Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

The question is that the words proposed to be omitted stand part of the question.

Graham Perrett (Moreton, Australian Labor Party, Shadow Assistant Minister for Education) Share this | Link to this | Hansard source

I rise to continue my speech on the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020. I point out that Labor, when in government back in 2009, had brought in measures that were designed to protect the consumer. They only applied to consumer credit contracts, not to credit contracts for a commercial purpose, like small business lending. Commercial credit is primarily regulated by state governments. When Labor brought in those protections, that was a good thing to do for consumers. They required the lenders to take some responsibilities—not drastic measures, but just turning their mind to the person in front of them, rather than to the credit profits that would flow to the person providing the credit.

The Treasurer announced in September last year that the government would remove responsible lending obligations for most consumer credit products. The Treasurer's rationale was that the RLOs were damaging the supply of credit. The changes in the bill before the House today mean that lending decisions would be regulated by APRA for authorised deposit-taking institutions—that is, banks and credit unions. APRA's mandate is primarily concerned with ensuring systemic stability by ensuring the banks do not make lending decisions that destabilise the bank or the financial system. APRA does not have a consumer-facing mandate, as every politician in this place would know. Lending institutions that are not authorised deposit-taking institutions will be regulated by legislative instruments set by the Treasurer and enforced by ASIC. What the government is seeking to do with this bill before the House today is to have consumer lending regulated by three separate sets of rules and two different regulators, depending on the nature of the credit provider and the credit contract.

It doesn't sound like sensible reform to me, as was mentioned by the member for Whitlam. And, not surprisingly, these changes directly contradict recommendation 1.1 of the banking royal commission. Royal commissioner Hayne said that responsible lending obligations should not be amended. It also contradicts the Treasury's own submission to the banking royal commission, which noted that appropriate responsible lending laws could enhance rather than detract from macroeconomic outcomes. Consumer groups are very concerned that watering down the rules to protect consumers will result in significant consumer harm. The Consumer Action Law Centre said in their submission to the Senate inquiry:

Confusingly, ASIC would remain the regulator for bank misconduct such as unconscionable conduct and misleading and deceptive conduct, but not lending conduct. This overlap of conduct and prudential oversight will be confusing and inefficient. It will not be competitively neutral, and it will create conflicting regulatory objectives for APRA.

The Law Council of Australia noted in their submission:

25. Under this regime, non-bank lending to consumers will not be judged by whether unsuitable outcomes for consumers result but rather by whether:

(a) the systems and processes conform to the criteria in the regulatory

declaration; and

(b) the assessment of suitability was made in accordance with those systems and

processes.

26. Respectfully, the Law Council submits that this does not represent a simplification of RLOs, but rather makes enforcement of the standards complex and difficult. It would also make it highly difficult for a consumer to assess whether or not their own lender has breached the non-ADI standards.

Banks are also confused about these regulatory changes being championed by the Morrison government. Suncorp Group Ltd said:

Suncorp believes there is a lack of regulatory alignment between ADIs and non-ADIs which compromises consumer protections by incentivising credit applicants to use non-ADI lenders who have simpler credit assessment standards and less regulatory oversight.

These changes may have an even more sinister impact. Several stakeholders told the Senate committee that they were concerned the bill would negatively impact victims-survivors of family violence and leave them exposed to the risk of continued and increased financial abuse. Labor senators on that committee said in their dissenting report:

When responsible lending obligations (RLOs) are correctly implemented, they can help to prevent economic abuse because the lender will make reasonable enquiries about each applicant's financial situation, the accuracy of information provided and suitability of the loan. This process is an effective mechanism to expose undue influence, imbalance of bargaining power and the underlying dynamic behind economic abuse.

As Ms Dacia Abela, senior lawyer for economic abuse at WEstjustice, a member of the Economic Abuse Reference Group, told the committee:

If this bill is passed, we expect an increase in the number of loans being approved in circumstances of economic abuse, and victims-survivors will have reduced options to seek an individual remedy against those lenders. Whilst lenders will still be expected to consider the affordability of a loan, the bill removes entirely the requirement for lenders to make reasonable inquiries of the borrower's requirements and objectives. This represents a missed opportunity to identify red flags of economic abuse.

In regard to APRA being a body for consumer lending, Ms Abela went on to say:

Lastly, and importantly, APRA has probably not had to think much about how family violence intersects with financial services, whereas bodies such as AFCA and ASIC are developing practices and knowledge of how to deal with family violence issues. So APRA would effectively be moving into new territory with virtually no knowledge of or set practice in the area.

We know that it is crucial that professionals working with victims and survivors of family violence understand the complex dynamics of family violence. We heard much about that during the debate in this parliament when the government pushed through their bill to abolish the Family Court of Australia. I can't believe that the Morrison government still does not understand that family violence is complex—that perpetrators will try to game every law and regulation they can find to maintain control over their victim.

The Prime Minister and his cabinet colleagues don't need to walk very far today to hear from women who have been in this very situation. I know they were busy at lunchtime, but today there were people who gathered outside this building because they were angry and they wanted to talk about this situation. Many of those women who gathered on the front lawn of Parliament House today would be able to tell the Morrison government firsthand what it's like to suffer financial and economic abuse due to the actions of a former partner. If only we had a Prime Minister or a Treasurer or a Deputy Prime Minister who could find the time to go outside and listen to those women. There is nothing more important than the Prime Minister listening to the women of Australia. I hope he has got that message.

Sadly, we know this government has form. They don't listen to the experts. They don't listen to stakeholders. And they especially do not listen to women. It would be hard to hear the voices of the women in the Liberal Party, there are so few of them.

Despite what the coalition government says, it is abundantly clear that this bill before the chamber is not designed to benefit consumers. It will actually overwhelmingly benefit the lending market, banks and lending institutions. The government claims that the primary purpose of these amendments is to provide timely flow of credit to the Australian economy. But at what cost to real people—at what cost to consumers?

We've seen the same approach by the Morrison government to economic recovery measures that have been introduced. Last week, the government announced a tourism support package, which has gone down like a lead balloon—I won't quote Phillip Coorey on this occasion! The announcement allowed for a great photo op for the Prime Minister, pretending to pilot an aeroplane, waving a ticket to nowhere. But, beyond that, it will do nothing for the one million Australians who will be taken off JobKeeper in less than a fortnight's time. The tourism support package will give Australian travellers access to 800,000 half-price airfares to a limited number of destinations around Australia that, strangely, seem to be in marginal seats or in seats that the coalition need to win at the next election. There is only one eligible destination in Victoria and only one eligible destination in the most populous state, New South Wales.

There are four eligible destinations in Queensland, but Queenslanders will not benefit from the half-price airfares if they're travelling within Queensland, and I know—being married to someone from Cairns—how desperate that area is at the moment. On visits up there recently, it has seemed that every other shop is on reduced hours or is boarded up, almost.

Sadly, we saw this government—even though they're in coalition with the Nationals—forgetting regional centres. They've been almost completely ignored.

There are a million Australians on JobKeeper and two million Australians who can't get a job or the hours they need to work to support their loved ones. Support for the tourism industry is welcome, but the announcement from the Prime Minister was nowhere near enough and it will be no substitute for a JobKeeper payment. Cutting JobKeeper too soon is a ticket to unemployment for too many Australians. It's estimated that between 100,000 and 200,000 Australians will join the unemployment queue when JobKeeper is cut. It is too soon to be cutting support. It is too soon to be cutting JobKeeper. Many Australians were hoping for an extension of JobKeeper or some other kind of substantial support. What the government has announced is a measure that will be very targeted to a limited number of destinations and will only benefit businesses in those destinations if the people travelling there have the spare cash to spend—

Lucy Wicks (Robertson, Liberal Party) Share this | Link to this | Hansard source

Order. The member for Moreton should return to the substance of the legislation.

Graham Perrett (Moreton, Australian Labor Party, Shadow Assistant Minister for Education) Share this | Link to this | Hansard source

and I suspect that many won't. We know, from the Labor Party's competent management of the economy after the global financial crisis where we brought in legislation such as that before the chamber right now, the importance of not pulling back on support too soon—and, Deputy Speaker, that was my longwinded approach to that point. Australia came out of that crisis well.

The American economy did not fare so well during the global financial crisis. They initially spent huge sums of money to rescue their ailing banks and stimulate their economy. That worked well. But, as soon as they thought the economy was starting to turn around, they pulled back spending—in particular, spending aimed at supporting the poor and the unemployed. That turned out to be a disaster for the United States. Their growth slowed and it led to deeper structural problems in their economy that persist today.

