Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

On behalf of the Standing Committee on Economics I present the committee's report entitled Advisory report on the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Bill 2011 together with the minutes of the proceedings.

Ordered that the report be made a parlia­mentary paper.

by leave—I am very pleased because this is a unanimous report of the committee, which these days is quite a rare event but one that is worth noting and celebrating, almost, in terms of the way in which this parliament has worked, where we have tended to see anything that we put up being opposed just for the sake of opposition. I need to place on record my thanks to all the committee for working so constructively together to come up with this unanimous report.

The National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Bill 2011 makes a number of reforms to lenders' practices for home loans and credit cards. For example, it requires lenders to publish key-facts sheets for both of these products, which will make it easier for consumers to compare products. Additional reforms for credit cards are: preventing lenders from sending unsolicited credit-limit-increase offers to individuals unless they elect to receive them; preventing lenders from charging fees where a consumer goes over their credit limit, unless the consumer elects to be able to go over their credit limit; and, requiring lenders to pay off consumers' debt with the highest interest, unless the consumer elects otherwise.

The most important reform concerns unsolicited credit-limit-increase offers to individuals. The committee heard consistent evidence during the inquiry that the aggressive marketing by banks of limit increases was a key reason why some consumers have credit problems. Credit cards have a number of unique features, two of which are high interest rates and the fact that consumers are only required to pay a very small amount each month. Aggressive marketing by the banks appears to be designed to put consumers at the limits of their credit capacity, whereupon the unique features of credit cards mean that individuals concerned are paying interest with little capacity to reduce the principal. While the debt treadmill may be good for bank profits, it has significant social costs, and this is why the committee supports the bill.

The committee also supports the bill because it will increase competition in the market and make consumers better off. Therefore, while there will probably be transition costs for lenders, the extra compliance should have no impact on prices for consumers, due to increased competition. Costs for lenders should be further reduced because many have already voluntarily adopted some of these reforms.

In addition to recommending the bill's passage, the committee is also recom­mending that the commencement date for the fact sheets for home loans be set back from 1 September 2011 to 1 January 2012. This is because the industry has consistently stated that they need more time to prepare their systems, and Treasury has agreed that in this case more time is needed. The industry has also stated that the end of the year is a busy period, so the committee believes that ASIC should be practical in how it enforces home loan fact sheets in those early weeks of January.

I would like to thank those organisations that assisted the committee during the inquiry through submissions or by participating in the hearing in Canberra. I have already thanked my colleagues on the committee for being able to reach a unanimous position in their contributions. I would particularly like to thank the staff of the secretariat. We are finding that in this parliament we are getting two or three bills referred to committee weekly, and the secretariat have gone above and beyond in their efforts to make sure that we can get our reports out, that they can be presented to parliament and that the business of parliament can continue to operate.

I will use this time to say that we need to be looking at the resources given to these committees, because quite frankly the workload in this parliament, compared to the last, is light years different. If we want this parliament to continue to function in an efficient manner we need to make sure that resources are given to the committee. I again thank the secretariat for the great work they did and the long hours they worked. They should be commended and I am very happy to put that on the record.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

by leave—I rise to offer the coalition's in principle support for the House of Representatives Standing Committee on Economics recommendations as outlined in the Advisory report on the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Bill 2011, which is before the House today. In relation to elements of what the government is seeking to do through the bill that the committee undertook to review is the fact that some substantial detail is yet to be resolved, insofar as that detail will be contained within regulations and not within the bill itself. In broad terms, it is fair to say that coalition members of the committee are happy to support the thrust of this legislation. We are happy to support the thrust of what was attempted to be achieved. One important point I would make is that I give credit to the Labor Party for changing their position on is the implementation date of these reforms. It was always the concern of coalition members that a situation would arise whereby there would not be sufficient time for the necessary reforms as a result of this legislation to be undertaken and imple­mented. In this respect, the move to effectively extend the starting date was, we thought, a positive measure, and so we are certainly supportive of that.

In broader terms, we give in principle support for the bill's amendment to the National Consumer Credit Protection Act to establish a number of key features in the new act. We are always looking for ways to support positive policy. This is an opposition that wants to work constructively for the betterment of Australian society. Where downfalls exist, as they currently do, we support the provisions contained in the bill that address them—such as, the requirement for lenders to produce a key fact sheet for standard home loans; the requirement for lenders to produce a key fact sheet for credit card contracts, to provide for some regulation regarding the circumstances in which borrowers can exceed credit limits on their cards and to prohibit fees being charged by a credit provider where they do so and the consumer has opted to have a higher supplementary buffer. Likewise, we support the development of a hierarchy for payments made under credit card contracts and the requirement for credit providers to allocate repayments by the borrower to that part of the balance of their credit card in which they charge the highest interest rate. These are all worthy initiatives.

That notwithstanding, in speaking as a member of this House, I had concerns about some of the regulation as it was predicted to be incorporated within regulations about credit providers making so-called unsolicited invitations and borrowers being encouraged to increase their credit card limits. These remain points of some concern for me. But, as I said, we did not want some of these fringe issues to detract from the overall thrust of the bill. In that sense, the coalition is happy to support the report of the committee. We do think that, like a lot of the groundwork that was undertaken by the former coalition government on credit regulation and making sure that consumers were empowered and informed when it comes to credit decisions, this report is another step on that journey.

I mirror the sentiments of the chair of the committee with respect to two aspects as well. The first is to thank the committee for their hard work. I know at times the committee secretariat find the ebb and flow of some of the dissenting or non-dissenting and majority reports inconsistent and perhaps difficult to deal with. That notwithstanding, we on this side of the House are certainly grateful for their principled work and for the fact that they continue to press on with this work. The second element is with respect to the chair's observation that the secretariat also require some additional resources given their very extensive workload. For a committee such as the House of Representatives Standing Committee on Economics, it is perhaps not unsurprising that there has been a marked increase in the amount of regulation and legislation that it will be looking at and reviewing as a very active House of Representatives committee. It is one of the main committees, indeed, for this parliament. Economics is, of course, at the forefront of what the Australian government should be dealing with. I think it is absolutely warranted for a committee like the House of Representatives economics committee to ensure that its secretariat is fully able and equipped to deal with all the necessary trials, tribulations and challenges that go with a very active and heavy workload of such committee. I thank the House for its time.