Barry O'Sullivan (Queensland, National Party) Share this | Hansard source

I rise to make a contribution to the Social Security (Administration) Amendment (Consumer Lease Exclusion) Bill 2015 debate. The point has already been made that the government does not support this private member's bill. The intent of the bill, as we understand it on the part of Senator Cameron, the author of the bill, is that he wants to prohibit all consumer leases from Centrepay, but this bill clearly does not do that. It does not have the capacity to achieve that. Indeed the government through the Department of Human Services has already introduced a range of changes that will address most of what the concerns of Senator Cameron.

The changes have been made to improve the operation of the scheme by providing greater information to its customers. These changes include, but are not limited to, exclusion of consumer leases that are not regulated by the National Consumer Credit Protection Act 2009. So, in effect, the government through the agency had a close look at where some of the vulnerabilities might be and have risen to the occasion to make adjustments in the operation of the scheme to see that the consumers are protected. The legislation also takes on, in excluding the expansion of Centrepay, to support alternatives to consumer leases such as low-interest loans in addition to no-interest loans, savings plans and lay-bys. This, in effect, is providing the people with choice. It allows them to function their household budgets and operate with the necessities of life within the scope of those things that might be of that available to the rest of us in the community when we are trying to manage the affairs of our budgets.

Apart from the strengthening protections we need to go back and have a look at who the people are that are affected by these arrangements, the Centrelink customers. These are people who often find themselves in difficult circumstances. We are talking about difficult economic or budgetary circumstances. The legislation is more inclined towards people who find themselves in lower socio-economic circumstances where this current assistance is valuable. From our life experiences we all know people who have grave difficulties in managing money. I have a number of relatives who fall into that category. When you do not have that ability—when you do not have an ability to budget, to save and to make contingency provision for the essential things in life where you are in more difficult or measured economic circumstances—these difficulties become writ very large in your life. We spoke yesterday about the fact that these programs are meant to help these people manage their circumstances, not to hinder them. We are not here to take away the fundamental and basic right of people to choose what they do with their money, but this process aids them to be much more alert to what they might next do and guides them in ensuring that they have covered the general necessities of life.

Regulated customer leases are not going to be excluded from Centrepay. Welfare recipients are generally unable to access most forms of credit such as credit cards in any event, and regulated consumer leasing is one of the few ways of obtaining essential household goods quickly. As we all know, without security being provided, when you make application for any form of financial assistance where you enter into an otherwise contractual arrangement with a consumer lease, a low-doc loan or a low-interest or no-interest loan, the credit agency or individual or corporation extending the credit has regard not just to your security position but to your capacity to service the loan commitment. This program allows security for those lenders where they know that, through the Centrelink payments, these loans or other financial arrangements will be serviced.

When we look at alternatives to general consumer leases, such as the no-interest loan scheme operated by the Good Shepherd microfinance scheme, this bill of Senator Cameron's would exclude people from having access to these financial facilities, which are particularly designed to help these people who are in otherwise somewhat difficult circumstances. Let's just think for a moment about where they might find themselves. Many people who are on Centrelink support are not receiving it simply because they are unable to get employment. That is one of the main reasons, but there are any number of reasons and we have to remember that we need to think beyond the individual themselves. In some cases, a person whom this bill would seek to exclude from accessing any sort of consumer lease or low-interest loan may well be a parent, and that parent may well be in difficult circumstances.

We heard yesterday in contributions made on a related matter that a lot of these households and homes find themselves with someone or, on occasions, multiple people within the household who have some form of addiction, whether it be a drug addiction or an alcohol addiction. Indeed, it may well be a gambling addiction or they are just people who are completely incapable of managing their own personal finances—exacerbated, as I pointed out earlier, by the very difficult circumstances they might find themselves in through the perils of life. Just think about this for a moment. If this bill were to take effect, it might prevent a parent, even the addicted parent or, indeed, another partner in that household, from being able to, for example, purchase a fridge or a washing machine. Just imagine the circumstances where you have a parent who is financially struggling in any event due to any number of perils, some of which I have mentioned, and there are many others, and is unable to purchase a fridge.

Let's take a household where you are living in the suburbs. You may not even have a car; you might rely upon public transport or some other form of making your way around, and now you find yourself with a young family of four or five school-aged children. Your fridge is broken and beyond repair. You might not even have the capacity to meet the costs of repairs to a fridge, but let us assume for the purpose of this example that the fridge is no longer functioning and you need to get a new fridge. If this bill were to take effect, some of these people would not be able to enter into a consumer lease arrangement, firstly because it would be prohibited by this proposed legislation, but in reality it may be that they cannot enter into an arrangement if they do not have proof—if they cannot convince the consumer lender—that they are able to repay the loan. Entering into arrangements where a loan is serviced by a part of their Centrelink payments, of course, allows that household to replace that fridge. As burdensome as that purchase may be, it puts that family back on a fair footing, as we would all want to see, in relation to the necessities of that household.