We do not want to follow that example. We know how to implement economic recovery, and it's not to pull back support too soon. And that is what I fear the coalition government is doing. JobKeeper will stop in just a couple of weeks. There is nothing that will replace that support for those who still need it, and there are many Australians who still need that support. This bill will do nothing to support Australian consumers through this COVID recession, and I cannot support this bill.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

The royal commission into misconduct by the banks was a once-in-a-century examination of the behaviour of Australia's financial sector. The Greens were the first party to push for it in parliament. We moved in the Senate to establish a parliamentary commission of inquiry. We managed to get bills and motions passed, including ones that came down here to the House. And then, under pressure, the government agreed to hold the royal commission into the banks. It clearly didn't want to do it, because not only have the big banks been some of the most generous donors to the government but there's also the revolving door: people come out of the big banks, come into the government and go back out again, and we've seen that time and time again. So the government was forced—forced—to take action to wind back some of the excesses of the banks.

When that scrutiny was applied—because the parliament, led by the Greens, pushed the government to do it—what did the independent inquiry say, when it looked into the illegal and unethical behaviour, in the pursuit of ever bigger bonuses and ever bigger profits, by the big banks? The royal commission uncovered a trail of destruction. Businesses had gone under, households were upended and lives were destroyed. After receiving over 10,000 submissions, after 68 days of hearings with over 130 witnesses, and after sifting through all the tales of woe and misery that people in this country suffered because the big banks were interested in doing nothing more than making a profit, the very first recommendation of the royal commission—recommendation 1.1—was that the existing responsible lending laws, which mean banks can't lend people more money than they have the capacity to pay back, should not be amended. That's recommendation 1.1: keep the restrictions on the banks that stop them from going out and engaging in predatory behaviour, where they find people who clearly don't have the capacity to enter into a loan, encourage them to do it and sign them up. Why? Because the bank makes money out of it.

It's no accident that this was the very first issue addressed by the royal commission, because it goes to the heart of the privileged role that banks have in our society and the sort of responsible behaviour that must accompany this privilege. Having the authority to take deposits and write loans against them is what sets banks apart. They get a licence to do it, under law, in a way that everyday people can't. They get a licence to do it, and it's what makes them so powerful. So it is no surprise that the parliament has previously said, and the royal commission has said: 'Don't let them abuse that power. Don't let them abuse that power by writing loans that they know people can't pay.' This is why there were responsible lending laws. If that's not clear enough, let me quote the commissioner's own words. Commissioner Hayne was unambiguous:

My conclusions about issues relating to the NCCP Act—

that is, consumer lending—

can be summed up as 'apply the law as it stands'.

It couldn't be clearer. That's the first recommendation of the royal commission.

So what's this bill doing? It's doing the exact opposite of what the royal commission recommended and repealing those laws so that the banks can go out and start making huge profits through unconscionable behaviour that up till now would have been illegal. So it's trying to make legal what at the moment would be outlawed behaviour by the banks and what the royal commission into the banks said should be outlawed behaviour by the banks. This bill is ripping up the responsible lending laws that Commissioner Hayne said should be enforced as they stand.

This bill confirms that the government never had their heart in the royal commission. They only did what they were dragged to do by this parliament. They established it to quell a bit of a backbench revolt, because certain members of the backbench knew that what the Greens and all of the others in this parliament were saying was right: that we needed a royal commission into the banks, because the banks had engaged in unconscionable behaviour where they abused the power that they had. Now this is happening under the cover of a pandemic. Can you believe it? The government are using a pandemic that apparently we've recovered from it and are world leading in, according to the Prime Minister. But notwithstanding that apparently we're on the other side, so we can afford to cut JobKeeper and JobSeeker—we've got to cut people's payments, because apparently that part of the pandemic is over—apparently we're in so much trouble that what we need to do now is to give banks back the power to write loans that people can't pay, just so the banks can make some big profits.

This bill would remove the responsible lending obligations for consumer loans greater than $2,000, and it would ultimately make it easier for the banks to lend someone $2 million than it would currently be to lend them $2,000. Under this bill, the vast majority of borrowers would not be provided with the most basic of consumer protections, which is that the product being sold to them is fit for purpose. That's all the law says at the moment: if you're going to write someone a loan, it's got to be fit for purpose. This removes that.

Instead of having a specific conduct regulator—that is, someone who can regulate the conduct of the banks, ASIC—resourced and empowered to oversee the suitability of a loan from the perspective of an individual customer, it's going to rely on APRA, whose role is to look after the financial system as a whole. Many people may not understand the significance of the difference between ASIC and APRA. APRA's responsibility is not to look after consumers. That's the end of it. That's the basic difference. Their responsibility is just to ensure the financial system stays stable. If banks make more profit out of this, APRA may well say, 'Oh, well, this is good for the banks.' It is not looking after the consumer. The government has instead picked a regulator whose responsibility is to look after the banks.

As is befitting of this government's ideology, this bill will just leave people to fend for themselves. It's just designed to let the banks get on with writing loans as big as they possibly can, whether it's good for people or not. The big four are treated as too big to fail, so for them the risk of default barely registers. They know the government will step in and give them a handout if they ever get in trouble. So basically this is subprime dreaming. This is to let the banks squeeze whatever profits they can out of consumers while they can. If and when the music stops, it'll be someone else's problem. It'll be left to the taxpayer and the public to pick up the tab when we see a repeat of the GFC.

That's what is worth remembering. We are seeing these laws because bank behaviour got out of control. That's why we put restrictions on the banks, and we saw that with the global financial crisis. Again, it was left up to the public to pick up the tab while the banks enjoyed all the profit and none of them suffered any consequences, and the executives went on to enjoy millions of dollars in bonuses. When we wound it in a bit and said, 'No, actually you can't write loans for people who are not going to be able to afford them,' that offered some protection to people in this country, and now this government wants to rip it up.

This bill is an insult to the victims of the banks and it is rewarding the banks' rapacious behaviour. It's the latest example of this government using COVID as a cover to wind back protections for individuals and give even more power to the big corporations and the superwealthy that donate to the government. They're trying it on with the repeal of responsible lending obligations, which will give banks a licence to engage in predatory lending, and they're trying it on elsewhere with industrial relations legislation which will entrench insecure work and keep wages low. They're trying it on with this bill, which will also water down requirements for banks to ensure, before they write loans, that those loans are fit for purpose.

When, in this parliament, all of the people across the political spectrum except for the government agree on something, it should tell you that the measure that people are lining up behind has the support of the people in this country. That's what we saw here. We saw a few government backbenchers speak up and everyone else across the political spectrum agree that we needed a royal commission into the banks because they were engaging in terrible behaviour, including predatory lending. When that royal commission reported and said, 'Keep some of the existing protections,' and the government said it was going to abide by and implement the recommendations of the royal commission, some people probably believed it. Some people probably went to the last election thinking the coalition government was going to honour its word when it said it supported the royal commission and was prepared to implement its recommendations. And now barely is the ink dry and the government wants to give back to the big banks at the expense of the Australian people. We cannot allow that, and that's why we will be opposing this bill.

Helen Haines (Indi, Independent) Share this | Link to this | Hansard source

I rise to speak against this bill, the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020, and again call on the government to abandon this effort to wind back responsible lending obligations. I acknowledge this bill contains some amendments designed to improve consumer protection in smaller credit products, but the main part of this bill will remove the obligations for lenders and the protections for consumers put in place after Australia's last recession.

Responsible lending obligations have become a core part of our credit regime. According to Treasury, approximately $34 billion in consumer credit that is subject to these obligations is issued each month. They require a lender to do basic due diligence about a person's capacity to pay back a loan. They work to protect against cowboy lenders and predatory loan sharks and to prevent Australians falling into the debt trap—saddled with debt they can't afford to repay. And, while they don't stop all unsuitable lending, they give lenders a standard to uphold and consumers an avenue for redress. What this act would do is remove responsible lending obligations from all forms of credit except small amount credit contracts and consumer leases. This effectively removes these obligations from loans of over $2,000, such as mortgages and personal loans—the everyday debt that is a staple of our economy and involves the biggest financial decisions we make in our lives.

As an Independent MP I represent only the interests of my constituents, and them alone. With them in mind, I look carefully at each bill before me to decide how to vote. I ask my constituents: is this good for you? I ask the organisations that support them: does this reform take us forwards or backwards? What I hear from my constituents is concern. What I hear from social and legal services, from churches and from consumer groups in my electorate is alarm and disbelief. And what I see as a person trained in evidence based decision-making is a case not yet made for winding this back.

