Andrew Wallace (Fisher, Liberal National Party) Share this | Link to this | Hansard source

You know what Labor policies I like the most? They're the sorts of policies that are copied from the coalition. This bill is the Treasury Laws Amendment (2023 Measures No. 3) Bill 2023, and it's proof once again that the coalition's plans are commonsense plans for Australia. It's proof that Labor do not have a plan for our economy. While the coalition will be supporting this bill, we support it because many of the reforms contained in this bill are the work of the Liberal and National parties when we were in government.

Not too long ago I hosted the shadow Treasurer for a visit to my electorate in Fisher. We assembled a Fisher industry round table composed of local financial advisers and local financial service professionals. We shared about the strengths and struggles of doing business under this Labor government. Small businesses like David Unwin Accountants, Tax and Audit, Infocus Australia and Wideland brokers. These are hardworking, community-oriented, client-centred firms on the Sunshine Coast, and they are contending with a huge deal more than they were before 22 May.

Australia should be very proud of its strong financial services sector. It is one of the bedrocks of our economy. Its stability and strength is known around the world. Part of this strength comes from nearly a decade of the coalition being in government. We slashed red tape because government shouldn't hold Australians back from achieving. We simplified taxes because government shouldn't complicate business unnecessarily. We invested in vocational and tertiary education in areas like data science, tech and cybersecurity to ensure that our financial services sector is at the cutting edge. At the same time, we implemented landmark transparency and consumer protection measures to protect Australians and their financial interests. We introduced standards for cybersecurity, data protection and verification to boost confidence in the sector in an uncertain world. We remain committed to those objectives and to ensuring that Australians have access to high-quality, affordable financial advice.

Mr Deputy Speaker Buchholz, now that there's been a change of the guard in the chair, I want to just say that a nation's financial success depends to a great extent upon the financial advice that is provided to everyday Australians. I know how difficult life has been for financial advisers, because my own financial advisers in my electorate have told me. They've gone through enormous changes, particularly as a result of the banking and financial services royal commission. A number of them have left the industry because of those reforms. That's sad. We now have far fewer financial advisers in the sector than we did before the royal commission.

Financial advisers bore the brunt of a lot of the recalcitrance and bad actions that were undertaken, particularly by the big four banks. The big four banks were the worst perpetrators in relation to what was revealed from the royal commission, yet small businesses and small-scale financial advisers seemed to bear the brunt of those recommendations. As a small-business man myself—and I know you were too, Mr Deputy Speaker—it breaks my heart to see that small-business people suffered as a result.

As with all things, the pendulum swings left and right. The reforms that we were going to introduce and that now are contained in this bill seem to impact upon that pendulum. They are reasonable reforms, and I'll talk about that in a moment. We support the measures in this bill, but I'm very concerned that Labor don't seem to be really committed to good-quality reforms in the financial services sector. I spoke earlier about the importance of the financial services sector. The last thing we want, as a country, is for financial advisers to be available only to the rich. The more warnings and the more disclaimers there are—these legal documents end up looking like a phone book, for those of us who remember those; the member for Casey probably doesn't know what a phone book was—it's been proven time and again, and as a barrister I can tell you, the less notice is taken of it. The more warnings, the more disclaimers and the more you make red tape for the punters—they don't take any notice of it. Where those reforms that were introduced as a result of the royal commission made life so difficult for financial advisers, it was appropriate and timely that some of those things got cleaned up. The last thing we want to do is enable only the uber rich to get financial advice. It's average mums and dads that need that advice and that support. If obtaining that advice becomes so costly that average people can't afford to get it, then it becomes self-defeating.

We in the opposition are particularly supportive of schedule 2 in this bill, which will help make it easier for financial advisers with good records to remain eligible to provide personal advice. The Levy review on quality of advice, which the coalition has supported in principle, has broad support across the sector. The government's response has been less than half-baked. It's not an attempt at solving the issues identified but at appearing like they care. But that's Labor's way: they talk the talk and pretend like they care, but actions speak louder than words. While overdue, the government's stream 1 reforms are welcome. However, without accepting the longer term agenda, the government is only kicking the can down the road, meaning that Australians will struggle to find the right kind of financial advice. At the same time, advisers working outside the superannuation system will be thrust into the cold. The response to the Levy review was an important moment and an opportunity to drive better outcomes for retirees, particularly self-funded retirees. They don't have the privilege of a pension. They require their money to go a long way, perhaps four decades, and it is incredibly important that self-funded retirees have access to that specialist financial advice.

Labor haven't bothered to implement the review in a fulsome way. Their narrow implementation, though a tiny step in the right direction, risks undermining investment, innovation and competition in the financial advice sector, creating an equal playing field between super funds and the rest of the sector. Financial advisers in my electorate have repeatedly raised concerns about this issue. The coalition is calling on the Albanese government to adopt in principle all the recommendations of the Levy review and to work constructively with the coalition on its implementation. This is a vital deregulation measure that will deliver wins for consumers as well as support innovation and investment in the financial services sector.

