Ian Macdonald (Queensland, Liberal Party) Share this | Hansard source

I congratulate Senator Cameron on bringing to the parliament a bill that at least heads in the right direction and has a concern and a solution for a problem that abounds. Having said that, I think Senator Cameron, whilst meaning well, has got it wrong again. But let that not withdraw from my acknowledgement that this is one of the more sensible contributions that my friend and colleague Senator Cameron has brought to the chamber. It is good that we are having a debate on this.

In reading some of the material about this, it reminded me of when I was a 17-year-old. I had just left school and could not afford to go to university. I started work as an articled clerk on about half the pay an apprentice would get. I studied externally through the University of Queensland at night to get my legal qualifications. I was certainly a poor Australian. Senator Cameron's wish is that his bill be all about harm minimisation for poor Australians. I remember the days when I certainly fitted into that category.

I lived some distance away from my work in the town of Ayr in North Queensland and, somehow, I had to get to work. It was too far to walk. I would rely on friends to give me a lift if they were going in to town at the same time. But because I wanted to be independent I bought myself a Honda 55 motor scooter. I emphasise '55' because it was five cc better than the regular Honda 50 at the time. I bought it on what was then called hire purchase. A lot of the ills that Senator Cameron talks about were, in fact, there in those days of hire purchase. You do not see hire purchase around much these days. I am wondering if it is still relevant. The idea of hire purchase is that you pay a deposit and then pay your purchase off in instalments. In my case, I got the motor scooter. I had to pay some sort of a deposit and then I had to pay it off. As I recall, I used to pay about two pounds—or $4—a month. I had the use of the motor scooter for a couple of years, whilst each month I would go into the hire purchase agency and pay my two pounds to enable me to continue operating the motor scooter.

Whilst I was responsible for maintenance and upkeep, and obviously for fuel and repairs, the actual ownership of the unit, the motor scooter, stayed with the lender all the time. The idea of hire purchase in those days—very similar to the situation that now applies under different bills—was that the lender retained ownership of the goods. At the end of the lease—I think my lease was for three years—the motor scooter effectively went back to the lender because they still had the ownership entitlement to it. But, as with all of those contracts provided at the time, in the goodness of their heart the lender could actually sell you the three-year-old motor scooter for a nominal price. It was very similar to the arrangements that apply in the situation Senator Cameron has highlighted.

As with a lot of the propositions that have been raised in this debate, I remember that the amount I actually ended up paying for the motor scooter was much greater than the purchase price. Adding up all the payments I made over the term of the hire purchase agreement, I paid something like three times the original cost of the motor scooter. But, of course, in those days there was no alternative. I did have the use of the motor scooter from day one and it allowed me to get around. Again, this is very similar to a lot of the situations that are highlighted in Senator Cameron's speech and in other contributions to this debate. Senator Cameron in his introductory speech on this bill said that the government should expedite the broader review of consumer leases that it announced and look at the national credit code and the implications of consumer leases on a broader basis.

On 7 August this year the Hon. Josh Frydenberg MP, the Assistant Treasurer, indicated that the government was establishing a review of the small-amount credit contracts, which I and probably everyone else in this debate have referred to as SACCs, and related provisions of the national Consumer Credit Protection Act 2009. The establishment of that review fulfilled a statutory requirement under the credit act to examine and report on the effectiveness of the law relating to SACCs that was provided in the credit act. In doing this the government recognised that the small-amount lenders can play an important role in the economy by providing credit to consumers who are excluded from mainstream forms of finance. The government wanted to ensure that the regulatory framework strikes the right balance by protecting vulnerable consumers without imposing any undue regulatory burden on the industry. These small-amount credit contracts are loans of less than $2,000 to the consumer, with a maximum term of 12 months. Since 2013 the credit act has placed specific obligations on small-amount credit contract arrangements and on the providers, including a cap on costs and a rebuttal presumption that a loan is unsuitable when the customer is in default under another small-amount loan.

The government's review also provides an appropriate opportunity to consider the laws that apply to regulated consumer leases. A consumer lease allows a customer to lease an item, such as a fridge—perhaps even a motor scooter!—until the term of the lease finishes, when the item is returned to the lease provider. It is similar to what happened in the case I was relating, about buying a motor scooter all those years ago. Consumer leases regulated under the credit act include those that are for a set period of four months or longer. While the customer base for small-amount loans and regulated consumer leases is similar, many of the regulatory requirements for small-amount credit contracts do not apply to consumer leases. The review announced by Mr Frydenberg will consider whether the provisions that apply to small-amount credit contracts should apply to consumer leases as well. While the customer base for small-amount loans and regulated consumer leases are similar, many of the regulatory requirements of these SACCs do not apply to consumer leases. The review, as I indicated, will consider whether the provisions that apply to small-amount credit contracts should also be extended to consumer leases.