I've consulted widely with my community on this bill, and my constituents are united, of one voice, in telling me to oppose this bill. This is what they're saying. Judith Beach of West Wodonga says:

It feels like it will make some of our most vulnerable people even more vulnerable to credit problems and to allow banks to return to the situation highlighted in the royal commission into banking.

Isabel Mary Dean from Euroa says:

Responsible Lending was addressed in the Banking Royal Commission but seems to have been ignored by Banks and Government, let alone the even less regulated lending bodies. Rolling back the already poor or flexible level of lending responsibility seems a very bad move.

Alex McMillan from Tarrawingee says:

I would like to urge you to vote against the lessening of credit lending responsibilities as the economy is surging and the housing market is booming. Lessening the onus on credit providers seems to be pandering to profits not to the care of people.

Neil Barclay says:

As a TAFE legal studies teacher I spent many years supporting/explaining these improvements to protect the vulnerable young and adults putting their toe in the water wanting to access finance … No vote from me

Jacinta Ludeman from Oxley simply said, 'Against.'

These constituent concerns are echoed by social justice, and legal and welfare organisations in my electorate. They've called on me to vote to strengthen, instead of repeal, safe lending laws. Hume Riverina Community Legal Service and Upper Murray Family Care tell me:

We already help people in our rural and regional communities who rely on emergency food relief because they can't make ends meet and others who are homeless because they are unable to afford rent as well as their loan repayments. We also see people being chased by debt collectors, and the extreme stress and anxiety this causes. We believe a change will lead to more debt, more bankruptcies, and more home repossessions. Clients we have been assisting have voiced their disappointment with the move to rollback the laws.

Sandra Blake, a respected and experienced financial counsellor currently working on the Small Business Bushfire Financial Counselling Support Line, tells me this about responsible lending obligations:

Banks and other lenders have and do breach these laws, but there has been some deterrent and form of redress for people when that happens. The Government is planning to remove these protections in the middle of a recession, when it is more likely than ever that people will be more vulnerable to being taken advantage of by lenders.

I thank my constituents for engaging with me in good faith on this significant piece of legislation and sharing their personal stories, which have informed their well-founded views.

The problems with this bill start with its title, specifically the part in brackets, 'supporting economic recovery'. The government says this reform is a key part of the economic recovery from the COVID-19 pandemic, seeming to claim that 'reducing the time and cost associated with the provision of credit' will make a material difference to getting back on track, yet there is no evidence that responsible lending obligations are holding us back. Across our country, our economy is rebounding at a rate that would have shocked the Treasurer when he first announced these reforms, in September last year. In December the total number of new loan commitments reached record highs, rising 8.6 per cent in a year to $26 billion, according to the ABS. The national accounts showed our economy expanded by 3.1 per cent in the December quarter, and last week the OECD upgraded our economic growth forecast to 4.5 per cent. The Treasurer himself said our economy was 'outperforming all major advanced economies' in 2020 and that the OECD points out that 'our level of economic growth is closing in on our pre-pandemic level'. This is fantastic news. With the government's other COVID-19 fiscal interventions, there is no shortage of credit being issued. But—and here's the point—I would say to the Treasurer: if you were intending to rely on COVID-19 to justify these reforms, your rationale has completely evaporated.

My electorate was economically battered by the 2020 trifecta of bushfires, COVID and border closures. I'm in constant contact with employers and businesses that have weathered these storms. They are grateful for the dramatic economic interventions of this government. They care, as I do, about business growth and creating steady, well-paid jobs. More than that, we care about the welfare of employees, the future of their children, and the young families so important to regional growth. Safeguarding these people from unsuitable debt strengthens the fabric of our society and therefore our economy. It is with them in mind that I am particularly worried about how removing these protections might affect my constituents wanting to buy their first home. The pandemic has seen a surge of tree changers lured to our regional towns by affordability, lifestyle and newly found working-from-home arrangements. We're thrilled to welcome these new families, but there's a consequence. The consequence has been that locals are competing with Melbourne buyers with significantly more purchasing power. The property market is running hot, and prices are skyrocketing. According to Domain's latest house price report, over the past year median prices have risen 13.7 per cent. In Wangaratta it's 13.1 per cent, in Myrtleford it's 13.4 per cent, in Euroa it's 17.11 per cent and in Bright it's a stunning 22.8 per cent. This is already locking local first home buyers out of their town. Young adults who grew up in Beechworth or Bright can no longer afford to buy there, even if they have two steady incomes. Our median household income is 22 per cent lower than the Australian average, which sets us even further back. We have in our hands a perfect storm of our young people overextending themselves, taking on more debt than they can afford, to get a foot into a real estate market that shows no sign of slowing.

When I think about the removal of these responsible lending obligations, I think of our young families, who have already made so many sacrifices to scrape together a deposit only to find out it's just not enough. How easy it would be for them to take a risk, a risk they can't afford, optimistically hoping that something will work out. We know that Australians will walk over hot coals to pay off a mortgage, sacrificing other essentials like doctors' appointments, getting the car serviced, late fees on credit cards and school books, just to keep a roof over their heads. This can have long-term impacts, like draining their emergency funds or affecting their future credit score. Where will this leave them? This is exactly the situation which responsible lending obligations try to avoid. It's not just bureaucratic red tape; it's a handbrake on incurring the type of debt that could lead to bankruptcy, ruin mental health and jeopardise relationships.

Of course, housing affordability won't be fixed by this law. But I'm sounding the alarm that higher levels of debt may become a fact of life for my constituents. Coupled with the uncertainty of the labour market and with JobKeeper stopping and JobSeeker being cut, at this moment we need more protection, not less.

This bill looks set to pass the House today, yet I cannot, in good conscience, support any legislation that would leave vulnerable people in my community saddled with bad debt, nor legislation that directly contradicts the very first recommendation of perhaps one of the most far-reaching royal commissions of our time. I urge the government to abandon these reforms. It's not too late. And I urge my Senate crossbench colleagues to take heed of the 33,000-signature strong open letter endorsed by Choice, ACOSS, the Consumer Action Law Centre and 125 community organisations. They're calling on us to strengthen, rather than repeal, these safe-lending laws and oppose this bill, put forward with the flimsiest of rationales—a bill that will do far more harm than good.

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

For some Australians, credit is a totally ordinary, mundane thing. They know their financial circumstances, their credit score and their superannuation strategy. They know how to deal with bankers, lenders and brokers. If there is something they don't understand, many of them have someone who can help: an accountant, a financial planner or parents and friends who are financially literate. For those Australians, getting into trouble is something that only happens with a significant life-changing event, such as a divorce or a death in the family, and they usually know what to do when that happens.

But that's not everyone. Many people in our community, in my own community of Mayo, are not financially literate. They don't understand credit and risk or have a budget. For many of those people, credit is a terrifying thing. They know how easily they can get into trouble. They've seen it happen to family members, to their friends or to neighbours. They've seen the terrible, enduring consequences that come from a loan going bad. They've seen people lose their homes, lose their rental properties, lose their relationships and lose their families. They also know it's necessary risk. There is no way that they can buy a home without credit—without a mortgage—or a car. And sometimes things go wrong and you just need a loan to cover a few bills until you're back on your feet.

For people who aren't financially literate, dealing with a lender can be stressful and anxiety ridden. They don't understand credit. They can't tell when they're getting a bad deal or when they're being taken for a ride. They have to place their trust in someone who may or may not be ripping them off. If you've read the submissions and the reports of the Hayne royal commission, you know that these fears are justified, because many Australians were, in fact, being ripped off time and again. For these people, consumer credit protections are the only thing that can actually prevent this from happening. It's not enough to keep them completely safe but it's something; it's some protection, and it's better than nothing.

So you can imagine how these people would be feeling when they hear the government wants to strip away these protections. You can imagine that these people, my constituents, would be feeling frustrated that the government is looking to undo the first recommendation—the first recommendation!—of the banking royal commission. They don't care about macroeconomic benefit to growth or private net capital investments. What they care about is losing their home and their future financial security, and ensuring that there's some protection so that their kids won't be ripped off by a dodgy lender or lose their credit rating.

