Claire Chandler (Tasmania, Liberal Party) Share this | Hansard source

I rise to address the Social Security (Administration) Amendment (Protecting Consumers from Predatory Leasing Practices) Bill 2020, which the government will not be supporting today. If passed, this bill would adversely impact Centrelink customers wanting to engage in a consumer lease and prevent them from using Centrepay as their preferred payment method.

As my colleague Senator Henderson has outlined, Centrepay was introduced in 1999 as a bill-paying service to help Australians on income support to pay for housing and utilities costs. Centrepay helps welfare recipients to manage their expenses for priority services and goods and reduces financial risk for clients by allowing for regular deductions to be made from their welfare payments. During 2019-20, an average of 648,000 customers per month used the service to make deductions from their welfare payments to pay their bills. It is important to note that Centrepay can only be used to pay for approved services and to approved businesses. Bill expenses range from accommodation, education and training expenses to health, household utility expenses, transport, legal services and household goods. The vast majority, around 75 per cent, of the deductions made through Centrepay are for accommodation and utilities expenses.

Since 2001, consumer leases for household goods have been allowed under Centrepay. Many Centrelink customers have limited access to microfinance, and the provision since 2001 gives them greater options to make essential household purchases. For example, if an essential household item, such as a fridge or washing machine, breaks down, a Centrelink customer can use consumer leases to purchase a new appliance quickly and easily. The option is available for them to engage in a consumer lease. The Centrelink customer has a choice whether they want to arrange for regular payments for the lease, including if they want to use Centrepay as a way of making payments on their purchase. Deductions for a customer's payment via Centrepay can cease at any time, although this does not cease any obligations under the consumer lease that they have signed.

The inclusion of consumer leases since 2001 has given consumers a viable option to purchase essential household goods when access to microfinance and money may be difficult to secure. There are 94,000 customers who are making use of Centrepay to manage the purchase of their goods using consumer leases, but, as I've said, if passed, this bill we are debating here today would impact those Centrelink customers who want to use consumer leases and who want to use Centrepay as their preferred payment method.

It is important to note that a number of changes have been adopted since 2001 to better protect Centrelink customers using Centrepay. In 2015 new Centrepay policies and terms were introduced by the then Department of Human Services to exclude unregulated consumer leases for household goods and funeral insurance. In early 2017 all unregulated leases were removed from Centrepay. To help protect consumers and not unduly restrict their access to finance, Centrepay only allows consumer leases covered by the regulatory framework under the National Consumer Credit Protection Act 2009.

The regulatory framework requires consumer lease businesses to be licensed and to comply with responsible lending obligations overseen by the Australian Securities and Investments Commission, or ASIC. Businesses that use Centrepay need to comply and act in accordance with the Centrepay policy and terms and consumer protection laws. As my colleague Senator Henderson said earlier, these are incredibly important safeguards for those Centrelink customers using Centrepay, contrary to what those on the opposition benches might have been contributing in debate this morning.

Services Australia undertakes assessment of business applications for Centrepay and compliance audits of approved businesses. This is another safeguard that is in place regarding this policy. Approved businesses must meet and maintain essential criteria. The assessment process may consider whether the business conducts its operations in a manner that is lawful, ethical and does not take unfair advantage of customers; the past behaviour of the business and business representatives; information provided by regulatory bodies, consumers, consumer groups and law enforcement agencies; previous dealings with the business; and any complaints made against the business. Most identified noncompliance is remedied as part of the review process. If a business is unable to remedy the identified non-compliance concerns in addressing the criteria I've just outlined, they are either partially or fully suspended from the Centrepay program until they comply or until a decision is made by the agency to withdraw their Centrepay approval.

Whilst businesses are required to meet the Centrepay policy and terms they are also regulated through their industry's legislation and relevant regulators, such as ASIC and the Australian Competition and Consumer Commission, or the ACCC, as it is usually known. The agency considers any noncompliance or active investigations with these regulatory bodies and, where notified, will review the business's ongoing approval. Where a business breaches Centrepay policies, including other laws and regulations, the agency will review the business and reconsider its ongoing approval for Centrepay. So again there are some important safeguards in place to ensure that the businesses that Centrelink customers are dealing with under Centrepay are behaving appropriately and are not taking advantage of their customers.

In conclusion, the government takes its responsibilities to consumers very seriously, but this bill proposed by Labor today would only reduce the payment options available to Centrelink customers to pay for household items. This would have an adverse impact on customers where an essential item, such as a fridge or washing machine, needs to be replaced as a matter of urgency. The option to engage in a consumer lease has given consumers a viable option to purchase essential household goods when access to microfinance and other financial money streams may be difficult to secure. The Centrelink customer has a choice as to whether they want to arrange for regular payments for the lease, including if they want to use Centrepay as a way of making payments on their purchase.

As I said, in 2015 new Centrepay policy and terms were introduced which excluded unregulated consumer leases. To help protect customers and not unduly restrict their access to finance, Centrepay only allows consumer leases covered by the regulatory framework under the National Consumer Credit Protection Act 2009. The regulatory framework requires consumer lease businesses to be licensed and comply with responsible lending obligations overseen by ASIC. Services Australia undertakes assessments of business applications for Centrepay and compliance audits of approved businesses. Like I said, the government takes its responsibilities to consumers very seriously, none more so than in the space of Centrepay, where, as I've outlined today and as my colleague Senator Henderson has outlined and as I suspect other colleagues will also detail, there is a strong framework of safeguards in place to ensure that consumers are not taken advantage of and to ensure that this policy process operates in a fair and reasonable way.

But this bill that we're debating here today, the Social Security (Administration) Amendment (Protecting Consumers from Predatory Leasing Practices) Bill 2020, would only reduce the payment options available to Centrelink customers to pay for household items. In effect, it removes choice, and that is something that we, as Liberals, should always be incredibly cognisant of and, I believe, should always seek to protect. So, on that basis, I urge the Senate not to support the bill.