In a similar fashion, if the washing machine in the house were to break and you have a family of six or seven who are already in difficult circumstances, in many cases exacerbated by some of the scourges in the household with these addictions, you could be left with a mother of young children who then has no capacity to wash the linen or the clothes of the family unless they are able to access some form of consumer lease, low-interest or no-interest loan or, as I said before, finances operated by schemes such as NILS, which is the Good Shepherd microfinance scheme.

Essentially, the impact of this bill is very clear: either we are prepared to support these people in these difficult circumstances by, in essence, guaranteeing the payment of the lease payments or the interest payments on these loans or we are not. There needs to be no confusion here and no crossover. I do understand the spirit of what Senator Cameron has tried to achieve. None of us want to see any unscrupulous lenders taking advantage of people who are in very difficult circumstances, who otherwise would not have a choice and who, in some cases, are in very desperate circumstances being exploited by lenders and financiers. Nobody wants to see that happen—me in particular.

In a former life, I had a lot to do with families who found themselves in quite tragic circumstances. I understand these stresses of day-to-day life. As a former police officer, I have been in their homes, I have seen their struggles and I have seen the pain of a mother who is a spouse to sometimes an abusive father, who was addicted to either drugs or alcohol. The circumstances in their homes are very pitiful. If this bill were to go ahead, on balance, it would prevent those mothers from being able to enter into any sort of consumer arrangements to bring to them some of the very basic necessities of life.

It may even extend beyond the basic necessities. I am not one of those who is of the school of thought that these people find themselves in these circumstances should be denied the opportunity to have some of those other things in life that we all experience and take the granted. You have got a young family coming through in that household, you want them to have the ability to be introduced to some of the technologies of life, either in an essential form, from an educational perspective or from a social development perspective. Might I say, to the cry of some others, it may be just to allow their children to be able to enjoy some of the functions in life that come with some computer games and the sorts of things that young people seem to be attracted to more and more these days. If this bill was take effect, for those mothers in those households—or a father, before I hear the cry of discrimination come my way from our side of the building—it would prevent them from being able to enter into leases or loan arrangements to bring those things into their family. I think that is completely wrong and, in effect, discriminatory in and of itself.

What this program does is assist them in doing this. Some people, believe it or not, are just not quite financially literature enough or have enough life experience to be able to wade their way through certain regulated lease agreements and the like. That is why the changes of policy—the Centrepay policy terms list and the categories and goods and services eligible for Centrepay deductions—that I indicated earlier have been done. This gives a guide to these households and, along with the consumer protection act, is meant—as best it can, in harness with each other and having a symbiotic impact—to in effect guide them.

Senator Jacinta Collins interjecting—

I will not take the interjection. This guides these families who might not be as fortunate as some in terms of financial literacy to be able to make decisions and, as I have pointed out all the way through, guides them in what they do in making these purchases of things that you and I all fairly well take for granted.

We have also sometimes got the additional situation of the complexity of these agreements, which might involve—along with the lender—a finance institution such as a bank, where these people have to then start to engage in complicated arrangements as to how the periodic payments for these leases or loans may occur. I think we are all familiar with modern banking terms and that there is a cost involved in that, whereas this service provided for Centrelink customers has no cost.

When I talked about no interest loan schemes, we have got areas—like Good Shepherd Microfinance—which I am quite certain Senator Cameron did not mean to catch in this bill but would catch them. We have got areas where even these things are not available. I am instructed that in Normanton, for example, in the far northern part of my state, there is no NILS provider. As a result, an individual in that area who found themselves in these circumstances would have no alternative if it was not for the Centrelink program to be able to, as we have talked about, secure these essentials of life.

During the thin years of 2013-14, the NILS itself—which is, as I have referred to, operated by the Good Shepherd Microfinance—approved 24,378 loans with a total value of $22 million. I want to stay more with the number of loans. Whilst accepting that some people may have taken multiple advantage of the Centrelink program, there are in essence—even allowing for 20 per cent to be duplicate applications—some 20,000 households and 20,000 families who we know already probably in very ordinary or very difficult financial circumstances who have used the scheme to get the necessities of life. Those necessities are quite regulated in terms of what they can do and where they can do it. With that Centrepay for household goods, in just six months from July to September 2014, there were 136,000 customers with a total deduction of some $148 million. Not all of those deductions are for consumer leases, but the comparative volume does tend to indicate a significant demand for household goods—those goods that I referred to as the basics of life.

In closing my contribution, I have recognised Senator Cameron's intent with this legislation. I think we all have great sympathy for any measure that might protect the vulnerable in our society, particularly those who are really disadvantaged—for example, a mother and children in circumstances not necessarily of their making. Every one of us wants to join Senator Cameron in protecting these people so that they are not exploited by unscrupulous lenders of money or those who extend lease and finance arrangements. But because there have been changes which perhaps Senator Cameron was not previously alive to we believe the bill is not necessary. Indeed, limiting people's capacity to do this will just impact on their ability to take on the most basic things in life which we have all become somewhat accustomed to. So I think we should not support the bill. (Time expired)