I accept that there are complexities to this. The majority of borrowers in Australia are financially literate and they can handle credit well and don't require government intervention. They can access credit. Notably, Australia's household debt-to-income ratio has increased at a faster rate and to a higher level than most countries in the decade to 2018. As long as lenders act ethically, with integrity and decency, most people will be fine. But there are situations in which some people need protection. The policy challenge is that there is no silver bullet, not one thing that offers everyone the protection that they need. So we protect some people in the minority by strictly regulating products aimed at them, such as payday loans and consumer leases. But we don't do a very good job with these protections, and, for years now, members in this parliament have wanted to see change and tightening of the rules—even the government's own draft legislation brought into the parliament would be a good start. But at least right now there are some protections, and there are wraparound services such as financial literacy programs, counselling and zero-interest loans available. However, these are limited and they're not always easy to access, particularly if you're in a regional area.

So I can certainly understand the efficiency argument against the system we have; however, I don't think the government's approach on this is right. In all honesty, I could support a bill where there was greater emphasis on protection and support and funding, but there isn't. This bill just rolls back responsible lending obligations and strips away protections for the vulnerable. It places responsibility for unaffordable and unsuitable loans on borrowers, leaving them with fewer ways to combat the bad lending behaviour we heard about in the Hayne royal commission. It actually beggars belief. This is royal commission's first recommendation, and the government wants to take it away.

The bill removes the ability to access remedies for loss and damages suffered due to unscrupulous behaviour and implements watered-down reforms to payday loans and leases recommended by the small amount credit contract review in 2016. This bill would allow an employed person to contract to pay up to 40 per cent—nearly half—of their net income every week to payday lenders and consumer lease providers, or up to 20 per cent if the person is receiving Centrelink benefits. Consumer advocates know what this means for vulnerable people who present to them, needing relief for basic expenses like food because their incomes have been eaten up by repayments and then late fees on unaffordable loans. I can't vote for that and I won't vote for that. I would really encourage the government to take a long, hard look at this piece of legislation and actually assess who this bill is here to help. It's certainly not vulnerable Australians.

(Quorum formed)

Mark Coulton (Parkes, Deputy-Speaker, Minister for Regional Health, Regional Communications and Local Government) Share this | Link to this | Hansard source

I rise to make my contribution to this debate on the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020. With regard to regulation around lending, obviously both the availability of credit and the protection of consumers are incredibly important. To the people that I represent, the ability to have credit and be treated respectfully and within the law is incredibly important.

Firstly, I'd like to thank those members who have contributed to this debate. The bill forms part of the government's economic recovery plan and amends the National Consumer Credit Protection Act 2009, known as the credit act, to support the flow of credit to the economy and introduce additional protections for consumers accessing high-cost credit. To improve the timely flow of credit, the bill amends the credit act so that the existing responsible lending obligations apply only to small amount credit contracts and consumer leases. The reforms remove the one-size-fits-all approach, which has unduly slowed down the time it takes for consumers to gain loan or credit-limit approvals, from the assessment of all other types of credit.

The new lending standards will align with APRA standards and require lenders to have sound credit-assessment and approval processes to assess consumers' capacity to repay debt without substantial hardship. The bill ensures sufficient consumer protections are maintained. Consumers will continue to have access to the Australian Financial Complaints Authority in the event that they have individual disputes with the financial institution. The bill also extends the best-interest obligations, which will apply to mortgage brokers from 1 January 2021, to other credit assistance providers to ensure credit assistance providers act in the consumer's best interest. The bill also introduces new obligations for providers of small amount credit contracts and consumer leases, to support improved financial inclusion while balancing the need for continued access to these products.

The reforms include imposing a cap on the total payments that can be made under a consumer lease, requiring small amount credit contracts to have equal repayments and equal repayment intervals, and strengthening penalties to increase compliance with the law. The bill will also allow the National Consumer Credit Protection Regulations 2010 to set the maximum amount of income a consumer can allocate towards repaying their lease.

I commend this bill to the House.

Libby Coker (Corangamite, Australian Labor Party) Share this | Link to this | Hansard source

The Morrison government has named this bill the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020, but this flawed bill does not protect the vulnerable from financial hardship. Instead it exposes them to unscrupulous and predatory behaviour.

Schedule 1 of this amendment removes responsible lending obligations from most consumer credit contracts. In other words, it gets rid of regulations that exist to ensure or safeguard the rights of the client. What is worse is that this bill flies in the face of the first recommendation of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Remember, the banking royal commission was established in response to the disgraceful practices of the banking sector, which have led to anxiety, suicide, an escalation in the cost of housing, homelessness, predatory behaviour—the list goes on.

The banking royal commission states that the National Consumer Credit Protection Act should not be altered to lessen the safeguards that ensure responsible lending, and there is very good reason for the inclusion of this recommendation. It serves to enshrine protections in our lending laws to make sure that loans are affordable, suitable and ethical. Importantly, it puts the welfare of the vulnerable front and centre. So why would you remove it? It makes sense. To introduce this legislation shows a lack of compassion and insight into the lives of our most financially vulnerable. The Morrison government says that the removal of such a safeguard is required to free up the ability to get a loan and to stimulate the economy, but borrowings are at an all-time high. So the message is that these safeguards are not an impediment to getting a loan. We don't need to free up the system, and we certainly don't need to expose our most vulnerable Australians to predatory and unscrupulous behaviour.

The Labor government introduced the National Consumer Credit Protection Act in 2009, and there were two key reasons for these responsible lending laws. The first is that irresponsible lending leads to extreme personal hardship. This, sadly, occurs too frequently, at no fault of the borrower. It is often linked to family violence, abuse and other devastating life challenges. The second reason is structural and was in response to the global financial crisis. Irresponsible lending introduces weaknesses into the economic system. These weaknesses can have devastating impact, as we saw with the global financial crisis. Put simply, irresponsible lending generates bad debt. At low incidence, bad debt generates economic drag and lowers prosperity across the country. At moderate to high incidence, bad debt causes economic collapse and decimates prosperity across the country—the exact opposite of what we want during COVID. Even the officials from this government's Treasury department agree. These Treasury experts sat before the banking royal commission and very clearly explained that the laws the government are now trying to cancel serve to protect our economy. The Treasury department submitted this to the banking royal commission:

There is little evidence to suggest that the recent tightening in credit standards, including through APRA's prudential measures or the actions taken by ASIC in respect of RLOs, has materially affected the overall availability of credit.

The department also noted:

… to the extent that firms are correcting lax credit assessment practices, there has likely been an improvement in the credit quality of marginal borrowers.

So, in summary, the government's own department said that credit standards and safeguards had not affected borrowings and had instead improved the integrity of the system—had protected the right of marginal borrowers. So it's incomprehensible to suggest that this draft legislation before the House today would have a positive impact on wellbeing or the prosperity of Australia. It will not.

Two clients of my community law centre, the Barwon Community Legal Service, clearly show the absolute importance of retaining responsible lending requirements. Sally has two children to her de facto partner, John, who had a gambling problem and was very controlling with money. John wanted a new vehicle, but his credit rating was poor and he was unable to get a loan. After several weeks of coercion, including physical and emotional violence, they went to a car dealership and John negotiated a purchase while Sally stayed outside. When it came time to sign the contract, John brought Sally into the store and explained to the car dealer that she would be the borrower, and they proceeded to complete the paperwork, with Sally not asked one more question. That lender issued Sally a $25,000 loan at 20 per cent interest per annum, via its own finance company. The car was registered in John's name and Sally never drove it. Sally only had her learner's permit. After they separated due to the ongoing family violence, John took the vehicle and left Sally with the debt.

Sadly, this government and the PM are introducing this legislation, which will expose vulnerable women like Sally to abuse. It's about time the Prime Minister listened to women. Today the Prime Minister let women down. He did not attend the March 4 Justice. He turned his back. But the Barwon Community Legal Service stepped up. They helped Sally. They argued that the finance provider had breached responsible lending laws by not making inquiries or verifying information despite clear signs of coercion. Eventually, after a complaint to the Australian Financial Complaints Authority, the debt was waived. This waiver would not have been possible and could not have been achieved without the responsible lending laws that this government intends to remove with the bill before this House.