But this bill is no substitute for the government's incompetence, ignorance and indifference when it comes to managing our economy. After a year of having Labor in control, Australia's economy is weaker, our communities are struggling and households are at their wit's end. The March quarter annual accounts showed that economic growth is at the slowest rate since September 2021, and that was mid COVID lockdowns. I imagine Labor's Treasury ministers sitting around scratching their heads and asking themselves, 'Why is the economy slowing down?' It's not slowing down; it's shuddering to a halt.

This bill contains measures which are worthwhile, but it does nothing to address the biggest challenge facing Australians, who are contending with rising mortgage payments and grappling with rising prices at the check-out. Energy prices are up. The cost of travel is only getting worse. Core inflation is higher than in almost all other G7 nations, lifting to as high as 7.8 per cent in the last nine months and currently sitting at nearly double where it was 18 months ago. Two major banks are forecasting per capita recessions. More rate rises are set to come. Australia's economy is weaker under Labor, and households are feeling it. Australians are saving less money, almost 7.6 per cent lower than a year ago. Australians have been taxed over 11 per cent more in the last 12 months. While Australians are working the most hours since 1978—in nearly half a century—they are keeping less of their money and delivering lower outcomes. That's right: productivity under Labor has fallen by nearly five per cent. Australians are working harder for less. They're working harder for less money, for less purchasing power, for fewer results. The coalition, when we were in government and now in opposition, are listening to those hard-working Australians. We hear middle Australia. We have their back, the same back on which this callous and careless Labor government is trying to balance the books of its union paymasters.

Australian families and their businesses are not a blank cheque from which Labor can draw funds for another policy experiment. Families are hurting. They need good quality financial advice. Businesses are hurting. They also need good quality financial advice. Communities are hurting thanks to this federal Labor government, and it is entirely avoidable. Don't swallow the argument about the financial problems coming out of Moscow. Don't follow that they are coming out of Ukraine. They are coming out of Canberra, out of this place. Our economic regress is only happening because Labor have no plan to address inflation. They have no plan to curb the cost-of-living crisis which they have so ably created. Labor's approach to managing our economy is to open the purse strings and spend and spend and spend while punishing people for trying to make their own money. It's big spend and big tax. It's cuts, cuts, cuts to essential services like veterans' wellbeing centres, mental health care and medical access in regional communities. It's slash, slash, slash when it comes to roads and rail in regional and remote Australia. While Labor arrogantly struts through the corridors of power, Australians are struggling to make ends meet. Enough is enough.

Naturally, we also support the technical changes that schedule 4 of this bill provides for in relation to the First Home Super Saver Scheme. This is an initiative of the former coalition government that helps Australians boost their savings for a first home by allowing them to build a deposit inside superannuation, giving them a tax cut. Freedom over your super, cutting taxes and making homeownership possible—that is the Liberal and National way. The First Home Super Saver Scheme could boost the savings of a first home buyer by around 30 per cent compared with saving through a standard savings account. This was just one of the measures of the former coalition government that was aimed at helping Australians get into their first home. It was supported by HomeBuilder, our response to the COVID-19 pandemic. It was backed in by the first home guarantee and then the family home guarantee for single parent families and the regional home guarantee for regional communities. This opposition believes in homeownership.

Daniel Mulino (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

r MULINO () (): I rise today in support of the Treasury Laws Amendment (2023 Measures No. 3) Bill 2023, which contains a number of important economic measures both in terms of microeconomic reform but also consumer protection. I'll speak to several of the key measures contained in this bill.

Schedule 1 of this bill contains measures in relation to the avoidance of certain product intervention orders. As we all know, safe and well-regulated consumer markets for credit products are of vital importance to our economy. Credit to so important to so many people in our economy in a number of ways. It's through credit that we are able to purchase our homes. It's through credit, in many cases, that we are able to go on holidays or purchase a car or get through difficult patches. Credit is obviously of vital importance. But credit can often be sought by people who are at a low point, who are vulnerable. Credit contracts can often be very complicated. Access to credit is essential to people in order for them to live their lives to the fullest, and credit transactions need to be regulated in an appropriate way because there is so much potential for harm.

