Cory Bernardi (SA, Liberal Party) Share this | Hansard source

It gives me great pleasure to rise today and address some of the measures proposed by Senator Cameron's bill, which is known as the Social Security (Administration) Amendment (Consumer Lease Exclusion) Bill 2015. I am particularly interested in this bill because it relates to a longstanding concern of mine about financial literacy not just amongst those who are on income management or income support but amongst our community generally.

One of the greatest things we as a nation can do is to ensure that young people develop an understanding of finance and money. That is not because they need to pursue money as their life's goal but because the astute management of money can prevent a great deal of misery and hardship in their lives. If they understand what the impacts of consumer credit and the long-term implications of not paying off your debts can be, it can prevent a lifetime of hardship.

I have been interested in this space for a very long time, particularly the benefits of teaching children about financial literacy. I wrote a little children's book, which I entitled The Money Tree, which was designed for parents to help their children understand money management through a fictional tale. I regret to say that it did not meet with widespread acclaim, but it has been distributed to schools and various other bodies for free at my own expense because I passionately believe that this is something that can change the lives of people forever.

I respect Senator Cameron trying to enact a bill which is designed to prevent people from getting in over their heads and facing financial hardship. The intention of Senator Cameron, I have no doubt, is quite sound and solid. But there are some flaws in this bill. We have to consider what the potential implications could be for those most impacted by this. What might sound intuitively like a really good idea can often have some impacts which need to be given consideration.

If this bill were enacted, it would mean that welfare recipients who are benefiting—and I strongly emphasise the word 'benefiting'—from income management would not be able to pay for any consumer lease obligations, whether they are regulated or unregulated, using their income managed money. Let's think about that for a moment. Those on income management would still be able to get involved in regulated or unregulated leases with their non-income-managed money. They could still do it with cash or various other things. But we have to ask ourselves: when people are going into what are generally longer-term obligations to buy whitegoods or merchandise, which is often very important to their lives and wellbeing, isn't it better for them to be in circumstances where their repayment schedules are managed and are not going to be subject to what I would call the weaknesses of indulgence that we all have? Marketers spend enormous amounts of money trying to part us from our cash, and if we have cash we can be vulnerable to those sorts of marketing overtures. That is fair enough, but not if it is going to leave you short for an ongoing repayment. It is not fair enough then.

We are talking about people who are welfare recipients, many of whom are doing it tough, many of whom need to purchase things which they cannot initially afford, so they need to go into a finance arrangement. Rather than risk those people losing their asset because they are vulnerable or their cash management skills are probably on par with most of Australia, we are better off providing them with some certainty and surety. That is what I sense.

This bill does not allow that to happen. As I mentioned, you can go to unregulated or regulated leases, and they can pay for that through their non-income-managed money. The risk here—and I seriously think it is a risk that Senator Cameron has not considered—is that this can cause further financial hardship for people that are already in very difficult circumstances. As I mentioned, for many welfare recipients this sort of surety is the only way that they are going to have a prospect of getting reasonable lease terms or rental arrangements, because there is a certainty that the financier is going to receive the regular payments. It does not mean it is going to be fair; it does not mean it is going to be good. It does not mean any of that, but it does mean that there is access to opportunity for people where otherwise there might not be or there is access to opportunity under terms that are probably much more appropriate and attractive than some of the payday lending terms or other less attractive options that are out there.

It is very clear to me from listening to the previous speaker that the government does want more lower cost options available for people. There are good Samaritans out there, including the Good Shepherd's No Interest Loan Scheme. I have had meetings over the years with members of the National Australia Bank and their social finance organisation, in which they provide no-interest or very-low-interest loans and support other organisations that are doing the same thing. These are very small programs in the scheme of things, but they make a huge difference. I think making a difference in this space is what we are all trying to do to get better outcomes for people and to make sure that government and taxpayers' money is used wisely and to the best effect. I think there is a general consensus that we want to stop predatory lending processes or make them as unattractive as possible, because of the difficulties that they cause.

I have seen it firsthand. I have been involved in the finance industry for a very long time. I understand how money worries can plague people. It does not matter whether you are rich or poor; if you cannot manage money effectively, you end up in a very dark place. If you start borrowing from some of the less-regulated lenders at some of the extortionate interest rates which are payable, or in some of the unregulated areas, it can cause enormous grief for you and your family because a lot of the less salubrious lenders are linked to very unsavoury characters. I know that firsthand because unfortunately I have had friends and clients who have gone down that path.

I think the Department of Human Services has to continue to ensure that people have access to goods using the most reasonable means that are available to them. That means giving some certainty to the vendor—the lender or financier in this case. The best possible way to do that is to allow access to income management. It takes it out of the discretionary hands of the recipient and provides that certainty to the vendor. There are a number of other things that we can do that would be positive in this sense, which I would like Senator Cameron to consider, if he wants to put forward another bill.