Then there's Ahmed, another client of the Barwon Community Legal Service, who was deep in debt from business and personal loans and was looking for a way out. He signed up for a course with a private college on the promise that he would earn an extra $1,000 a week after completing the qualification. When he couldn't afford course payments, they offered to organise finance for him. Ahmed got a phone call from someone who asked for all his bank statements and other details. The caller, a finance broker connected to the college, applied for a loan on Ahmed's behalf at a rate of 22.9 per cent interest, using extremely inaccurate information. The course wasn't as advertised, and Ahmed was left with a loan of $30,000 to repay, on top of all his other debts. Barwon Community Legal Service stepped in and helped Ahmed make a complaint to the Australian Financial Complaints Authority, on the grounds that both the broker and the lender breached responsible lending laws. Ahmed eventually accepted a settlement from the finance broker. The lender wiped $22,000 of the debt and allowed Ahmed to repay the remainder at a rate he could afford, without interest. Like Sally, Ahmed is extremely thankful that Barwon Community Legal Service was able to advocate on his behalf. Without responsible lending laws, this would not have been possible.

I'd like to take this opportunity to pay tribute to the hugely committed team at Barwon Community Legal Service. The work they've done for Ahmed and Sally and thousands of others across my electorate is beyond commendable. They witness and fight the harm brought about by inappropriate lending practices and other social ills on a daily basis. In the last financial year, Barwon Community Legal Service saved clients over $350,000 in waived, renegotiated or revoked debts arising from breaches of the very legislation this government is rushing to water down. This service runs a tanker ship on the smell of an oily rag and makes our country a better, fairer and more compassionate place. So my heartfelt thanks go to the Barwon Community Legal Service.

The Barwon Community Legal Service bears witness to the harm caused by irresponsible lending. The Treasury has testified to the significant and negative economic impacts of irresponsible lending. But the Morrison government still has the gall to claim this bill will do Australia and the Australian economy good. What absolute rubbish! It will not. This bill scraps responsible lending obligations and exposes customers and the economic system to huge risk, and this bill is in direct contradiction to the banking royal commission recommendations. It makes absolutely no sense.

Labor does not support this bill, which will harm Australians and the Australian economy. We say no to any effort to strip back responsible lending. We say no to the Morrison government on this legislation. Instead, we stand with Treasury and community legal services, we stand for the banking royal commission recommendations and we stand with Sally and Ahmed and every Australian who relies on every MP in this chamber to do the right and the decent thing and protect them from harmful, irresponsible lending practices. It's time the Morrison government stepped up and took responsibility. It is the role of federal government to protect our most financially vulnerable. I urge this government to do its job and not pass this harmful legislation.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to contribute to this debate on the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020. This is a deeply worrying bill. It continues the Morrison government's ongoing strategy of using COVID-19 as a cover to ram through damaging measures in its Liberal Party agenda. They've used it to try to slash the pay and conditions of some of Australia's lowest paid workers by trying to remove the better off overall test. They also used it to slash service standards and time frames for critical public services like Australia Post, and now, today, they're at it again. This time they're using the coronavirus as a justification to tear down hard-won consumer protections for vulnerable Australians.

This bill will wind back responsible lending obligations—the safeguards that were rolled out to address predatory lending practices. If removed, unscrupulous credit providers will once again be free to pressure customers into taking unmanageably large loans even if they know that their customer won't be able to keep up with the repayments. It will also swing the door wide open for companies to gouge consumers who take up small loans or consumer leases. This is shameful, it's disgraceful and it demonstrates that the Morrison government has learnt nothing from the shocking litany of egregious behaviour we saw time and time again in the banking royal commission.

We shouldn't be surprised, of course. The Liberals never wanted an inquiry into the banks, after all. In fact, they fought it, tooth and nail, right to the bitter end. Indeed, this Prime Minister voted against a royal commission not once, not twice, but 26 times, and this track record says a lot about whose side our Prime Minister is on. Make no mistake, when he voted against the banking royal commission, Mr Morrison voted against vulnerable Australians, and now it's more of the same. This bill is a win for the banks and indeed many companies that offer consumer credit, but it will be a dreadful tragedy if it proceeds. It will be the death of a fair go for mums and dads and the elderly Australians who can't compete with predatory lending tactics.

The Morrison government argues that these changes are necessary to keep credit flowing. I'd argue that, if you need to lumber customers with loans that they can't afford in order to be profitable, then the problem isn't with the law; it is with your business model.

No-one wins when thousands of Australians default on their loans. We learnt this the hard way during the global financial crisis. Indeed, this is the very reason these protections were brought in in the first place. Australia's national peak consumer group, CHOICE, has rightly pointed out that the livelihoods of millions of vulnerable Australians are now hanging in the balance, and it has led a vigorous community campaign against this.

Already, more than 23,000 Australians have signed an open letter to the federal parliament urging us to maintain the current protections, a call that has been backed in by 125 charities, unions, academics and financial counsellors. Now it's time for the parliament to listen. I urge the Morrison government to stop putting the interests of financial services ahead of the interests of the Australian people.

I'd like to go through a few of the specifics of the bill. As I mentioned, it does two main things. Firstly, it removes responsible lending obligations for the majority of consumer credit contacts. These obligations simply require financial services organisations to make reasonable inquiries about a customer and then use this information to assess whether a particular product is right for them. This is a sensible and reasonable provision. Banks have all the data and enough actuaries to know what debt people can comfortably manage. They shouldn't be allowed to sell them products that they cannot afford. If this bill proceeds, this will be allowed and indeed made worse. The burden of risk will be placed squarely on the shoulders of the borrower.

Of course, we know what will happen. We've seen how this story ends. Free from their legal obligation to act ethically, many operators will undoubtedly make choices to benefit themselves and not their vulnerable customers. As Fiona Guthrie from Financial Counselling Australia pointed out:

… weaker lending standards mean people will be loaded up with as much debt as possible. There is significant profit to be made in pushing borrowers to the edge.

What a disgusting proposition!

The Morrison government say these changes are necessary because the current restrictions are hurting the supply of credit, but even their own department won't support them on this one. Indeed, these changes directly contradict Treasury's own submission to the banking royal commission, which said the responsible lending obligations were working well to protect consumers and safeguard the economy. That's right: they were working well. This is backed up by the Commissioner of the Australian Securities and Investments Commission, Sean Hughes, who flatly rejected claims that responsible lending has had an impact on economic growth. If this bill proceeds, it will free up the banks to aggressively push credit onto their customers.

The second set of measures proposed in the bill relate to small amount credit contracts—more commonly known as payday loans—as well as consumer leases. These changes ostensibly respond to the government's own SACCs review, which it commissioned back in 2016, but they fall unacceptably short of the recommendations in that review. For example, the review recommended capping payments at 10 per cent of a customer's income, with a separate cap for small amount credit contracts and consumer leases. The result of the changes is that as much as 40 per cent of people's pay packets could soon be eaten up in payday lending fees. That is going to be legal with the passage of this bill. The SACCs review also said that fees for consumer leases should be capped at four per cent of the retail price of an item. In contrast, this legislation sets four per cent fees as the base amount that can be charged, plus delivery fees, plus installation fees, plus establishment fees—up to 20 per cent. The end result? Consumers could be paying the equivalent of annual interest rates in excess of 100 per cent. This is horrendous, and it will open the floodgate to egregious price gouging and drowning debt stress for those who can least afford it.

Labor has been alarmed by this bill from the beginning. That is why we sent it to an inquiry in the Senate. While the inquiry won't report until next month, the feedback from the submitters so far has been loud and clear. Indeed, it has received more than 100 submissions to date, with the vast majority rightly panning this legislation and blasting the government for lacking the moral fibre to back the interests of vulnerable Australians over those of the banks.

I've also been contacted by a number of people in my community, in Newcastle, about this bill. I'd specifically like to give a shout-out to Jonathan, who works as a financial literacy project officer for the Salvation Army's Moneycare service in Newcastle. Jonathan wrote to me to warn of the dire circumstances should this legislation pass. He noted the large power imbalance between consumers and the providers of financial products, and he said that many people in the community simply don't have the resources needed to effectively make complex financial decisions. He also warned me of the dire outcomes that can result when people are pressured into taking on financial products that that are unsuitable, unaffordable and leave them worse off.

Jonathan told me the story of a Bien, a 20-year-old Congolese born refugee. When he was 19, with only six months of work under his belt, Bien signed his first significant financial contract, on a ute. Unfortunately, it wasn't fair and it wasn't sustainable. The salesman pressured Bien heavily into taking the loan but didn't explain what it would mean for him. As a result, Bien signed the contract expecting to pay $19,000 for the vehicle. But the terms of the contract meant he would be required to pay a total of $48,000—on a minimum wage. Within six weeks of taking on the loan, Bien defaulted on his repayments. Soon after, understandably, massive stress set in. Bien wasn't eating or sleeping, and he withdrew from his social life. Feeling silly, embarrassed and hopeless, he reached out to a friend who referred him to the Salvation Army. Thankfully, they were able to hold the lending organisation to account and get a good outcome for Bien. How did they do this? By using the very provisions that this bill now seeks to trash. Bien's story shows clearly why we need these responsible lending obligations and what a disaster it would be if this bill was passed.

