Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Hansard source

I am pleased to bring this private senator's bill before the Senate. This is a simple proposition to exclude consumer leases from the Centrepay under DHS. This brings Centrepay back to its original purpose—that is, as a budgeting tool for basic consumer goods and for paying utilities. Consumer lease companies are targeting and preying on vulnerable Australian in low socioeconomic regions in cities and towns. Consumer lease companies are disguising this predatory behaviour in glossy brochures and advertising. Predatory business behaviour under consumer leases is causing massive financial hardship to poor and vulnerable Australians. This predatory business model is growing; however, in my view it should be, and is, unsustainable. There are massive mark-ups in profits at the expense of the disadvantaged, and this should be unacceptable to the Senate. Consumer and welfare support groups are alarmed at the social implications and the practical application to individuals and their families of these consumer leases. Alternatives to consumer leasing are available, and the Department of Human Services and Centrepay must stop facilitating predatory and unconscionable business practices.

This bill should be supported by all senators, as it is about harm minimisation for poor Australians. The government should expedite the broader review of consumer leases that it has announced and look at the National Credit Code and the implications of consumer leases on a broader basis. This bill does not deny anyone access to a consumer lease, even though I would caution and advise against consumer leases, but it does stop the Department of Human Services and Centrepay facilitating consumer rip-offs in Centrepay.

The purpose of this bill, as I have indicated, is to amend the Social Security (Administration) Act 1999 to provide that consumer leases are excluded goods for the purpose of part 3B of the act. The bill is needed to remove the potential for Centrelink clients utilising Centrepay services and participants in the income management regime under part 3B of the act to suffer financial harm as a result of entering into one or more consumer leases for household goods for which income management measures, including Centrepay deductions, are available. The main provisions of the bill will make consumer leases an excluded good for the purposes of part 3B of the act. What this does is very simple. Item 1 of schedule 1 amends section 123TC of the act to provide a definition of 'consumer lease'. It simply says:

consumer lease means a contract for the hire of goods by a natural person or strata corporation under which that person or corporation does not have a right or obligation to purchase the goods.

Item 2 amends section 123TI(1) of the act to provide that consumer leases are excluded goods for the purposes of part 3B of the act.

Centrepay was established in 1998 as a simple budgeting tool to help Centrelink clients budget by paying rent and utility bills through automatic deductions from their welfare payments. Centrepay effectively prioritises payments made this way ahead of other living expenses. I think everyone would agree that Centrepay has been an outstanding success and is strongly supported by Centrelink clients, community services and welfare agencies. It is used by over 600,000 Centrelink clients, on whose behalf nearly two million deductions are made each month. The annual value of deductions is nearly $2 billion. Thirty per cent of Centrepay users are disability support pensioners, a further 20 percent are Newstart recipients and 16 per cent are in receipt of parenting payments. These are the same groups who are disproportionately represented as financially excluded payday lending customers and Centrelink advance and urgent pay recipients.

We all know the problems of payday lending. The problem we have here is that many of the operatives who were in payday lending when some checks and balances were put on payday lending have migrated into consumer leasing. As I have indicated, consumer leasing is growing because of the advertising and the actions of these companies. Centrepay's reputation as a simple, well-regarded budgeting tool is under threat from the presence of service providers whose businesses provide household goods, whitegoods and electronics under consumer leases While Centrepay excludes repayment of a credit card debt or any other kind of consumer credit, it can be used to pay for consumer leases. While utility bills still account for a third of Centrepay deductions, household goods leases now account for 14 per cent and their share of Centrepay deductions is growing. As the 2013 Independent Review of Centrepay pointed out, when consumer lease payments are being made through Centrepay, the arrangement between the Centrelink client and the leasing business is often seen by the client to have 'tacit government endorsement of those same arrangements'. So Centrepay facilitates the payment, and the clients—the citizens who use it—are of the view that it is approved by government. There is evidence that consumer leasing businesses foster this belief in their sales pitches.

Consumer leases are contracts for the lease of goods under which the hire is for domestic or household purposes, the hirer does not have a right to purchase the rented goods, and the amount paid by the consumer is more than the value of the goods, often by a very, very large factor. The Consumer Action Law Centre report The hidden cost of 'rent to own' found consumer leases cost at least twice the normal retail price, usually three times more, and often even more than that. Consumers might be able to find a better deal by shopping around, but inquiries usually find the consumer lease cost to be at least twice retail price and often much more. Consumer leasing is expensive even when compared to buying on credit at 20 per cent per annum. Consumer leasing is the most expensive way anyone can obtain a new household good.

Look at some of the prices that are being charged by these consumer lease companies. For a high-definition television, which you can pick up for a retail price of about $749 to about $1,049 depending on where you buy, the rent-to-own price, when it is worked out over the three or four years that the consumer lease is laid out, becomes $3,112 to $3,893, a mark-up of 371 per cent to 415 per cent. These are some of the lowest paid people in the country. Some are on welfare, and this is the type of mark-up that these consumer lease companies are forcing on them.