That's why the Albanese government introduced long overdue reforms to the regulation of payday lending and consumer leases through the Financial Sector Reform Act 2022. This act implemented the government's response to the 2016 review of small amount credit contract laws, SACCs, as they're known; one obviously has to reduce everything to an acronym in public policy. These were laws to protect people dealing with small credit transactions. As I mentioned earlier, these small credit transactions are often ones which are nonetheless of vital importance to people, but people can be very vulnerable because they can often be caught by terms in transactions which they're not well aware of. One important aspect of the 2016 review was a recommendation to address avoidance behaviours by entities using business models not regulated by the Credit Act. To provide a bit of context for what's in this bill, I thought it would be useful to go back to that particular recommendation from the 2016 report. Recommendation 24 of the review's report dealt with avoidance, and specifically said:

The Government should amend the Credit Act to regulate indefinite term leases, address avoidance through entities using business models that are not regulated by the Credit Act, and address conduct by licensees adopting practices to avoid the restrictions on the maximum amount that can be charged under a consumer lease of household goods or a SACC …

We saw in that recommendation that in the laws that cover small amount credit transactions, or SACCs, there need to be measures to protect consumers; in particular, vulnerable consumers.

The 2016 report talked about two different types of avoidance. The first is 'business model avoidance', where providers can structure financial products so that they are not regulated by the Credit Act. For example, that could be a lessor offering an indefinite-term lease instead of consumer leases of household goods regulated by the Credit Act. The second is internal avoidance of the Credit Act, where the provider offers a regulated credit contract or a consumer lease of household goods but structures the contract or includes certain terms in the contract to avoid the requirements of the act. An example of that might be lessors deliberately providing finance through leases, rather than as a credit contract, to avoid the caps that apply to credit contracts—or 'front loading'. A number of stakeholders, including the Consumer Action Law Centre, talked about a whole range of situations in which consumers were put at risk or, often, harmed by avoidance mechanisms.

The provisions of the Financial Sector Reform Act 2022 extended these anti-avoidance mechanisms to product intervention orders made under the National Consumer Credit Protection Act 2009. What this bill does is to further extend the protections. Schedule 1 of this bill ensures that the anti-avoidance provisions also apply to ASIC product intervention orders relating to credit products made under the Corporations Act 2001. Importantly, ASIC has identified credit products that cause considerable consumer harm, particularly for vulnerable consumers.

This is a good example of a situation where we have credit products where there is potential benefit for consumers—obviously, consumers need the advantages, need access to credit—but, particularly where we are talking about vulnerable consumers, there are many situations where there is potential for harm or actual harm. This bill is very important in extending the scope of the anti-avoidance protections recommended in the 2016 report to an additional class of products, so I strongly support schedule 1 of this bill as an important consumer protection mechanism. Again, I say that as somebody whose electorate covers many people who struggle to deal with the complexity of consumer products, particularly credit products that are designed in such a way as to avoid certain regulatory mechanisms.

Schedule 2 deals with financial advice. Financial advice is absolutely critical to people's long-term welfare. Financial advice relates to some of the most important and complex decisions that we make. It relates to decisions as to how we save over the long run and how we allocate our savings and assets across different classes: do we use our savings to pay off our home, do we put them into super, do we put them into investment products? These kinds of decisions have a critically important impact on our post-retirement standard of living, on the amount of risk that we bear in accumulating assets and on our security in retirement.

So, when we talk about financial advice, we're talking about a group of people, financial advisers, who provide people with some of the most important advice they are going to receive in their lives. I think this is sometimes not well understood. Of course, there are many other people who we seek advice from—people in the medical professions, such as doctors, allied health experts and nurses, as well as lawyers and accountants. There are many professions which provide us with critically important advice. But I think that sometimes we don't take a moment to think about how critically important financial advice is in terms of how it can set us up over the course of our entire lives with financial stability and security at a point in time post retirement where we might otherwise be very vulnerable.

We know that financial advice has experienced a number of difficulties. We saw this in the Hayne royal commission. We've seen it in other contexts as well. This is related to a number of issues. One of the issues that was raised was conflicts in remuneration that arose in a number of contexts and the way that that impacted on the nature and the quality of advice. That was one of the key pieces of analysis that came out of the Hayne royal commission. Another set of issues that arose in relation to financial advice was what one might call the level of professionalisation of the profession or of the career path—the educational standards and other aspects of the way in which financial advisers worked as professionals. I think that those two issues are obviously interrelated to some degree, but nonetheless they are separate. With both of those issues—the remuneration of financial advisers but also what one might call the professionalisation or the standards of qualifications and so forth of financial advisers—I believe there are some tricky policy tensions.

When it comes to the removal of conflicts, I suspect almost everybody, if not everybody, in this chamber would agree it's necessary and a good thing. But there can be a tension between moving towards less conflicted remuneration mechanisms and yet providing remuneration to financial advisers and costs, which are passed on to those seeking financial advice, that allow for access for ordinary people. We've probably moved towards a system where more of the fees for financial advice are now upfront, and that can provide barriers to some people receiving access to financial advice. So I think it's important to acknowledge upfront that there is a policy tension there—that removing many of the conflicts that I think did need to be addressed has created a bit of a policy tension with access.

