Sam Dastyari (NSW, Australian Labor Party) Share this | Hansard source

Mr President, the Competition and Consumer Amendment (Payment Surcharges) Bill 2015 will be supported by the opposition. It is an important bill. It arises out of a recommendation of the Financial System Inquiry, commonly known as the Murray report, which recommended this action—that surcharging in relation to credit cards be closely regulated and that, in effect, overcharging not be allowed. This is an important matter because, frankly, consumers are being ripped off as we speak. It is interesting that of all the issues which were given attention during the Murray inquiry process, none received anywhere near as many submissions from the public as this particular matter. It is quite understandable that this was the case, because consumers have every right to be angry when they are ripped off in this fashion. I am pleased to note that consumer advocate, Choice, supports the bill in its current form. I also want to note—and I will touch on this in a bit more detail later—the role of and the work done by the Senate Economics References Committee on this issue of surcharging and credit card use.

It is right and appropriate that retailers be able to pass on the costs of using a credit card for transactions. They add up. It is a substantial cost. It is fair to say that nobody reasonable in the debate objects to retailers being able to pass on reasonable costs. That is appropriate and it is protected under this bill. What is not appropriate is excessive surcharging. In many cases, people have very little choice as to how they pay, but the costs are more than passed on and retailers make profits out of what is meant to be a user charge. When surcharging was first allowed for the cost of credit card transactions, it was envisaged by the Reserve Bank of Australia—which allowed this to occur—that it would be to recoup reasonable costs. As we speak today, the Reserve Bank estimates it will cost a merchant an average of 0.82 cents per transaction to accept the normal and most utilised cards, which are MasterCard and Visa. Of course, 0.82 is a low figure compared to what people charge in the vast majority of instances; charges of two per cent, three per cent or more are quite common.

This legislation is appropriate and will be strongly supported by the opposition. In fact, the shadow treasurer, Mr Bowen, indicated support for this action on behalf of the Labor Party when the Murray report was first released in 2014. Here we are in 2016 and we are only now legislating—if anything, it is perplexing that it has taken so long to reach this point. The Labor Party would have supported this legislation and facilitated this package much earlier than we are doing today.

We are relieved to say that this legislation and explanatory memorandum make much more sense than the Treasurer's explanation of it at the time. The Treasurer has had some very ordinary interviews in his so far brief tenure as Treasurer, but one was particularly special. He was asked on the Today show how this legislation would work. Karl Stefanovic asked him about a surcharge for a well-known airline, which might be able to charge you when taking credit card payments. The Treasurer responded, not confidently; indeed, he was very vague. It was quite clear he had no idea what he was talking about. He had no idea how this legislation would work. He had absolutely no idea of the detail. But the opposition has looked at the legislation and the explanatory memorandum, and thankfully we have found them to be much clearer. Clearly the government's legislative drafters have gone to work, and this is a good piece of legislation.

This bill is important not only as a matter of fairness but also because electronic payments are, of course, more and more a part of our economy and they are, by and large, efficient. There is no reason to discourage them; in fact, they can be and should be encouraged. Allowing the use of electronic payments through credit cards without excessive surcharging is good policy, as well as being fair. It is appropriate that the Australian Competition and Consumer Commission—the ACCC—be established as the body responsible for enforcing the legislation. The ACCC has experience and expertise in this field, and we would certainly endorse the mandating of the ACCC to ensure that this law is implemented as effective.

The legislation will clarify the regulation and enhance competitive neutrality between systems providers. At the moment there is a process of blending, which is charging one surcharge regardless of the credit card used—although some credit cards have considerably more costs. This has caused some angst to some credit card providers, for understandable reasons. For example, American Express is generally more expensive for a merchant. That is a matter of choice. If there is a higher charge to use an American Express card, customers of Visa and MasterCard, should not be penalised for doing so. It should be the case that the blending process is, in effect, unfair and is, in effect, a surcharge. Of course, the charge which dominates is the higher charge. For example, a charge for American Express would dominate the blending process and people using Visa or MasterCard would be charged more than they otherwise should be.