They target single mums. Many single mums need a stroller for their kids. A mid-range stroller costs between $100 and $300 depending on where you buy it. The rent-to-own price is between $772 and $1,392 for a stroller that can be bought for $100. The mark-up is between 464 per cent and 772 per cent. A cot—again targeting single mums—has a retail price between $270 and $1,000 depending on where you buy it. The rent-to-own price is between $1,552 and $2,488, a mark-up of between 249 per cent and 575 per cent. I can go on, but I do not think there is any justification for any business to be targeting some of the poorest paid in our country with rip-offs and mark-ups to that extent. These prices were looked at by the Consumer Action Law Centre, and this is part of the prices that they have found in their report called The hidden cost of 'rent to own'. That was published in September 2013.

I was concerned again in my local area. I live in the lower Blue Mountains. I do a lot of shopping in the Penrith area. Many areas of Penrith are quite well off, but many areas of Penrith are low-socioeconomic areas. When I had a look at where these rent to own stores were, it was clear that they were targeting the lower socioeconomic areas in our country. I was doing some shopping with my wife, and we were in the Centro Nepean shopping centre. In the middle of the Centro Nepean shopping centre a pop-up retail area had been established, and it was a mob called Rent 4 Keeps. They were handing out leaflets and targeting young families. If a woman was on her own with a young kid, they were being targeted for the leaflets. I know that leaflet drops have been done around some of the lower income and wealth areas that have a high density of welfare recipients in the Penrith areas.

They were handing out this leaflet that I have before me. It says: 'Dealing with R4K is easy. There's an easy application process. R4K comes to you. It's got a great new product range. There's no up-front fees. Flexibility. Six- to 36-month terms. Quick, personal R4K service. You are very important to us at R4K.' I am not surprised that they are very important given they are getting rip-offs and profits on the basis that they have. They say: 'All renters welcome. Government benefits okay. Easy debit okay. Direct debit okay. Low-income earners? Tick. Single parents? Tick. Poor credit? Tick. Carers? Tick.' Then it goes on and shows you some of the goods that you can pick up, and it has this happy, smiling family looking so happy that Rent 4 Keeps have got their claws into them. It is a really slick sales approach.

I went over and asked for one of the leaflets. I went back and had a look at what they were offering. I looked at two of the offers that they had for these consumers that they want to get their claws into in Penrith. There was a Hisense 55-inch high-definition television. I went to look at the model. I went online to Harvey Norman and looked at the price you could get it at Harvey Norman, which was $1,195. You could have got it cheaper if you had done it online somewhere other than Harvey Norman, but Harvey Norman is a good benchmark. Over the 36-month lease period that Rent 4 Keeps were offering, this Hisense 55-inch high-definition television would cost that consumer in Penrith $7,449. I just cannot understand why Centrepay and the Department of Human Services would provide any succour to this type of rip-off. I just do not understand it.

The other television they were offering was a Samsung 40-inch television. At Harvey Norman it was $845. Under Rent 4 Keeps it was $5,608. I cannot understand why anyone would defend this type of predatory behaviour against low socioeconomic communities in this country. That is the type of rip-off that is going on.

If you look at where the rental store locations are, you do not find any of them in the North Shore of Sydney. You do not find any of them in the leafy suburbs of Melbourne. You find them in regional Australia. You find them in low socioeconomic areas in the cities: Blacktown, Campbelltown, Mount Druitt, Parramatta and Penrith—areas where the average income is $49,000 to $50,000 a year. If you look at where the stores are set up, they are targeted there. It is Radio Rentals, Mr Rental, Rent 4 Keeps—all those companies—that are in there.

I was so concerned about it that I convened a round table of a number of welfare and consumer action groups on 20 April in Sydney. Overwhelmingly they indicated that this was unacceptable and should be stopped. As I said, I am not arguing that no-one should have access to this, but I am arguing that the government should very quickly do what it said it would do, and that is to have a look at these consumer leases. In the meantime, we should bring Centrepay back to doing what it was designed to do: to provide a forum or a tool so that low-socioeconomic workers or people on welfare have access to Centrepay to pay for goods that are absolutely needed. As I said, this is supported by many of the welfare and consumer action groups. In fact, the Consumer Action Law Centre put out a press release this morning supporting the proposition we are putting.

The argument we might hear from some of these rent-to-buy companies is that there is no option of doing a community service. Well, that is nonsense. The No Interest Loan Scheme, or NILS, is a community based program that provides access to fair and safe credit of up to $1,200. The StepUP loans scheme provides low-interest loans of between $800 and $3,000. The Good Money scheme is available, and there is a pilot program in Victoria. The AddsUP matched savings scheme provides matched savings incentives of $500 to help people save. There is a Good Energy scheme. There is a Good Insurance scheme. There is a Good Shepherd Microfinance scheme. These schemes operate in 650 sites around the country. There are 1,300 microfinance workers out there trying to help people to get microfinance and to keep them out of the clutches of these Radio-Rentals type mobs. They are engaging with 100,000 people each year, and they had 27,000 loans out in 2013-14 worth $29 million.

We should be ensuring that the alternative is promoted through Centrepay; that the alternative provides fair and reasonable access to consumer goods for low-income and welfare recipients; that we implement the independent review of Centrepay by Anna Buduls and John Falzon; and that the rip-offs stop. The first thing to do is to make sure that Centrepay is not used by these rapacious companies that are ripping off poor people. (Time expired)