Tim Ayres (NSW, Australian Labor Party) Share this | Hansard source

I'm very happy to support the Social Security (Administration) Amendment (Protecting Consumers from Predatory Leasing Practices) Bill 2020. I'm very pleased that Senator McAllister has introduced it into this place, and I only wish that the government would either support the bill or act to deal with the exploitation that Services Australia is facilitating.

Centrepay is designed and was originally set up to help low-income people manage their finances, not to facilitate the mining of profits from the household incomes of some of the most vulnerable people in Australia. More than 600,000 Australians use Centrepay to pay bills, rent and ongoing expenses through automatic deductions. It's a sound proposition, but it has been open to access by businesses whose products—particularly consumer leases—disadvantage consumers and have the potential to cause great harm to Australian families who should have the government's support. About 10 per cent of payments made through Centrepay are for consumer leases. One dollar in every $10 goes to these operations, which largely exploit vulnerable Australians. Consumer leases are an underacknowledged, underregulated and misunderstood cousin of payday loans. They're marketed to the same people—poor people struggling to get by—and they make their money from the same ruthless exploitation. Consumer leases are subject to responsible lending obligations, but there's no maximum cost of a consumer lease. Almost every time, the consumer will pay far more than the cash value of the goods.

Services Australia clients are sometimes subject to exorbitant interest charges—in some cases over 800 per cent—and Services Australia says, 'There's nothing to see here.' They sign off on these propositions and allow the money to be deducted out of people's accounts without a second look. ASIC has found that household goods leased from rent-to-buy businesses can cost nearly nine times the retail price of the same goods. With every consumer lease payment arranged through Centrepay, the government effectively endorses these practices. Our social security system should be supporting people, not endorsing a business model that creates poverty traps that many ordinary Australians can't find their way out of. The government is facilitating predatory lending and leasing practices that rip away money and take food off the kitchen tables of some of our most vulnerable families.

This bill would ensure that Centrepay is prospectively closed to consumer leasing companies for the same reasons that Centrepay is closed to payday lenders. There are safer payment options. They include no-interest loans from microfinance organisations. There are other payment services that are better regulated to avoid poverty traps, direct debit arrangements, credit card arrangements and bank transfer arrangements, all designed to support people making large purchases from a low-income base without being ripped off by predatory interest rates.

A similar bill to ban Centrepay for consumer leases, which was introduced by my predecessor Senator Doug Cameron in 2015, was the only private member's bill to pass the Senate in the 44th Parliament, with every crossbench vote. During that debate, coalition senators consistently said that there was no need for such a bill because their government was working with regulators and the Department of Human Services to stop exploitative consumer leases. Five years later, contracts continue to be signed and they continue to get the stamp of approval from the Morrison government. Five years later, the government simply haven't done enough. They are always on the side of big banks, not on the side of ordinary people. In this case, they are always on the side of some of the most predatory, unscrupulous operators in the market and never on the side of low-income families.

We have consistently advocated on this side for greater protections for consumers in response to consistent concerns about improper behaviour by consumer lease providers and payday lenders. I want to congratulate Senator Jenny McAllister for bringing this bill to this place and for doing the work that's required: talking to the advocacy organisations, talking to ordinary Australians and talking to people in the finance sector to develop a bill that's capable of resolving the problem that is so manifest for so many hundreds of thousands of Australians.

During debate on the 2015 private member's bill to close the Centrepay loophole, Senator Ruston, now a minister, said this:

I think it is incumbent on government not to interfere in people's lives to the extent where we tell them what they can buy or not buy.

What a hypocrite! That's exactly what the government does when it comes to other legislation that's before this house this week. In government senators' dissenting report to the Senate Economics References Committee report Credit and financial services targeted at Australians at risk of financial hardship, Senator Hume said:

Coalition Senators wish to emphasise that Centrepay is free and voluntary. It helps individuals to budget, and people can start, change or cancel their Centrepay deductions at any time.

Well, choices don't exist in a vacuum. Desperate people and low-income families are not free to choose between feeding their children or buying their children's school uniforms and paying off a predatory consumer lease arrangement.

Consider that, when the coronavirus pandemic hit, the payday lenders were certainly ready. By April, they were sending text messages to potential customers. One of the text messages said:

Need a COVID-19 relief loan? Fast cash loan paid in 15 Min*. No Credit Check!

In testimony to the Senate COVID committee, ASIC commissioner Sean Hughes said:

… when we get to what is being referred to colloquially as 'the cliff' at the end of the various support programs, we think there will likely be an increase in utilisation of those payday lending programs.