There's also a policy tension with this broad and well-founded desire to move towards a more professionalised class of financial advisers and cohort of workers because of the importance of the services that they provide. Again, it's with access and with the number of people in the profession. We want to make sure that, by putting in place minimum educational and training standards and transitioning the financial advice profession to a new set of standards, we don't see a situation where we lose too many people from the profession, which, of course, would have consequences for access. I believe we need to adopt a balanced approach when transitioning to a new framework which will serve the community well and financial advisers well in the longer term, in terms of the educational and professional standards and the codes of conduct moving forward.

We know that, since 2019, a large number of financial advisers have left the industry, and this has consequences for the accessibility of the important services they provide. What we see in schedule 2 of the bill is that we will help to ensure that as many consumers as possible continue to have access to quality of advice by removing a significant disincentive for experienced advisers to stay in the profession. The amendment in schedule 2 will allow experienced advisors with at least 10 years experience and a clear record to remain in the profession without continuing additional education. This, I think, is a pragmatic and sensible way to deal with the need for the community to have access to financial advice—such an important piece of advice for people to manage their assets, their financial security and their quality of life across their entire lifetime.

Finally, I'll make a few brief observations about schedule 3, which implements recommendations from the Council for Financial Regulators to strengthen regulatory powers and to facilitate competitive outcomes in the market for clearing and settlement of cash equities traded in Australia. We know that boosting competition is invariably good for consumers, is good for innovation and is good for productivity. It ticks all the boxes. We know that financial services are the arteries, the lifeblood, of the economy as a whole—a great analogy that Paul Keating drew a number of years ago but that remains very much true to this day. So the innovativeness and efficiency of our financial services system is absolutely critical.

The timeliness, reliability and cost of our payment system is incredibly important for people in the community—not only low-cost transactions but also transactions that occur quickly. If we look at the trading of equities, it's also critical there. We want to see downward pressure on fees, and we also want to see confidence in the transfer of ownership. This is important for everyday people because, if you reduce the fees on the transfer of equities, people who either directly own equities or own them indirectly through a superannuation fund benefit massively over the course of their lives through the accumulated gains of the lower fees on all of those transactions.

We've seen the introduction of competition in the trading of equities through the introduction of Chi-X, back in the Rudd-Gillard government. This is now an important series of amendments in schedule 3, to set up the framework through regulation that would be jointly administered through ASIC and the ACCC for the regulation of potential competition in settlement and clearing—another important part of that ecosystem. That means more competition but in a way that retains the stability of the system, which is so critically important. It's a really important microreform, and I support this bill as a whole.

Aaron Violi (Casey, Liberal Party) Share this | Link to this | Hansard source

The Treasury Laws Amendment (2023 Measures No. 3) Bill 2023 is a 4-schedule Treasury omnibus bill that the coalition will be supporting, and many of the changes in this bill continue the work of the former coalition government. However, support for passage of this bill is no substitute for a government that is refusing to take responsibility for high inflation, rising mortgage repayments, rising prices at the checkout and rising energy bills—just to name a few of the challenges we face in this country. We need a government to take responsibility—or else Australians will continue to pay a very high price.

This bill does not provide any cost-of-living relief or support for Australians, and even today the Treasurer won't support Australians, telling those that are coming off fixed mortgages and are about to see a tripling in their interest rates to just speak to their bank and work it out. There is no support for those Australians.

So what is in this bill? Schedule 1 introduces new rules that prohibit schemes designed to avoid the application of product intervention orders made under the Corporations Act 2001. Schedule 2 changes limitations in the education requirements for new entrants who are registered tax agents to enter the financial advice profession and removes the education requirements for experienced financial advisors with 10 years of experience and, importantly, a clean record who have passed the financial advisors exam. Schedule 3 amends the Australian Securities and Investments Commission Act 2001, the Corporations Act 2001 and the Competition and Consumer Act 2010 to facilitate competition in the provision of clearing and settlement services for cash equities traded in Australia. Schedule 4 makes a number of technical changes to the Taxation Administration Act 1953 and the Income Tax Assessment Act 1997 to support the operation of the First Home Super Saver Scheme so that it works better for first home buyers. There are definitely some good things in this bill, which is why the coalition will be supporting it.

Australia has a strong financial services sector that we need to continue to support. The coalition remains committed to ensuring that Australians have access to high-quality, affordable financial advice. In government, we implemented a series of measures to improve consumer protections and streamline and strengthen oversight of the financial advice sector. That's why we are supportive of the measures that continue this work, specifically in schedule 2 of this bill, which will help make it easier for financial advisers with good records to remain eligible to provide personal advice.

This bill also makes technical changes to the First Home Super Saver Scheme in schedule 4. This is an initiative of the former coalition government that helps Australians boost their savings for a first home by allowing them to build a deposit inside superannuation, giving them a tax cut. For most people, the scheme could boost the savings of a first home buyer by around 30 per cent compared with savings through a standard savings account. This was just one of the measures of the former coalition government that was aimed at helping Australians get into their first home.

