider should comply with full credit regulation requirements.

I'm advised that this is an emerging issue in relation to solar panel sales, for example, through buy-now pay-later, resulting in buyers being signed up to loans that they have no capacity to repay. Consumer advocates like the Consumer Action Law Centre and CHOICE then hear through financial counsellors that borrowers are panicking that they may lose their house over a loan that they just can't afford.

I note the banking sector didn't express a strong or unified position on this, perhaps because some banks are now also providers of buy-now pay-later products as well as credit. However, I do support the bill and hope that it can be strengthened in the debate.

Regarding other provisions that are part of this larger piece of legislation, I support the Medicare levy exemption for lump sum payments to ensure that the Medicare levy is not payable with respect to eligible lump sum payments in arrears, such as compensation for underpaid wages.

Multinational tax transparency is another good, solid measure with country-to-country reporting. Tax transparency across jurisdictions for large multinationals with an annual global income of $1 billion-plus—which will be set by legislative instrument by Treasury ministers—will help improve information sharing and assist in the effectiveness and appropriateness of current tax settings as well as enhance and inform public debate. This is a very good measure.

There are also measures with respect to deductible gift recipients. I support this and support the expanded list. I do think we can do a lot more in the philanthropy space. We know that there are a lot of people and organisations that aren't even aware of DGR status. Some organisations don't know how to apply for it, and it is a very burdensome thing to apply for. We can do a lot more in this space around education. We could, perhaps, even make it a little bit easier for organisations, and share information with people who may wish to make a donation on how they can do that. The National Skills Agreement payments is another measure I support.

One area I think is really lacking is the $20,000 instant asset write-off for small businesses. This is a tokenistic approach, if we genuinely want to see small businesses thrive in this nation. You can't buy even the most simple, basic piece of equipment for $20,000, you can't buy a vehicle, you can't buy much at all. We know that many small businesses are having a very, very challenging time at the moment, so I think this threshold of $20,000 really needs to be looked at by government. If we genuinely want small businesses to grow, to stretch and to invest huge sums of money, why would we not lift that threshold to make it more attractive for them to do so? Twenty thousand dollars—I can't remember the last time it was so low. During COVID, it went up significantly. Prior to that, it was around $30,000. I just think that $20,000 is very low, and so I would urge the government: if you are genuinely there for small businesses in our nation and you want to see them thrive and you want to see them grow and employ more people and take on new technologies, then you need to look at the instant asset threshold limit and adjust it accordingly. Thank you.

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