I am pleased that, as Mr Frydenberg announced, the review will be chaired by Ms Danielle Press, the CEO of Equipsuper, who will be joined by panel members Ms Catherine Walter, the deputy chair of Funds Management Victoria, and Mr Stephen Cavanagh, a partner in HWL Ebsworth. The minister announced that the consultation process would involve the panel calling for submissions from interested parties. It will consult widely with stakeholders. The terms of review are quite extensive. I will not go through them all, but they include the review to make recommendations about effectiveness and where necessary to recommend any changes to the requirement to obtain and consider a consumer's bank account statements in certain sections of the credit act. The terms of reference also require the inquiry to look into the rebuttable presumption that a loan is unsuitable if the consumer is in default under another small-amount credit contract or has held two other small-amount credit contracts in the past 90 days in accordance with several provisions of the credit act. The inquiry will also look at the prohibitions on entering into and increasing the credit limit of a loan contract that has a term of 15 days or less with a consumer and on suggesting to consumers or assisting them to do all that is required by certain relevant provisions of the credit act.

The review panel is also required to look into the requirement to display a warning statement about alternatives available on small-amount credit contracts in several relevant provisions of the credit act. Also, the inquiry has to look at the cap on fees on charges, including the maximum of a 20 per cent establishment fee and of a monthly four per cent fee that, again, is referred to in several sections of the act. The inquiry will look at the requirement that consumers who do default under a small amount credit contract must not be charged an amount that exceeds twice the amount of the relevant loan in section 39B of the National Credit Code.

I cannot equate these things precisely with what happened 50 or more years ago when I bought my first 'vehicle' under a hire-purchase contract, but clearly these sorts of issues have been around for a long time. One often wonders about all this regulatory work that governments do from time to time. I note this National Consumer Credit Protection Act came into play in 2009 in the term of the previous Labor government. At times I think we should pause and think about whether we should be encouraging individual responsibility rather than having governments—big brother—trying to regulate every aspect of our lives to protect us from ourselves. I am not sure that my instance, where I paid, if I remember correctly, three times the amount of my motor scooter back in those days, was something that really needed regulation by government. I was aware of that as a 17-year-old when I went into it, but to me the convenience and use I got from that motor scooter was worth the extra amount that I paid in total, and it allowed me to pay it off by almost affordable payments every month until I completed the contract.

Whilst there was some legislation and regulation around hire-purchase agreements in those days, one wonders if at times we try, as a parliament, as various governments, just a little bit too hard to save people from themselves. There used to be the old legal principle of caveat emptor—be careful of what of you buy, think about what you buy—but unfortunately in this day and age there has grown up this view that bureaucrats and politicians in Canberra are better able to regulate the lives and responsibilities and obligations of individual Australians than those individual Australians are themselves.

What we have to strive to do in Australia, and what we do obviously do and have done for many years, is to make sure that every Australian has an education that equips them to be able to properly assess whether they should be taking out a small amount credit contract. Back in my days, you took out a hire-purchase agreement. Ensuring Australians are better informed and the better educated is a better way of addressing these things than having governments and bureaucrats in faraway Canberra trying to regulate what they think is in the best interests of the people of Australia.

I often make the same point in relation to Indigenous people. I find it offensive that people in this parliament in Canberra and bureaucrats are always trying to pass laws, to do things, to make special rules for Indigenous people. To me that always seems to suggest that we think Indigenous people are simply incapable of making the decisions that other Australians make. I find that very offensive. I have some caution with some of the things even my government does in relation to Indigenous people. I think that the best thing we can do for Indigenous people is to treat them exactly the same as every other Australian, with the same rights and responsibilities and opportunities and benefits that every other Australian gets. But some of the things we do from this building and from Canberra seem to me to be almost designed to ensure that that paternalistic situation continues to apply for Indigenous people, and I for one totally oppose that. I know a lot of Indigenous people, and they are equally as good as, if not better in most cases, than every other Australian. I think they are as well able to control their own lives and look after themselves as every other Australian. Again, I emphasise that education, training, the ability to participate fully in Australian society applies there, as it applies to every other Australians.

Senator Cameron said in his opening speech this was an attempt to help minimise harm to poor Australians. Of course, if we did not have any poor Australians in the country then perhaps Senator Cameron might not have thought it necessary to bring this bill forward. We, as a government, try our very best to make sure all Australians benefit from living in this lucky country. Having said that, and whilst I again acknowledge the good ideas and good principles behind Senator Cameron's introduction of this bill, I think he has got it wrong. The government is already addressing many of the issues that Senator Cameron indicated concerned him. When the reviews that the government has set up and other actions the government has taken come into play, this bill will be unnecessary. For that reason I intend to oppose it and I urge the Senate similarly to oppose the bill.