The coalition is absolutely committed to helping more Australians achieve the dream of owning their own home. That's why, in the Leader of the Opposition's first budget reply speech last year, the coalition reaffirmed its commitment to the First Home Super Saver Scheme. We know that we have a responsibility to ensure that all Australians have the opportunity to buy their own home. Currently, a super fund can be used to buy a residential or commercial rental property. It can buy shares; it can even buy livestock. In fact, it can be used to buy almost any asset class except a home to live in.

Under a coalition government, we will extend the same opportunity to women who separate later in life, to women with very few housing options and to women who are increasingly left homeless. Your super is your money. The government thinks that it's their money. This brings me to what is not in this bill. While containing many worthwhile measures, this bill disappointingly fails to address the biggest challenge facing Australians—the impact of inflation and rising interest rates being felt by businesses and families across Casey and the nation. Rising mortgage payments, rising prices at the checkout and rising energy bills are all eating away at already tight household budgets. Australians are having to work more hours to make ends meet. They have to dig into their savings to survive. Real wages are going backwards under this government. Our core inflation is higher than any G7 nation, except for the United Kingdom. This is a tough time for Australians.

During the midwinter break, I spent five weeks in my electorate talking to many businesses and residents. I welcomed Senator Jane Hume to the electorate as the Chair of the Senate Select Committee on the Cost of Living. We wanted to speak to the community about their experiences and learn about their challenges. We started the day in Belgrave, visiting local businesses. One of the most disturbing facts that came out of that was that a real estate agent I talked to said that one in three of the houses they're putting up for sale is because of a separation, and this is the first time during his lifetime in real estate that there has been such a significant number that it is actually measurable—one in three. It's heartbreaking to think that financial stress is, as he said, in many cases the key driver of those separations.

We also had the opportunity to meet with Belinda Young and the fantastic team at Mums of the Hills. This is an organisation of over 6,000 mums. It started as an online group. We went to see their new facility, and it was wonderful to be there to talk to Belinda and the team and to be at the opening that weekend. Mums of the Hills are a voice for the mums in the Dandenong Ranges, the Yarra Valley and across the outer east, who have very particular challenges. One we spoke about a lot on that day was child care and the absolute childcare desert that is the Dandenong Ranges in particular but also the Upper Yarra and all across the regional areas of the Yarra Valley—mums having to drive for more than 45 minutes to put their kids into child care if they could find a spot and the impact it is having on families and the stress. So, thank you Belinda and the team at Mums of the Hills for supporting mums all across the outer east, the Dandenong Ranges and the Yarra Valley and for being a great advocate for them. I'm looking forward to continuing to work with you so we can support more residents across our electorate.

After that we had a round table with some amazing local women in business, and I want to thank Lisa Glassborow for taking the time to organise that round table. It was insightful to talk to those mums, those women, about their challenges. A common theme was just wanting government to get out of their way, reduce red tape, so they could continue to develop and grow their business and allow them to keep more of what they earn from all the hard work they do.

Then we had a wonderful tour with Sue Sestan and the team at Inspiro, which is a community health organisation. Unfortunately for them they are seeing increased demand as more people are struggling to make ends meet and medical bills are putting even more pressure on their organisation and on families. We finished the day with a cost-of-living forum in Wandin North, and thank you to all those residents who took the time to attend and to those who couldn't attend but shared their views with my office via email and over the phone. The turnout was amazing, and talking to people—and they are struggling; they are struggling to make ends meet, to put food on the table. One lady shared the heartbreaking story of literally having to decide to turn her heater off in the middle of winter because they couldn't afford to pay the bill and to eat. These stories we hear are tragic.

It is disappointing that this bill does not address these problems. And these problems are not coming out of Ukraine, as the Prime Minister wants us to believe. These are problems that are coming from Canberra, and it's important to note that we are debating this bill at a time when this government is overseeing an economy that's shuddering to a halt as inflation continues to rage. A typical Australian family with a mortgage and kids is $25,000 worse off compared with a year ago. The annual accounts for the March quarter show that after a year of Labor the economy is growing at the slowest rate since September 2021, when New South Wales and Victoria were in COVID lockdowns. Australians are now working the most hours since 1978 but are feeling poorer for it, with real wages continuing to go backwards. Australians are saving less. The household savings ratio is 7.6 per cent lower than it was a year ago. Australians are being taxed more. Individual income tax has increased by 11.4 per cent since last year. The government will talk about their surplus, but they won't talk about how inflation creates bracket creep, which means that Australians pay more in income tax. And labour productivity in the past 12 months, under Labor's watch, has fallen by 4.6 per cent. But this bill does not address any of these economic challenges. The fact is that hardworking Australians are paying a heavy price for this government's failures.

