Christopher Back (WA, Liberal Party) Share this | Hansard source

I want to comment on the Social Security (Administration) Amendment (Consumer Lease Exclusion) Bill 2015 as proposed by Senator Cameron. And I want to record that I am in absolute lock step with Senator Cameron in his motivation behind presenting this bill before this chamber. I sense that the dialogue in the discussion by others is in accord with that. I say that because in this society people who would try to use their influence, their retail capacity, their expertise or their marketing to prey on those who simply cannot afford the type of product or service that these people are trying to peddle are parasites. If legislation needs to be put into place to exclude these people, to expose them, to out them, then I am absolutely in agreement with that. I am, as many in this chamber have been and maybe still are, associated with organisations such as St Vincent de Paul, Anglicare, the Salvation Army and other non-government organisations associated with people who are in need, often financial need. I say very strongly that the motivation behind Senator Cameron's bill is to be applauded.

However, as has been pointed out by my colleagues, and as I will in the brief time available to me point out, if by passing Senator Cameron's bill we actually place vulnerable people at greater risk rather than less risk, then Senator Cameron's noble objectives will not have been met. That is the concern I have. We know the objective of Centrepay. It is to assist customers in managing their expenses—expenses that are consistent with the purposes of their welfare payments—to reduce the financial risk to them, to provide them with a facility that will allow regular deductions to be made from their welfare payments that will still leave them with adequate resources to lead a fulfilling life, to look after their families and to look after their own wellbeing.

Whether Senator Cameron's bill has been the catalyst or not I do not know. As Senator Xenophon has just said, if the dialogue that we have in this place today leads to further improvements to make the administration of this process better, then I certainly concur that Senator Cameron's time will have been well spent. But, as has been pointed out, some of the elements within the bill will actually put these worthy people at greater risk rather than less risk. For example, if we exclude under the Centrepay arrangements the consumer lease for goods that are regulated now, what will probably happen is that people will go outside the system, where they will be vulnerable to these people whom I refer to as parasites—people who would prey on those whom they very well know are, for whatever reason, unable to afford what it is they are trying to sell them, often at inflated prices. Those who are on income management may use a cash component, for example, to purchase when they could have used, under a properly structured process, the Centrepay mechanism. If it encourages them to go and purchase unregulated goods, then nobody is better for this process.

Why do people often find themselves in these circumstances? I refer back to the comments of my colleague Senator Fawcett, and that is that we know there are instances in which adults are illiterate. Therefore, giving them written information about the risks or the opportunities associated with either lease or purchase or other means of acquiring products is meaningless, because they simply do not understand them. There are other people who, for whatever reason, may at some time in their past have had the necessary skills to manage their money but for various reasons may not now be in that position. I guess that is where the Centrepay system comes into its own.

What are some of the services that are included under the regulated category? Very briefly, they are accommodation services; education and employment; health; finance, particularly that associated with community group loans; legal and professional services, if they are required, such as court fines; travel and transport; motor vehicle registration, associated with the good conduct of their family and often used to obtain and then arrive for work; utilities; and the council services, such as electricity et cetera. And then there are of course these household goods that are more the subject of the consumer lease exclusion about which Senator Cameron spoke. I also want to talk about household goods lease and rental, which is the subject of our discussion, and provision of food, home care and trade services. What is excluded? Rental or lease payments for goods where the consumer lease is not regulated under the national Consumer Credit Protection Act. And then there are payments made to a broker, an arranger—a person who acts as a middleman, who, I say again, parasitises that process—rather than the provider of the Centrepay-approved good or service. Also excluded are short-term loan repayments to cash lenders, payday lenders and pawn brokers. These are excluded and of course unable to be used.

I want to refer for a moment to the relationship between the department that has oversight and ASIC. As we know, ASIC is the party responsible for the regulation of consumer leases. It falls then to ASIC to ensure the good and proper activity of retailers and others under the regulated process. As has been pointed out, it is ASIC's role to enforce compliance, for example. I am pleased to learn that even this year there have been retail organisations that have been named, shamed and, more importantly, excluded from offering the regulated products which in ASIC's view they have abused. They are excluded for periods of time, which are clearly punitive, and put on notice that if they were to continue that activity they would not be able to offer the regulated goods through this process.

It is my view that Senator Cameron's motivations are quite correct. But if his bill is enacted, it will be welfare recipients on income management who would not be able to pay for any consumer lease obligations, whether regulated or unregulated, using their income-managed funds. There is also the associated risk of them using the cash component to engage in the sorts of activities that Senator Cameron is alerting us to, placing vulnerable people in financial distress—which is exactly what income management was designed to avoid.

We know that there are mechanisms other than leasing. There may be no- or low-interest loans through philanthropic and other organisations. There may be lay-by. There may be the opportunity to obtain a necessary product by alternative means. It was interesting to listen to the comments made by Senator Sinodinos and Senator Xenophon in relation to the excellent work of Muhammad Yunus and others who have followed him in relation to microfinancing. It is worth recording that the bad-debt rate from microfinance loans to deserving people, particularly deserving women, in countries like Pakistan, India and Malaysia, is, as I understand it and in my experience, infinitely lower than in the wider banking system. These loans give these people the opportunity to improve their lot, to start a small business and to work their way out of that cycle of poverty.

I applaud Senator Cameron for his motivation in introducing this bill. I concur with him about the concern he raises about the most vulnerable people, who need to be protected from the activities of those who would undo them. But the measures that have been undertaken by the government and the department, with the involvement of ASIC and ACCC, are the way to go. We do not want to throw the baby out with the bathwater.