Debt can have terrible impacts beyond our financial lives. It can hurt our relationships, our work lives, our health and, indeed, our very sense of self. It can quickly drag people down into despair. It can lead to an ever-worsening cycle of debt when people try to stay on top of things by taking out loans in order to pay off other loans. Not everyone has the financial skills to understand the long-term impacts of their financial decisions. But the banks do know how much debt people can manage. They should never, ever be allowed to give people loans that they know the customer simply cannot afford.

Of course, the Morrison government knows very well that this legislation puts people like Bien at risk of falling into desperation and despair. They won't admit that they know. In fact, they deny there's even a problem. But they're not telling the truth. Do you know how I know this? It's because it's not just peak bodies that have been warning the government about this; indeed, Treasury advice uncovered by a freedom of information request shows that the Treasurer was warned in March that dumping responsible lending obligations would harm consumers. Yet, this is exactly what he has proposed four months later. He really should be ashamed of himself.

In summary, this legislation sends a clear message to the financial services sector. It says that, despite the appalling exploitation of Australian consumers revealed by the banking royal commission, the Morrison government will continue to use the federal parliament, this very House and chamber, to do the bidding of bankers. It says they have no qualms with introducing legislation that reduces transparency and shifts the burden of risk from the lender to the consumer. It says that the government simply isn't on the side of Australian borrowers.

Well, let me assure you that Labor is on the side of vulnerable Australians, that we are on the side of justice and that Labor is very much on the side of a fair go in this nation. The government should withdraw this legislation immediately.

(Quorum formed)

Peta Murphy (Dunkley, Australian Labor Party) Share this | Link to this | Hansard source

There's something about this government that I struggle to understand. It's true that we all come from our own backgrounds and experiences. It's true that the families we were born into, the schools we attended and the institutions that we have worked for have or that have shaped our lives have all influenced not only the lives we've led but also the way that we view the world. It's inevitable, and it's fair enough. But what most people try to do, even if it's just occasionally, is to step outside of their own world and their life experience and try, just for a moment, to put themselves in the shoes of people who haven't led the same life they have. That's what I struggle to understand about a lot of members of the current government. If members of the government took a moment to stop and genuinely listen to the stories of the lives of people—people who weren't born into a family that could afford to send them to a private school; who weren't born into a family that had multiple investment properties from which they could live; who weren't born into a family where there were two parents at home; who weren't born into a family where there was any parent at home who had a job; or who weren't born into a family that thought nothing of being able to pay $40,000 a year to send them to an elite school so that they could make the right connections and have the right friends to be able to ascend to positions of power—then we wouldn't have to be standing in this parliament debating pieces of legislation like this.

Perhaps they should come to my electorate and meet some of the hardest-working people you will ever come across. They are scraping from pay cheque to pay cheque but, even worse than that, scraping from shift to shift, never knowing when the next shift is going to come; not knowing necessarily how much they're going to get paid for that shift, because it's for a different employer or a different labour hire company; never knowing whether or not they're going to be able to pay the rent, put food on the table or buy a netball top or a pair of footy boots for their kids; and absolutely vulnerable to predatory financial institutions because they're so desperate for a bit of extra money just to get by. That's who the Treasurer should spend some time speaking to, and then maybe he would understand why it is that members on this side of the chamber—even those of us who have never had to go to a payday lender or have been fortunate enough to always be able to tick all of the boxes to get a loan no matter how stringent the rules are—are standing here to say this sort of legislation causes harm.

Maybe we should step back for a moment and stop talking about the technicalities of what financial institutions can and can't do and about lending laws, and just focus for a moment on the health impacts of financial stress and living day to day in that precarious world. We have in Frankston in my electorate—just round the corner from my electorate office, in fact—one of the new mental health services that, to their credit, the current government has funded as a result of the increase in mental health stress during the pandemic. It's called a Head to Health site. It involves both being able to attend at a clinic—in this case, it's the Young Street medical clinic—or being able to access mental health assistance online. The Australian government's Head to Health website notes the following:

Mental health and financial safety are strongly linked. Experiencing a mental illness can add to financial stresses, and financial stresses can add to a mental illness.

The Senate inquiry looking at this legislation heard from organisations that represent everyday people who are in financial stress because they're in underpaid and low-paid jobs and have fallen prey to either predatory payday lenders or loans that they can't, and never were going to be able to, repay. The representatives of those hardworking, decent Australians told government and opposition members alike:

Should lending standards reduce as a result of the repeal of the RLOs this is likely to create greater overindebtedness. The impact of unaffordable debt on individuals, families and communities is immense. Community lawyers and financial counsellors speak to people every day who are struggling to pay their debts, while trying to juggle other expenses like energy bills and groceries. Over-indebtedness can result in significant longer-term impacts on individuals as it affects their capacity to provide for housing, health, education and retirement.

The submission to the Senate inquiry went on to say:

Debt can also have a harmful effect on relationships with family and friends, increase isolation and exacerbate mental health issues. Studies have found that people with unmet loan payments had suicidal ideation and suffered from depression more often than those without such financial problems.

I'm sure there are members of this chamber who have, at periods in their lives, had financial stress. There may well be people in this chamber who have had financial stress caused by a loan that they couldn't service. If there are, they should be calling on that experience and calling on their humanity to oppose this legislation. It's just almost inexplicable that the government would choose to call this bill 'supporting economic recovery'. Whose economic recovery is this legislation supposed to be supporting? The evidence to the Senate committee at the end of last year was that there was no lack of available credit. Whose economic recovery is being supported by going against the first recommendation of the royal commission into banks and the financial services sector? It was the first recommendation.

This government, under this Prime Minister, voted time and time and time again against establishing a royal commission into the banks and financial institutions. We know that they got dragged kicking and screaming, and this Prime Minister reluctantly announced such a royal commission. Then we heard over and over again words that sounded like commitment to the inquiry. When the final report was tabled, we heard words from the Prime Minister and the Treasurer that sounded a lot like commitment to the recommendations of the inquiry. But we haven't seen the action. The Treasurer's own implementation schedule for the recommendations of the royal commission isn't written on paper, because it's online, but it isn't worth the internet that it's written on. He hasn't come close to following it. The real truth—not the words but the real truth—of the government's commitment to making sure that Australians don't have their lives, their families and their physical and mental health ruined by the actions of the big banks is in their walking away from the first recommendation of the royal commission.

I almost can't work myself up to get angry, because it's just sad and disappointing. Today has been a day of disappointment. Today has been a day where women's rage and distress and hope have been dashed by a Prime Minister and a government that know the words but don't have the actions and that weren't brave enough to go and listen—really listen—to Australian women calling for gender equality and real systemic response to endemic domestic violence and sexual assault in this country. Today is a day when the Prime Minister, on indulgence at the start of question time, gave a speech which one can only imagine he thought would justify his pronouncement from on high that he couldn't be seen to go out to address a rally of thousands and thousands of Australian voters, most of whom happened to be women, but that three or four of them could come to his office and listen to what he had to say.

Kevin Andrews (Menzies, Liberal Party) Share this | Link to this | Hansard source

The member for Dunkley is now straying from the topic of the bill before the House, and, whilst it may be an important matter, this is not the appropriate place for that discussion.

Peta Murphy (Dunkley, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Deputy Speaker, and I'm getting there. I'll get there. It's because the Prime Minister wouldn't listen, and here we have legislation that is in exactly that vein. You have financial services representatives, community legal centres and individuals taking the time and effort to make submissions and give evidence to this government through a Senate committee about why this legislation should not go ahead, and it's almost as though the Prime Minister refused to go out and listen to them. It's almost as though the Prime Minister's attitude is 'I'll tell you what you need, and what you need is what I've got to say'. It flows through this entire government, and it starts with where I started. If you are a government that believes that you rule the country—you don't govern the country and you don't lead the country, but you believe that you rule the country—because your privilege has led you to a life that means that you cannot even comprehend the life that other people have to lead, then you don't listen and learn from other people and do what they need.