It's not just Australians who have been abandoned by this Prime Minister and Treasurer. Small business has been abandoned by the Minister for Small Business. ACCI-Westpac research shows that 42 per cent of businesses are seeing their margins eroded, despite increasing prices, and the ANZ is reporting the longest slump in consumer confidence since the 1990s recession. Yet we hear nothing from the Minister for Small Business on how she or the government will support small business. Small business knows it has been abandoned by this government.

We need to remember that small businesses are families. I spoke to Arun, who owns a restaurant in my electorate. He and his wife are now working over 80 hours a week, as wages go up, as energy price goes up, as food prices go up, trying to make ends meet. We need to be supportive of small-business owners in this country, because they're family people looking to put food on the table, to feed their kids, send them to school and make sure they're healthy.

Productivity is also a key driver in reducing inflation. It is disappointing to note that the Prime Minister and the Treasurer have not engaged with the Productivity Commission's five-year report on how to increase productivity. One of the key recommendations of this report is technology as a vital pillar in driving productivity. I would, again, ask the Prime Minister to appoint a minister for the digital economy, to oversee a national strategy, to make sure we are taking advantage of technological opportunities, like AI, to drive economic growth and productivity.

The reality is, the cost of Labor's inaction is sky-high energy bills, surging mortgage repayments, increasing rents and soaring grocery prices. Australians are under the pump and making huge sacrifices to pay their bills, and there is no end in sight to Labor's energy price spiral, rising inflation and rising grocery prices. This is the consequence of a government that has let inflation get out of control and has failed to take responsibility for addressing the biggest economic challenges facing Australians.

Australians cannot afford Labor's complacency on inflation. The challenges faced by Australians are not addressed in this bill. Instead, we have a government that doesn't have a plan or the priorities or focus to fix the problems facing Australians, facing families and facing small businesses in Casey and across the nation.

Joanne Ryan (Lalor, Australian Labor Party) Share this | Link to this | Hansard source

I rise with great pleasure today to speak to the Treasury Laws Amendment (2023 Measures No. 3) Bill 2023 in the second reading debate. This bill contains measures that are very important to me and very important to my community. Testament to that is the number of times I have risen in this House to talk about the predatory behaviours of payday lenders in my community and communities like mine across the country.

This bill will improve the integrity of consumer markets for credit products. It removes barriers for financial advisers and supports competition in the provision of clearing and settlement services for cash equities. Schedule 1 of this bill is the one that my community care about the most, because schedule 1 legislates avoidance of certain product intervention orders by predatory payday lenders and by businesses that have been, across at least a decade, targeting vulnerable people in my community. I want to thank Minister Jones, the member for Whitlam, for his work in this space and I want to particularly thank our current Speaker, the member for Oxley, for his work in this space while we were in opposition across the last two terms.

I also want to personally thank Gerard Brody, formerly of the Consumer Action Law Centre, for his advice across many years about how we, in opposition and now in government, could crack down on predatory behaviours that hurt vulnerable people. We're hearing a lot of talk about inflationary pressures and about the cost of living. Let me tell you that that is the absolute pinnacle time for what those predators do, because it is when people are doing it tough that the predators are leaning out the shop door offering someone a cup of coffee to sell them a product that will cripple them financially. At its peak, those opposite refused to take action in this space, despite their own review and their own recommendations that said that this should be cracked down on. They failed to do so. There are those in this place now who were here during those years when the former member for Higgins, the then Assistant Treasurer, Kelly O'Dwyer, conducted that review and made a commitment to enact the recommendations. She failed to enact those recommendations, leaving vulnerable people open to being preyed upon.

I thanked the member for Oxley, who worked closely with me in raising this issue many times in this place as well as out in the community. I want to thank some local bodies, including Anglicare Financial Services, who I met with on more than one occasion to hear the stories of the impact of these predatory behaviours on people I represent. Anglicare shared the stories of people who had not one payday loan but four or five, with absolutely crippling interest rates, and who were sent to the wall and went to Anglicare for financial advice and support to unravel the situation they had gotten into.

We all knew at the time that the answer lay here in the federal parliament, that the answer lay here in the House of Representatives and that it was within the powers of the former government, as they'd said in their own review, to block this predatory behaviour. But they chose not to do that.

I thank Westjustice, and particularly Denis Nelthorpe, who also worked closely with me. I also want to thank Vernon Fettke OAM, from Homestead Financial Group. He is a financial adviser who also spent considerable time helping me to understand the issues and the solutions.

We on this side know that, despite the 2016 Review of the Small Amount Credit Contract Laws, little happened in this place to protect vulnerable people from predatory behaviour. This legislation takes another step towards that protection. It introduces anti-avoidance provisions that are aimed at reducing the risk of consumer harm from predatory lenders who modify their business models to avoid the application of the consumer protections in the credit act and other financial services legislation.

