Sarah Hanson-Young (SA, Australian Greens) Share this | Hansard source

Must it be put separately?

The TEMPORARY CHAIRMAN: The proposed amendment (2) must be put separately to the other amendments.

I move:

(1)   Schedule 1, item 25, page 16 (lines 1 to 5), omit all the words from and including "Division 4" to the end of section 160A.

(3)   Schedule 3, item 7, page 51 (after line 5), after section 124A, insert:

124AA Prohibition on providing credit assistance in relation to small amount credit contracts

Prohibition

(1)   A licensee must not provide credit assistance to a consumer by suggesting that the consumer apply, or assisting the consumer to apply, for a small amount credit contract if the licensee knows, or is reckless as to whether, in the 12 month period before the time the assistance would be provided, the consumer has been a debtor under 4 or more small amount credit contracts.

Civil penalty:    2,000 penalty units.

Offence

(2)   A person commits an offence if:

  (a)   the person is subject to a requirement under subsection (1); and

  (b)   the person engages in conduct; and

  (c)   the conduct contravenes the requirement.

Criminal penalty:    50 penalty units.

(4)   Schedule 3, item 13, page 54 (after line 17), after section 133CA, insert:

133CAA Prohibition on entering small amount credit contracts

Prohibition

(1)   A licensee must not enter a small amount credit contract with a consumer who will be the debtor under the contract if the licensee knows, or is reckless as to whether, in the 12 month period before the time the contract would be entered, the consumer has been a debtor under 4 or more small amount credit contracts.

Civil penalty:    2,000 penalty units.

Offence

(2)   A person commits an offence if:

  (a)   the person is subject to a requirement under subsection (1); and

  (b)   the person engages in conduct; and

  (c)   the conduct contravenes the requirement.

Criminal penalty:    50 penalty units.

(5)   Schedule 3, item 14, page 56 (after line 4), after subparagraph 180(1)(b)(ii), insert:

     (iia)   section 124AA (which prohibits the provision of credit assistance in relation to small amount credit contracts);

(6)   Schedule 3, item 14, page 56 (after line 6), after subparagraph 180(1)(b)(iii), insert:

     (iv)   section 133CAA (which prohibits credit providers from entering into small amount credit contracts);

(7)   Schedule 4, item 22A, page 69 (after line 19), after paragraph (d) of the definition of medium amount credit contract, insert:

  (da)   the debtor's obligations under the contract are not secured; and

Let us work our way through them. I will speak to them and then we can move to deal with each as you see fit. I am more than happy for that to happen. They deal with the issues I outlined in my second reading speech—

The TEMPORARY CHAIRMAN: Before you proceed, please seek leave for that to be granted. Is leave granted?

Leave granted.

The first amendment, amendment (3), is in relation to making sure we can put a cap on the number of loans people take. The big problem is that, despite the fanfare, there is no hard cap on how many loans people can take. This amendment to schedule 3 suggests there would be a cap of four on the number of loans that people can take in a 12-month period. If we do not want people to get sucked into a cycle of poverty then we need to ensure that we have a hard limit on the number of loans that any individual can take out in one period. That is what consumer organisations have recommended. It is more in line with what the original legislation intended. It will go a long way to helping those who are the most disadvantaged in our community not to be caught out by these nasty practices of the loan sharks. It is the best way of protecting them. It has been proven internationally and it is what this bill should be aiming to do, rather than simply saying we do not want people to take too many loans. We need to put a hard limit on that. It would be four loans within the period of 12 months.

The second amendment is in relation to the issue of garnishing income and employer authorities. This is where people have the right to ensure that when they get sucked into these awful, nasty schemes, they do not have the loan sharks dipping straight into their bank accounts and leaving them with absolutely nothing. The repayment method should be direct debit. That differs from people working all week only to then realise they have nothing in their bank account because everything has gone to repaying the debt. We suggest that that area needs to be strengthened as well, which would be in relation to omitting section 160E item (14) of the government's original amendments.

The third amendment deals with the issue of security over loans. I spoke about this briefly in my second reading speech. The bill has put some caveats and safeguards around loans up to $2,000—you cannot have a loan up to $2,000 secured against something else. We are suggesting, in line with what consumer action organisations have asked for and what the experts say must be in place if we are to have true reform in this area, allowing security to be taken for loans up to $5,000. This would mean that you could not have somebody taking a $5,000 loan and having it held against their house or their car, effectively leaving those people with nothing if that loan is called in. That is the point of that amendment, lifting the $2,000 non-security cap to $5,000, which is what the experts argue is needed.

The last point in our amendments deals with the issue of enforcement. There is no point in embarking on reforms in this area unless we are serious about enforcement: whether we have a hard cap on the number of loans at four per year, whether we have issues in relation to security or loan sharks just dipping into people's bank accounts as they like or getting employers to pay them directly. These big businesses, Cash Converters and others, are making windfall gains such as increases in profits as high as 10 per cent over the last 12 months on the back of very desperate, very poor, very disadvantaged Australians. If we are to tackle all those things we need to have proper enforcement mechanisms as well. That is what our final amendment goes to. I will leave it there and I am in the hands of the chair as to which amendments will be put to the committee at which time.