It will of course also improve the efficiency and effectiveness of price signals—that is, it would encourage credit card providers to even more increased efficiency and drive down their processing costs. It will make their product more attractive to consumers if consumers know that they are only going to be charged for the cost, and the cost to the credit card becomes more relevant. At the moment it is frankly irrelevant because the consumer is going to be charged more than that in any event. It has the potential to reduce cross-subsidisation, as was outlined, between customer groups and merchant groups through that blending process.

The bill amends the act not only to include a ban on surcharging but also to allow the ACCC to take actions against corporations that are involved in excessive surcharging. As I said, that is something the opposition supports. The surcharge will be excessive if that surcharge exceeds the level for surcharging permitted under the Reserve Bank standard, which covers the kind of payment and sets out the regulations. The Reserve Bank has considerable expertise that it has built up since having responsibility for payment systems through the Payments System Board and it is appropriate that the Reserve Bank has that authority under this bill.

The opposition trusts that some sensible definitions of what is to be considered excessive will be created as part of the process in this bill. I support the bill on the basis that those definitions will not inhibit competition between retailers on surcharge levies, because that again is something which would provide competition to encourage not only credit card providers but also retailers to make sure that their offering is as sharp as possible and that only the relevant charges are being passed on, and consumers, at the end of the day, will benefit. This is a pro-consumer piece of legislation, it is a pro-competition piece of legislation and it is a sensible piece of legislation. The Labor Party will facilitate its passage through the Senate, as we did in the other place, so that it becomes the law as quickly as possible. It is disappointing it has taken this long to get it to this point. It is something which could have been dealt with very easily last year. Obviously, the government had other things on its agenda, but, nevertheless, now that it is before the Senate we will facilitate its passage with our support.

I also want to touch on the work that has been done in this area by the Senate Economics References Committee, and more recently a report that was done on the issue of credit cards. This piece of legislation is important and it deserves to be supported, but it addresses only one issue; it does not address some of the other fundamental issues regarding credit cards and credit competition within the credit card market. While this goes a step in the right direction in addressing some of the issues that deserve to be addressed, there is a whole series of other issues relating to credit card competition, relating to the market, relating to making sure you have a competitive environment, relating to internal and hidden payments that also exist, which I believe the Senate Economics References Committee has done an exceedingly large amount of work on. In the committee's report that came down last year there was a series of other practical, sensible measures.

I think consumers have a right to be very angry and frustrated when they see credit card interest rates as high as 20 per cent while the cash rate has fallen to around two per cent. I think a lot of consumers feel that they are getting a raw deal—and they are. Some of that can easily be overcome by shopping around; by looking for a better deal. There are deals out there where people can get credit card deals at eight or nine per cent, but what we tend to find is that they are not the ones being advertised, and that people are being drawn in with offers of 20 per cent, not realising that a lot of this is a trap.

On top of that, there is the whole complicated area of credit card debt limit transfers which allow people to completely move their the transfers over to another credit card provider. While on the face of it this all seems like a very positive development, unfortunately it ends up meaning that, for example, someone will have $10,000 of credit card debt, they will take their credit card over to another supplier, and they will have that account cleared—but rather than being forced to actually close it, what ends up happening is that that they have another limit of $10,000, and it just builds up again. On top of that, the difficulty and the challenges with closing credit card accounts and cancelling credit cards is at odds with how easy it is to actually obtain them. There is not a single major credit card provider in this country that will allow you to cancel your credit card online. You have to phone up, you have to go in, or you have to do it all via written letters—and yet you can actually apply for and get a full credit card online. These are simple, practical steps.

The Senate Economics Committee tried to take the politics out of the issue and find half a dozen examples of some fairly simple, practical reforms could be done to improve credit card use without really affecting competition—or while enhancing competition. That being said, this proposal from the government which comes from the Murray report is a step in the right direction. I believe there are other practical steps that can also be taken.