To put that into plain language, legislation can be created and business models can shift and change. We have to get to the nub of this and stay two steps ahead of those who want to change their business models in response to legislation so as to allow their predatory behaviour to continue. That's what this legislation will do. It will ensure that there are anti-avoidance provisions that hold to account those businesses that are behaving in these ways. The provisions in the Financial Sector Reform Act 2022 extend the Australian Securities and Investment Commission's ASIC product intervention orders made under the National Consumer Credit Protection Act 2009.

Schedule 1 of the bill ensures that anti-avoidance provisions also apply to the ASIC product intervention orders relating to credit products that are made under the Corporations Act 2001. In essence, the bill is creating anti-avoidance provisions so as to ensure that existing legislation covers the behaviour from providers who shifted and changed their business practices so they could continue their behaviour. I want to say a few things about the harm that I saw it do in my community. It was obvious to me that there was money to be made in this space. It was obvious because within 800 metres of my Werribee train station there were five payday lenders with a shopfront. It was obvious to me when I sat with some of the victims of this, with their financial advisers from Anglicare, and heard them say to me: 'I really need support, and I really need help. But go easy on those guys. They're really nice. They give me a cup of coffee.' There's a physical presence in the community. There's someone welcoming people through the door, to offer them another product to further harm them, and to do so with a smile and a cup of coffee. This is predatory behaviour.

This went on for years while those who now sit on the opposition benches failed to act on their own recommendations. They failed to stop this behaviour in communities like mine. They failed to take the steps they designed themselves—not just one minister but ministers over a decade. This behaviour was allowed to flourish in communities like mine and harm the most vulnerable, the least financially astute, people who were open to being seduced into these products.

There has been a lot said in this space across the years that I've been here, and it's always prefaced with: 'Sometimes people really need that line of credit, and they need it quickly. They might have a job interview, or they might need new tires on their car.' That has been used as justification to allow this behaviour to flourish. It should never have been allowed to flourish. Business practices that rely on people taking on credit where they can't afford to pay it back, and at exorbitant rates, don't deserve to flourish. What they deserve is legislation to stop the practice, and that's what this piece of legislation delivers today.

I mentioned Vernon Fettke OAM. This goes to schedule 2 of this piece of legislation. Obviously the financial sector, as we've heard speakers say today, was heavily criticised in the royal commission. This had a huge impact on the financial advice sector. Vernon Fettke was with the Homestead Financial Group locally in my electorate. I distinctly remember sitting with Vernon while we were talking about (a) the payday lending scope, and (b) the financial advice that was being given. He led the development of a code of conduct for financial advisers in his business. I attended when everybody who worked at Homestead Financial Group took a pledge on that code of conduct. Vernon was acting proactively in response to something that he was not guilty of, but, seeing the damage that was being done via the royal commission by bad actors, he took a positive step to ensure that everybody that was working with him in my community was going to do no harm and was going to act with integrity.

Schedule 2 in this piece of legislation is doing some tidy-up work in that space which reflects the government's commitment to an advice industry with strong professional standards that gives Australians access to high-quality financial advice. As implemented, the education requirements have failed to appropriately recognise the lived experience of financial advisers. The current requirements do not properly balance the desire to professionalise the industry with the benefits of retaining an experienced, skilled workforce, hence my references to someone like Vernon, who has since retired. But his leadership of young financial advisers was extraordinary and exemplary, as seen in the development of that code of conduct for that group.

Since 2019 over 10,000 financial advisers have left the industry, including experienced advisers with no history of misconduct. This only serves to reduce access to quality financial advice. This schedule means that experienced advisers who make a valuable contribution to the financial advice industry and play an integral role supervising new entrants during their professional year will be able to share their knowledge and experience more broadly. It ensures that consumers continue to have access to quality advice by removing a significant disincentive for experienced advisers to stay in the industry and ensure there is a pool of advisers to mentor, supervise and upskill new entrants.

The space around credit, and businesses who provide credit, is something that government needs to be attuned to and aware of. I would encourage all members to ensure that they have a relationship with the community organisations in their electorates, so that they've got an ear on the ground on what is happening in this space, because these businesses will shift and change again. There will be new ways of doing things. In my electorate, when this first came up for me as an issue, it was a cup of coffee and a shopfront. But it soon morphed into unsolicited text messages to people, leaving places where they'd registered online, offering them a line of credit. We know those things were happening. I would encourage all members to ensure that they are in contact with those community organisations like the Consumer Action Law Centre, West Justice and Anglicare Financial Counselling Services so that we can, as a parliament, stay one step ahead in ensuring that changes to business practices—new and unforeseen things that we can't see now or perhaps a bit more buy-now pay-later that might be preying on our vulnerable citizens—stay ahead of the game, close loopholes as quickly as we can and ensure that the most vulnerable in our communities are not set into debt traps where one person makes a profit and another potentially falls into a debt cycle that will take decades to recover from.