There is a difference between people who grew up being told they were the conquerors of the world and people who grew up understanding that they were going to need to conquer the world. I'm here to be a voice for people who grew up knowing that they were going to have to work to conquer the world, and so are my Labor colleagues. That's why we won't support this legislation which makes it easier for those institutions that are the conquerors of the world to take advantage of people who are just working day to day to conquer the difficulties that are put before them. Deputy Speaker, I draw your attention to the state of the House.

(Quorum formed)

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

Andrew Giles (Scullin, Australian Labor Party, Shadow Minister for Cities and Urban Infrastructure) Share this | Link to this | Hansard source

I'm very pleased to have the opportunity to make a contribution to the debate on this bill, the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020, and to support the second reading amendment moved by the member for Whitlam. I was also pleased to be present in the chamber for the contribution of the member for Dobell. It's always of interest to hear what the member for Dobell says, particularly when she brings to this place the experience and passion she had for her previous work. I think any members opposite who had regard to her contribution would be prompted by her reminding them, as she reminded all of us on this side of the House, that this is a debate about people. In particular, it's about the vulnerabilities that people can have. We have a government that talks a big game when it comes to mental health, an issue that we are all committed to advancing. But those words will continue to ring hollow if they are not matched by action, and this is an area where that action is required.

In this place and this building today, it's hard to be hopeful. This is a government that, throughout its time in office, has been bereft of a vision for Australia and for Australians. It has been obsessed with managing the tactical questions that come up from day to day. From time to time I convinced myself that that led to a dynamic that could on occasionally be positive—that members of this government would do the right thing when they had exhausted all other alternatives. We have seen that time and time again. Indeed, we saw that as they stumbled into calling the royal commission that ultimately led us to the propositions that we are debating right here and now. They got there in the end, dragged kicking and screaming, due to the advocacy not only of consumers, the bravery of advocates and the consistent advocacy of my parliamentary colleagues but of members within their ranks who thought that this was an issue that could not continue to be ignored.

Now, though, there appear to be no brave advocates within the ranks of the government or, indeed, amongst some of those on the crossbench who continue to vote with the government consistently despite having said they would approach issues on the basis of their conscience, a matter that the member for Whitlam outlined in respect of the member for Hughes and his background on this issue. But we have seen today in this place, in the most shocking manner, that this is a government that from time to time will fail to do the right thing even when it's staring them in the face. It will fail even to listen. It's a government that's not listening to the voices of Australian women. It's a government that won't enable debate on the most serious of issues in this place. It's a government that in this case seems to be thumbing its nose at the first recommendation of a royal commission it itself called.

The first recommendation, recommendation 1.1, of the Hayne royal commission explicitly recommended against amending the responsible lending framework, but this government—now that courageous voices are no longer found within its ranks when it comes to these issues—seems to be determined not to do what's right on the basis of ordinary Australians but to do the bidding of the banks in circumstances where it seems the banks have invented the problem that this part of this legislation is designed to solve. My colleagues have gone through the evidence, and the evidence is wanting. The evidence that is before us is that which has been presented by advocates and that which came before the royal commission.

I think we should reflect on the royal commission before any of us passes judgement on the bill before the House. There were 10,000 submissions to the royal commissions—10,000 difficult stories which those of us who have the capacity to respond to must respond to. We must not ignore their stories, as members of this government turned their backs on the voices of millions of Australian women today, but we must honour them and think about how we can do justice to a lending system that does the right thing by ordinary Australians—starting, of course, with the recommendations of the government's own royal commission. There were 10,000 stories. The member for Whitlam, the shadow minister, acknowledged this. Not all the most powerful stories were contained in the 10,000. There are more and, sadly, I'm very confident there will continue to be more. We have a chance to make that number smaller by doing the right thing and supporting the amendment proposed by the shadow minister.

Government members who, once again, don't seem to have had a lot to say in respect of this legislation should reflect on that when they come into this place shortly and vote on it. They should reflect on those 10,000 stories. They should ask themselves how many more they are interested in hearing and think about the words of the member for Dobell about the people that are at the core of this responsible lending regime and doing the right thing by them, rather than extending a licence to people who, quite frankly, in too many cases, don't warrant it. There were 10,000 stories, 68 days of hearings over nearly two years and 130 witnesses who bravely, in many cases, gave their evidence and told stories that were difficult to tell. That led to this first recommendation—all of these stories, all that evidence by one of Australia's most eminent jurists—to keep the responsible lending laws as they are. It shouldn't be a difficult proposition.

Indeed, when this report was handed down, the Treasurer, the member for Kooyong, promised to implement the recommendations. There's a whole other story about how he is going about implementing the breadth of those recommendations, and my colleagues the member for Fenner and the member for Whitlam have unfortunately had many opportunities to advise the House and the wider community on the utter lack of progress in attending to this responsibility—although I guess it's consistent with the sort of progress he has had more broadly in his role. But to simply ignore recommendation 1.1, to go in the face of it, is quite extraordinary, even by the standards of a tone deaf and visionless government.

I think it's worth going back to where this story began, before the royal commission, when the Rudd government—a government with a sense of the possibilities for Australia and a sense of the responsibilities of national government—introduced these obligations as part of reforms to credit law to establish a nationally consistent framework, the credit act. This sets out responsible lending obligations—those obligations which require lenders to assess whether a credit product is unsuitable for the customer before that product is to be provided to them. There's an argument that's been put forward, although not with any vigour, in this place, in Australia's parliament, that these obligations are causing constraints to credit supply. That's not something that there's any particular evidence for, and there's a broader debate to have about that. But what we're seeing here is a government that is allergic to the evidence and indifferent to the views of those who are speaking on behalf of those most directly affected. I touched before on those 10,000 submissions to the royal commission. Some weight has to be attached to a response of that nature, some weight must be attached to the 130 witnesses and some weight has to be attached, surely, to the findings of the commission. This is a government, however, that won't listen to the voices of ordinary Australians and won't listen to the experts.

The consumer groups have expressed in the strongest possible terms their opposition to the reforms—the reforms contained, of course, in the first schedule of the bill which is before the House. I should also note—and this is not something that I'm particularly going to direct my remarks towards—that very serious concerns have also been expressed by these groups that the reforms put forward which go to protections in respect of payday lending don't go far enough. Again, this has been one of those other issues where members of the present government have failed to understand what is happening in communities. They've failed to understand exploitation. They've failed to listen and have only been dragged to it kicking and screaming. I think it is incumbent on them to reflect on whether they have gone far enough in this regard.

I think members opposite could also, as well as having regard to the royal commission and to the voices of ordinary Australians, have regard to the submission of their own Department of the Treasury to the Hayne royal commission, which suggested, again, that responsible lending laws enhanced rather than detracted from macroeconomic outcomes. You'd think that the Treasurer would be mindful of this sort of advice from his own department when he comes into this place puffed up, telling his version of a good news story. But, in this regard, as in so many other aspects of his performance in this role, he is only interested in a version of the truth that suits his purposes, and generally they are the purposes of the day, not the long-term vision for recovery that Australia so desperately needs and not, indeed, the vision for recovery that I have noted that the secretary-general elect of the OECD seems very keen on. If only he had been keen on those sorts of reforms and that sort of agenda when he was the finance minister for Australia, when he set our country on precisely the opposite agenda! So perhaps former Minister Cormann, Secretary-General Elect Cormann, can have a chat to his former cabinet colleagues about the right way forward, about a green recovery and a green transformation. How ironic that someone as responsible as he could make that argument!

Mr Stephen Jones interjecting—

Thank you, member for Whitlam. That was where I was going. This man—the man who talks now as the representative of an organisation that has been determined to convince its members about the necessity of a path towards inclusive growth—is the same person who proudly described low wages as a deliberate design feature of the architecture he was proud to hold in place. I hope the new Mathias Cormann speaks to his former colleagues and advises them to reconsider.

Again, when we think about the issues that we're concerned about here, they can't be divorced from the wider economic agenda, or lack thereof, of this government and, in particular, its agenda. At a time when wage growth is at record lows and when our economy is more dependent than ever on consumption, the plan is to drive people who may be vulnerable further into debt, rather than to increase their spending power through labour market reforms that are actually good for working people. It's quite extraordinary to see the priorities that this government puts forward. For these reasons, I'm very proud to stand with the member for Whitlam and support his second reading amendment. In fact, it's very difficult to understand how any responsible member of this place could argue with that proposition, although, only a couple of hours ago, we saw members opposite deny even the prospect of debate on the most straightforward motion—responding to, without a hint of criticism, the movement and the moment that is Australian women demanding action and equality.

