Tim Hammond (Perth, Australian Labor Party, Shadow Minister for Consumer Affairs) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I suspect none of us in this place will be unfamiliar with the scourge placed upon hundreds and thousands of vulnerable consumers all through the community as a result of being trapped hopelessly in a debt spiral that is occasioned as a result of being caught up in an endless circle of a payday loan or a rent-to-buy scheme. They are technically known as small amount credit contracts, which have significant history in this place. Just to make it clear as to the size and scale of this problem, whilst individual examples are well known to all of us, when one sees the impact across the country of being trapped in a cycle of financial stress occasioned as a result of a payday loan or a rent-to-buy scheme, one truly gets an indication as to just how desperate the situation is and how urgent it is that we do something about it.

In 2015-16, there were almost 620,000 new payday loans, with a book of about $500 million advanced. Two in five of those people who entered into a small amount credit contract loan during this period were unemployed, and one in four small amount credit contract loans were given to people receiving more than 50 per cent of their income from Centrelink. Tellingly—and this is really where that never-ending cycle of financial stress comes into play—one in six of these loans were entered into with a customer with an existing loan. In the second quarter of 2015, 75 per cent of lenders admitted to providing small amount credit contract loans to customers who had had two or more small amount credit contract loans in the previous 90 days.

In relation to the burden placed upon households of those who are exposed to this debt cycle, it is important at this stage to reflect upon the impact on women as to trying to escape out of a cycle of poverty but at the same time requiring money to survive. While it has been the case that women have traditionally only taken up about a quarter of payday loans, that proportion is growing rapidly. There was an 80 per cent total increase in payday loans in 2015, but for women the increase was 110 per cent. Single mother families make up 15 per cent of these households, and 47 per cent of women using payday loans were from single parent families.

It is the Labor Party that has a proud history of taking meaningful steps to put in place regulatory reform in an area that had previously been left unchecked for many, many years. Payday loans and rent-to-buy schemes often involve small-amount loans of up to $2,000. Labor enacted the National Consumer Credit Protection Act in 2009 and strengthened that regime in 2012. During that time in the other place Senator Gallagher and also Senator Cameron did some tremendous work in this space to make sure that there is regulation to protect vulnerable consumers.

Part of that plan was to make sure there was also a mandated review of that space. That took place two years ago by way of the small amount credit contract review. That review put into place a number of recommendations in this space. While they were brought in by the government in November 2016, I'm very pleased to say that, in the blink of an eye, they had bipartisan support. At a time when, more than ever, our community is quite rightly calling out for this place to demonstrate more bipartisanship, I'm pleased to say that this was an area of reform that both parties immediately agreed could and should be brought into play for the benefit of hundreds and thousands of vulnerable consumers right across the country.

What we've had since then has, quite frankly, been a tale of woe from this government. Despite the fact that the good intentions were well publicised, it took almost two years to get legislation to the table. But that did occur. It occurred on 23 October 2017 when the now Leader of the National Party and then Minister for Small Business, Minister McCormack, introduced draft legislation that had been approved by the government's cabinet processes, making it very clear, committing to paper in black and white, that this draft legislation would be out for consultation for two weeks and legislation would be in this place by 2017. That legislation again received bipartisan support from the Labor Party—nothing happened. Despite the promise that we would see some reform, nothing happened in this space. In a circumstance where the Consumer Action Law Centre, as the peak body for those groups, is willing to back these reforms, it is a travesty that the next step has not been taken in this place to have that bill introduced.

This won't happen on our watch. Today we have introduced a private member's bill that is identical in every single way—every clause, every sentence, every comma, every full stop—to the draft legislation that was approved by the government's cabinet and published by the then Minister for Small Business and now leader of the National Party. We have introduced that today. The government, quite frankly, has a choice to show some leadership, to step up and vote for its own bill. In the name of bipartisanship, we make that offer today.

I would also like to take this opportunity to publicly commend the member for Oxley, who will also say some words in this space, who has been fighting this fight at the front line in an electorate that faces financial challenges every single day. Not only has he listened; he has acted, and he's led from the front. He is to be commended in relation to doing his bit to protect vulnerable consumers. I commend this bill to the House.

Milton Dick (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

I second the motion. I rise to put on the record that the reckless conduct of payday lenders has gone on long enough. I want to thank the member for Perth and members on this side of the chamber, who have been leading this fight to protect vulnerable Australians. I acknowledge in the chamber today the member for Barton, the member for Scullin and the member for Gellibrand. Every single Labor member recognises that it is time to take action to protect families, young people and pensioners who are being ripped off by loan sharks who are exploiting an industry which preys upon vulnerable people as the cost of living drastically increases under this government.

As we've heard, 1.8 million households are now financially distressed and over 650,000 families have turned to payday loans just to get by. These figures have doubled in the past decade and are rapidly increasing at pace under this government. With flatlining wages, insecure work and rising inequality, it's time the government started doing what they said they would do, instead of being rolled by the hard Right, which we are seeing time and time again with the dysfunction and chaos inside the government. It is vulnerable Australians who are now paying the price. Those opposite need to answer a very simple question: do they think it's fair that a mother of two young children with a weekly income of $488 has been signed up to contracts for whitegoods worth $1,600 with a total repayment of a whopping $5,824? An elderly gentleman on a disability support pension of $456 per week was duped into a contract for $2,041 on a consumer lease and repayments with a grand total of $7,790. That is not fair. It is wrong.

The government know this. Their own recommendations have said this. What's changed? It's the hard Right of the Liberal and National parties, which is rolling the assistant minister. We know that because the government have committed to this legislation. So, today, government members have a real choice: will they stand by this legislation which has been endorsed by the cabinet of this country? Will they stand by it? This legislation is the government's own bill, sentence for sentence, line for line. It is time that they started standing up for vulnerable Australians and protecting those people who need protection, instead of rolling over for the loan sharks in this country.

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.