Andrew Leigh (Fenner, Australian Labor Party, Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

Scott Futcher lives outside Newcastle and recalls that eight years ago, when he needed help paying his electricity bill, he turned to payday loans. Scott ended up with multiple small loans that, according to an article by Emma Brancatisano on SBS, amounted to a $10,000 debt he was unable to repay. Scott said initially he was:

… too proud to ask for help. I knew I was the one who did it. I put myself in there, I should get myself out. In the back of your mind, you're shaming yourself.

Scott's experience saw a small loan steadily snowball into a bigger one. He was a part-time worker, receiving Centrelink payments and unable to get a bank loan. He was initially lent $500, but he started accessing more money on that loan through top-up loans. He said:

More bills are coming in, you think, 'I'll have to get another loan to pay that'. You kind of have to get another loan to pay the other loan off as well, just to keep afloat.

Ultimately he ended up with multiple loans, including seven loans through a single lender. He said that ultimately he had to reach out for help. He reached out to the Salvation Army's Moneycare service and said:

That was the first day of getting my life back. It has taken a couple of years now. But I actually see the light at the end of the tunnel.

Ultimately he was able to work through the financial counselling service, which went to the national financial ombudsman on Scott's behalf over a complaint that a creditor had provided unsuitable loans. An agreement was reached to collect only the remaining amount of the loan, without interest and late fees. Scott made his final repayment this year. He said:

No more loans. I feel great. I just felt like I wanted to cry again.

We recognise that there is a place for a well-regulated credit market, but this bill seeks to address the practice that has emerged of firms seeking to get around product intervention orders. A joint submission to the Treasury consultation from five organisations—the Consumer Action Law Centre, the Financial Rights Legal Centre, the Indigenous Consumer Assistance Network, Financial Counselling Australia and WEstjustice—focused on the firm Cigno Pty Ltd. Cigno, they said, had consistently changed its model in order to stay one step ahead of ASIC's product intervention orders. According to the submission:

A standard credit facility arranged by Cigno will generally involve a small loan (under $1000), repayable within a few weeks, but with fees that amount to roughly the same as the principal borrowed.

That's right: over just a few weeks you're taking out a thousand-dollar loan and you're paying a thousand dollars in fees.

Cigno, the submitters said, would charge administrative fees, late fees and other fees that didn't reasonably correlate to the cost of providing the principal amount. They said they'd regularly heard from clients where Cigno had claimed they were owed multiple times the amount that had been borrowed, within months of the loan being taken out. But, in response to three product intervention orders made by ASIC aiming to ban the models used by Cigno and their partners, Cigno continued to offer loans on terms that had been advertised identically to Cigno customers, but with slight changes to the contracts underpinning their model.

This bill aims to put in place anti-avoidance provisions which will ensure a safe, well-regulated credit market. The Albanese government is putting these provisions in place because we stand firmly on the side of consumers. The reforms put in place last year by the Assistant Treasurer, Stephen Jones, regulated payday lending and consumer leases through the Financial Sector Reform Act 2022, which implemented the government's response to the 2016 Review of Small Amount Credit Contracts. That included a recommendation to address avoidance behaviour, and the anti-avoidance provisions in today's bill are aimed at doing just that. They're aimed at reducing the risk of harm to consumers from predatory lenders who modify their business models to avoid the application of the consumer protections in the Credit Act and other financial services legislation.

As the Consumer Action Law Centre and other submitters have put it, there's no downside to the introduction of anti-avoidance provisions. They're effectively a fallback to a situation in which drafting complexity has inadvertently left loopholes which can be exploited by unethical businesses. The provisions in this bill go to the problem where ASIC has identified credit products that it says cause significant detriment and harm to vulnerable consumers and issued product intervention orders to address this harm. The harm in this case is to some of the most vulnerable people in our community—people who find themselves down on their luck, reach out for support but are unable to get it, and end up going to a payday lender.

You don't go to a payday lender if you have a good amount of credit and you're able to get a credit card. You don't go to a payday lender if friends and family can help you out. Payday loans are not the most common form of short-term credit; they're the third most common form of short-term credit after credit cards, family and friends. But they create a significant risk of harm to consumers.

That is why the Albanese government has taken the side of consumers. We've recognised that payday lenders can sometimes get out of control. There are situations in which payday lenders have caused considerable harm. I'd urge those who are listening to this broadcast and considering a payday loan to first reach out to an organisation such as the Salvation Army's Moneycare in order to see whether there are other options. We know there's some short-term relief that is provided through other sources. Almost invariably, that will be offered under better terms than payday loans. I commend the bill to the House. I commend the important work of the Assistant Treasurer, Stephen Jones, in these vital reforms in standing up for consumers, particularly the most vulnerable consumers in Australia.

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

The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour. If the member's speech was interrupted, they will be granted leave when the debate is resumed.