This, I think, is a matter that is less all-embracing but equally straightforward. Why wouldn't members opposite stand up for respecting the findings of Commissioner Hayne? Why would they want to weaken Australia's credit laws and deny the purpose for which they have been enacted? And, instead of looking after mates, why won't they focus on passing legislation and on engaging more broadly in actions that will support an economic recovery for all Australians—the people that the member for Dobell was speaking about, the people I represent, and the people who are expressing their concerns in my electorate and in electorates right around the country about the human impact of these changes, should they be enacted?

There is a choice facing Australians, just as there is a choice facing members opposite. They can take a step back. They can reconsider this. They can look at the work that has been done for them by Commissioner Hayne and honour the contributions of the thousands of Australians who have bravely told their stories. They can reflect on their responsibility to those Australians and to their former colleagues. I think of Senator Williams. I wonder what he's thinking right now. It was almost his life's work to have that royal commission established, and I'm sure he would have been proud to see its recommendations. But, as soon as he's no longer in the other place, we see those recommendations discarded. I ask members opposite to think about that when they cast their vote on this matter. Deputy Speaker, I draw your attention to the state of the House.

(Quorum formed)

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

This legislation, the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020, effectively reverses legislation introduced by Labor over a decade ago. That legislation was enacted in response to the very concerns that consumer groups are now raising about this legislation, consumer groups who have seen the problems in the past and know what to expect if this legislation is adopted by parliament.

The legislation, as other speakers on this side have made clear time and time again, even flies in the face of the banking royal commission recommendation that the National Consumer Credit Protection Act 'should not be amended to alter the obligation to assess unsuitability'. It is fiercely opposed by the very community groups that every day are left to deal with the consequences, and, not surprisingly, it is the subject of a dissenting Senate report from both Labor and the Greens. Indeed, I suspect the only reason that the Senate committee recommended adoption of this legislation was that the government had the numbers on that committee.

At a time when COVID-19 has shattered the Australian economy, when there are two million unemployed or underemployed people throughout the country, when JobKeeper is nearing an end, when other government COVID support measures are being phased out, when credit card debt in January was at $21 billion and when unemployment conditions are less secure than ever before, lending laws should not be relaxed. Indeed, they should be tightened because irresponsible lending ultimately will cause additional financial harm to people already struggling to make ends meet.

In a media release issued jointly by CHOICE, the Consumer Action Law Centre, the Financial Rights Legal Centre and Financial Counselling Australia, the authors make this absolutely clear. In that media release, which was issued only on Friday. Alan Kirkland, CEO of CHOICE, says:

This report ignores the clear economic evidence: that the housing market is already overheating and removing safe lending laws will push home ownership out of reach for many more Australians.

We already see high levels of mortgage stress in states like Queensland, South Australia and Tasmania. Giving more power to the banks in these circumstances will be bad for people who are already struggling to repay their mortgage and bad for people trying to get into the housing market.

Gerard Brody, CEO of the Consumer Action Law Centre, says:

One bad loan won't break the bank, but it can definitely break the borrower. That's why we need to keep our safe lending laws – without them, the regulator focus will be on the stability of banks, not the protection of borrowers.

He goes on to say:

The Government's plans will dismantle our effective and sound financial services regulatory framework. The reality is that the prudential regulator, APRA, does not provide individual consumer protection. It focuses on whether loans cause a credit risk to the bank, not on whether loans are affordable to individual borrowers.

The same press release goes on to quote Karen Cox, the CEO of Financial Rights Legal Centre:

This plan to roll back responsible lending was concocted as a knee jerk response to the pandemic related recession. Now we are facing record lending levels and runaway property prices. It's time to drop this crazy plan and avert a potential debt disaster.

It then lastly quotes Fiona Guthrie, the CEO of Financial Counselling Australia:

The effect of irresponsible lending on everyday people is enormous; it sends too many people into debt spirals which often leads to financial stress, family breakdown, mental health issues and even homelessness.

Indeed, Fiona Guthrie issued a press release today on this very subject. Attached to the press release were several case studies from around Australia highlighting the impacts of what poor lending does to consumers. The press release says:

Financial counsellors are at the front line, witnessing the harm that is caused by irresponsible lending. This bill will exacerbate financial stress, family breakdown, mental health issues and homelessness.

Rather than refer to one of the examples provided by Fiona Guthrie, I'll provide my own example of a recent case in my own electorate.

Several weeks ago I was contacted by a relatively new arrival to this country who had a wife and, from memory, four children to support. This person had a stable job and was on basic pay, but he couldn't make ends meet, with a mortgage to pay, with a motor vehicle lease purchase contract that he had committed to and with normal living expenses for himself and his family. He simply wasn't earning enough to pay his everyday bills. He was behind in his payments and was facing repossession of his car and, even worse, losing his home. His motor vehicle repayments, in particular, were dragging him down. I asked this question: where was the responsible lending and the scrutiny in respect of his case, where the motor vehicle dealership could have looked more carefully at his financial situation before allowing him to commit to the repayments that he made? I referred this person to a friend, a former financial counsellor and adviser, who looked at his case exhaustively. They were not able to help but made it clear that he should never, ever have been allowed to get into the situation he did. But he did so because, in my view, he was vulnerable to the fact he was a new arrival, didn't necessarily know the laws of this country well and perhaps didn't understand Australian life as well as he might have thought he did, which ultimately got him into the mess that he's now in.

What is the government's justification for this legislation, particularly given that the banking royal commission didn't recommend it—in other words, there's no call from the royal commission; in fact, as I said earlier, it recommended the opposite—and that so many experts have already argued against this legislation as well? It is that the changes will simplify lending laws, make credit easier to get and increase credit supply throughout the country. However, that particular view is not supported by all.

In their submission to the Senate inquiry, the Law Council—and I'm referring to laws being made simpler and easier to understand—said of the legislation:

… the Law Council submits that this does not represent a simplification of RLOs, but rather makes enforcement of the standards complex and difficult. It would also make it highly difficult for a consumer to assess whether or not their own lender has breached the non-ADI standards.

That's what the Law Council said in respect of supposedly making it easier. It actually makes it more complex. With respect to it being a measure to help release more money into society, Maurice Blackburn in their submission pointed out to the committee that there is not a need for this bill as it is seeking to solve an issue that simply doesn't exist. Maurice Blackburn point to some data. I quote the data that they refer to:

The total value of new loan commitments for housing and the value of owner occupier home loan commitments each reached record highs in October 2020.

…   …   …

…   …   …

The government is saying that we need to have more money out there in society because it will help stimulate the economy. It is saying that people cannot get credit and this is restricting the ability of the economy to grow. But the stats simply don't support that argument. In fact, the reverse is happening.

What is notable about this legislation is that the underlying argument for it is to speed up economic recovery by releasing more private money through loans and extending credit. Unsurprisingly, therefore, this legislation is being backed by many of the business associations, whose members will obviously benefit from the easing of credit. If the government wants to boost the economy, it should continue to do what has been proven to work and what it has been doing over recent months with respect to the COVID stimulus package—that is, ensure that people on low incomes have money in their pockets to spend. If they have money in their pockets to spend, they won't need to resort to credit. If they don't have the money in their pocket, then they will be forced to try to secure credit which they simply cannot afford. This will slowly take them further down in terms of their ability to survive financially.

What was the Morrison government's response to that argument? It was to cut the JobSeeker supplementary payment. Now it comes back with a proposition that it will increase JobSeeker permanently by a measly $25 a week. It is simply not enough. It will not lift people out of poverty. It will ensure that they continue to struggle through life, and it will ensure that, because they are struggling, they will try to access money through credit that they simply cannot afford.

Of course we want people to have money for the things that they need to get on with their life, but this is not the way to do it. The reality is that there are better ways for the government to manage the economy and support people on low incomes than to simply make access to credit much easier. The arguments in favour of this legislation—and I believe it was initially intended to boost the economy during COVID-19—simply don't stack up, and they will not stack up in the months ahead as the economy reverts to a more normal economy.

As I said earlier, unsurprisingly, the Labor members on the Senate committee that looked at this bill did not support the recommendation that it be passed. Indeed, they moved a recommendation that the bill not be passed. They also made the very sensible point that the Senate should immediately pass the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2019 (No. 2), which probably would make a difference to people's ability to manage their financial affairs. It is clear that this legislation does not have the support of the broader community. It is clear that this legislation will only cause more hardship and suffering for people who are already doing it tough. As we on this side of the House have said, it should not be supported.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this, the honourable member for Whitlam has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question.