Nick Xenophon (SA, Independent) Share this | Hansard source

This bill introduced by Senator Cameron reminds me of a saying I quite like: 'Just as an oyster needs a grain of sand to grow a pearl, precious ideas might grow from vigorous argument. So we should probably value irritants in public debate, and welcome challenges to accepted norms.' In what Senator Cameron has done here—clearly he has irritated some in this chamber with this idea, saying that there is another way forward—he has actually dealt with an important issue that is affecting many thousands of Australians every day of every week and that has a profound impact on their financial welfare. In the absence of a better alternative, I have no choice but to support the Social Security (Administration) Amendment (Consumer Lease Exclusion) Bill 2015, because what this bill is saying, effectively, is that we need to stop aiding and abetting practices where consumer leases are effectively ripping off some of the most marginal in our community. Senator Cameron's favourite economist, Joseph Stiglitz, in The Price of Inequality talks about these issues: about that entrenched inequality and those traps that people who are vulnerable, who are poor, simply cannot get out of. Senator Sinodinos made a point about the Grameen Bank. Muhummad Yunus won a Nobel Peace Prize for his microloans. What have microloans got to do with peace? If you give people economic security, if you give them economic stability, if you give them jobs and hope, that is one of the best ways to drive away the evil influences of terrorism, extremism and fundamentalism. Poverty is a factor in making people vulnerable to the evil of terrorist influences.

The reason why I support this bill is, I think, contained in a table that Senator Cameron has referred to and that has been provided in very useful briefing material—it comes not from him but from the Consumer Action Law Centre—on the hidden costs of rent-to-own in September 2013. I will give two examples. For a high-definition television with a retail price of $749 to $1,049, the rent-to-own price can be between $3,112 and $3,893. That is between 371 per cent and 415 per cent. For a mid-range stroller—this is what a young family puts their baby in—the retail price is between $100 and $300; the rent-to-own price is between $772 and $1,392—a 464 per cent to 772 per cent mark-up. We need to do something about this. I think that Senator Cameron's bill, being an irritant perhaps to those who think we should just have business as usual, will prompt change. I am not sure whether this bill in its current form will get through both houses of parliament but I can practically guarantee that, as a result of Senator Cameron's very fine work on this, we will see changes in the law that will achieve, if not all of what he wants, a significant amount of what he wants. I still think this bill is the best vehicle forward.

The system of automatic deductions from government payments via Centrepay has been around since 1998. It has been an effective budgeting mechanism whereby the costs of utilities and rent were deducted each fortnight before the balance was paid to the Centrelink client. But since the recent clampdown on unscrupulous payday lending providers there has been a massive expansion in the advertising and take-up of consumer lease agreements. Disturbingly consumer lease providers such as chain stores providing televisions, computers or stereos are approved for deductions from Centrepay. While utility bills account for about one-third of Centrepay deductions for 600,000 Centrelink clients, consumer leases have risen to account for 14 per cent of deductions. But the statistics mask the damage to people's lives brought about by these consumer lease payments, as their meagre government payments get eaten up by high interest payments which can make the price of goods being used more than double their retail price—or in fact seven, almost eight, times the retail price.

I acknowledge the concerns that have been expressed by government senators—including Senator Ruston, who is in the chamber—saying that we should not be treating Centrelink clients any differently to other Australians. I agree with Senator Ruston that Centrepay should not be used as a form of mandatory income management. Centrepay is voluntary and will continue to be so—but with a clear purpose. Centrepay was always designed to be an effective way to ensure that essential items like electricity and rent could be paid for by some of the poorest people in our community. This bill should be seen as a prudent measure to safeguard people's social security benefits—funds that should not be flowing in increasing amounts via exorbitant interest payments to consumer lease providers. I note that Centrepay cannot be used for the repayment of credit card debt or any other kind of consumer credit. But these rent-to-pay agreements are a loophole. They are a rort that is occurring. In the same way, I believe, consumer leases should also be excluded. This bill will ensure that it continues to be used for that purpose. That is why I will be supporting it. I commend Senator Cameron for bringing this bill. We need reform sooner rather than later, and this bill is a very good vehicle for that.