In the end, as I have said before, we need to make sure that the government and the taxpayer are getting appropriate value for money. We have to ensure that taxpayers' money is being used as wisely as possible. We also have to acknowledge that the interests of the welfare recipient have to play a significant part in this. It is not enough for us to wash our hands and say, 'You can have this bundle of cash every week'—it is hardly a bundle, I should say—'you can have this taxpayers' funding every week or fortnight and you can spend it on whatever you want.' We know that some people cannot or will not spent it appropriately, and that leads on to greater societal difficulties. It leads on to individual difficulties in health and wellbeing as well. We know that in some instances children are impacted by the choices that their parents make. We need to acknowledge that and we need to put in place measures that will protect the wellbeing of all participants in this process.

We have seen the success of income management in many areas. I know that in the previous government there were calls from the member for Wakefield for income management to be rolled out in his area—against the will of his government at the time. I remember there were calls from other members of parliament saying: 'No, this is a good idea. This will help alleviate suffering. It will help alleviate hardship. It will make things easier for people to make the necessary decisions for themselves because some decision making is actually being taken out of their hands.' It sounds a bit perverse, but limiting choices, even for a section of expenditure, makes for better choices. If people are compelled to provide for their rent and to provide, for their children, food and those sorts of things before some of the other discretionary items, they can be better off. And that was the intention. It has been hailed, I think, by most sides of the chamber—with some exceptions, I would say.

That is what the Centrepay policy and terms effectively do: they list the categories of goods and services that are eligible for these Centrepay deductions. They also list the categories that are explicitly excluded. But I need to be very clear here: the new Centrepay policy and terms do not rely on social security law to exclude particular goods. And that is why I would suggest that, no matter how well-meaning this bill may be, it is actually not needed, because this bill does not actually exclude consumer leases from Centrepay. As part of the transition to the new Centrepay policy and terms, businesses that are actually approved for the household goods categories have been required to specify whether they provide regulated consumer leases or unregulated consumer leases, and unregulated consumer leases are being excluded from Centrepay. The businesses are also required to provide positive agreement to comply with the new policy and terms. I will just state that again: businesses approved for the household goods categories have been required to specify whether they provide regulated consumer leases or unregulated consumer leases, which are being excluded from Centrepay. They are also required to provide positive agreement to comply with the new policy and terms.

We are also obtaining more detailed data on the usage of Centrepay for consumer leases, which was probably an omission because it was not the case previously. That is not in any sense a criticism; it is just one of these things that sometimes slips through the net. That will enable us to monitor much more closely the usage of Centrepay for unregulated consumer leases during the grandfathering period.

I will make a point here on regulation. The Department of Human Services is not a regulatory authority—and I do not think it should be. We have regulatory authorities. We have the Australian Securities and Investments Commission, which is the body responsible for the regulation of consumer leases. That is done under the National Consumer Credit Protection Act 2009, as I am sure you will recall. It undertakes research and activities to promote compliance with the national credit act.

Of course, ASIC has taken a great deal of action over the years. There are some in this chamber who are quite critical of ASIC for not taking action where it needs to take action and for prioritising the wrong agendas, but it has taken action against a number of consumer lease providers for failure to comply with the requirements of the national credit act, and particularly in regard to the responsible lending obligations.

ASIC is our regulator. It is meant to inquire into these sorts of things. The Department of Human Services should not be the regulatory authority in this space. However, the Department of Human Services should have a very close and ongoing relationship with the regulatory agencies, including the Australian Securities and Investments Commission. And I understand that it does. I understand that it has a very strong and close working relationship with the Australian Securities and Investments Commission and that cooperation has led to some businesses actually being removed from Centrepay. That is government as it should be working: the regulator and the department talk, and they come to determinations that are in the best interests of the taxpayer, the welfare recipient and the consumer credit supplier.

In that respect, I understand that the department recently provided information to assist ASIC with its current research to better understand consumer leasing practices and the impact on welfare customers. This is very important work, to establish the impact of consumer leases.

I want to come back to where I started. Understanding how money works and understanding personal finance—budgeting; your obligations; the implications of accepting credit at particular rates and not paying it off, and what that can do to your financial future, and the long-term effects it can have on your health and wellbeing—is one of the most important things we can ever instil in people in this country. If we could get people to think about the consequences of managing their money and the consequences of managing their health, this country would be immeasurably better off.

For many, I have to say, it is a bit too late. It is very difficult to get people to change their habits much later in life. But our responsibility is to instil in the next generation—in the boys and girls who are at school, some of whom I have seen touring this parliament today—the need to learn about and understand the implications of credit. In advance of that generation finally going into adulthood with that information, we now have to implement measures such as income management to assist people in making the right choices.

Once again, I say to Senator Cameron: this is a well-meaning bill; I understand perfectly what you are trying to do here, and I sense that you understand what I am trying to do as well, Senator Cameron. But there are consequences that the government has considered. I have to say that I stand with the government on this because the consequences of, and the omissions from, this bill mean I cannot support it. That may come as a surprise to you, Senator Cameron, but I am unable to support your bill today in its current form because I think the government has a persuasive case as to some of the implications of it—which I do not think are of benefit to those people who deserve our full support.

I will use the brief time I have left to encourage the government to continue its diligence in examining the implications of changes to consumer credit codes and financial management. I would encourage them even more warmly to invest in the next generation. The two best things they can do for the future of this country are, first, to instil in young people an understanding of how money works and how they can live a lifetime of financial independence by adopting some very simple practices and, second, to encourage them to take better care of their health.