So it goes for these consumer lease programs. There are already millions of Australians in deep financial trouble on this government's watch. A million Australians are unemployed—we'll peak at eight per cent next year; 2.4 million Australians are unemployed or underemployed; wage growth has stalled for the life of this government, not just this year but at historic lows for the life of this government; and the wage share of national income is at record lows. Last week, an ANU study found:

Australian workers lost a total of $47bn in wages in the first eight months of the Covid-19 recession …

In particular, the recession has hurt those who completed year 12 but who do not have a university degree, workers born in non-English-speaking countries and older Australians. Are these people really free to make voluntary financial decisions? Look at the early access superannuation scheme, much trumpeted by the government in their vain effort to undermine industry superannuation. APRA's data from 22 November shows that 3.4 million Australians applied to the government's early release super scheme—their average release was $8,400—and 1.4 million Australians applied for a repeat amount, and their average release was $7,400. The total amount of money released was $35½ billion. Treasury estimates that this will rise to $42 billion by the end of the year. Note for comparison that the 2020-21 budget has only $25 billion in direct COVID-19 support measures, according to KPMG.

After taking into account inflation and the cost of living, a 25-year-old who withdraws $20,000 will be between $80,000 and $100,000 worse off in retirement. A 35-year-old who withdraws $20,000 will be at least $65,000 worse off. A total of 590,000 superannuation accounts have been drained to zero. Almost all were those of workers under 35. Senator Hume said, 'For many people who've made that decision, they know that there's a trade off, but they have made the decision to take that money today because they need to pay bills and pay down their mortgages.' It's a choice she will never have to make, a choice she is incapable of understanding. She went on to say, 'That might be a better financial decision for their personal balance sheet to take that money today rather than lock it up for the future.' It's free, it's voluntary but it's robbing Australians, especially young Australians, of a decent retirement to serve the ideological interests of those opposite.

The Liberal Party is incapable of understanding the position that low-income families are in and incapable of understanding the choices that they must make day to day, and what those opposite are doing every step of the way is making those choices harder and pushing people on a sort of 'path determinacy' towards more poverty, less resources, fewer choices and more misery for low-income families.

The people opposite only understand the economy from the perspective of financial services that prey upon poor people, and that's what they're here to represent in this chamber. That's why they voted 26 times to oppose the banking royal commission. Always on the side of the big banks, never on the side of ordinary people, in this case they are on the side of some of the worst creatures in Australian financial services, the people who make ordinary working-class low-income Australians pay eight times the value of a consumer good and rip that money out of people's pockets, facilitated by the government. When confronted with the banking royal commission, the then Treasurer, now Prime Minister, said it was nothing more than a populist whinge. He went on to say that the Labor Party was playing reckless political games with one of the core pillars of our economy. He said the only product of that approach could be to undermine confidence in the banking and financial system. What hypocrisy from the guy who was out there after the banking royal commission waving his finger and tut-tutting. The real approach of this government has never been to be on the side of ordinary Australians. It's why they are so determined to abolish responsible lending obligation laws, introduced by Labor after the GFC, which will free up banks to aggressively push credit onto their customers.

As I said before, what Minister Ruston had to say about the Centrepay loophole was:

I think it is incumbent on government not to interfere in people's lives to the extent where we tell them what they can buy or not buy.

What hypocrisy! The coalition believes that vulnerable people deserve the right to be targeted by banks, to be ripped off by consumer loans and to be forced to drain their superannuation accounts in order to get through the recession, but not to conduct the basic transactions of everyday life.

There's robodebt—a project that Scott Morrison introduced as social services minister, made a centrepiece of in his budgets as Treasurer and has failed to take responsibility for as Prime Minister. Total debts are $721 million, with 470,000 of them and 370,000 people affected. Not only do the coalition support dodgy financial schemes that prey on the poorest Australians; they created one, and it was illegal. The current line that income averaging was the issue is a fig leaf for a system that forced Centrelink recipients to prove they didn't have a debt, not the other way round. It caused immense suffering family by family—370,000 families—immense suffering.

In Steinbeck's TheGrapes of Wrath two tenant farmers debate the nature of the bank that is about to kick them off their farms. How can an institution designed by and maintained by people perform such inhuman acts? They say:

The bank is something else than men. It happens that every man in a bank hates what the bank does, and yet the bank does it. The bank is something more than men, I tell you. It's the monster. Men made it, but they can't control it.

There is something similarly cruel in the logic of this government's approach to low-income families and, in this case, consumer leasing arrangements. They have made an arrangement that makes poor people poorer and reduces their choices. What they should do is unmake it. They should support this legislation or do something to remove this cruel practice from Australian financial life.