Barnaby Joyce (Queensland, National Party, Shadow Minister for Finance and Debt Reduction) Share this | Link to this | Hansard source

The coalition will be supporting the National Consumer Credit Protection Amendment Bill 2010. The bill was introduced on 10 February 2010 and amends the Commonwealth national consumer credit legislation, the National Consumer Credit Protection Act, which was passed by the parliament last year to ensure the constitutional soundness of referring power from the states to the Commonwealth in relation to consumer credit.

Last year’s credit act implemented a number of reforms, including a national licensing regime for all providers of consumer credit and services across Australia and responsible lending conduct requirements for licensees. In principle, the coalition supported the credit act and the efforts to enhance the national regulation of consumer credit by harmonising laws across states and territories.

I would like to point out that the Howard government recognised the need for and importance of standardising credit regulation, and started the process of uniformity by releasing the national consumer credit code in March 2006. Uniformity of credit regulation is the next step after the introduction of the credit code and COAG discussion under both the Howard and Rudd governments. We in the coalition worked with the government to enhance the operation of the credit act by making amendments in the Senate. These amendments require credit providers to verify information provided in a preliminary credit assessment and to provide reasons for rejecting applications for hardship variations and stays of enforcement.

Consumer credit is important to the Australian economy. It is estimated that consumer spending accounts for around 70 per cent of demand in the economy. A strong national regulatory system is needed and will boost the confidence of consumers to borrow and purchase. This is important because demand for credit has dropped significantly over the course of the global financial downturn. Statistics from the Reserve Bank of Australia on personal lending show a drop in demand of around 10 per cent since the peak in May 2008, a drop of some $16.4 billion over the 19 months to December 2009.

A stable regulatory environment for credit is needed, particularly when the government’s spending—and massive debt—threatens to push up interest rates and limit the ability of consumers to afford credit. The amendment bill allows the Commonwealth to assume responsibility for national credit regulation by allowing the referral of state powers. The legislation will come into effect on 1 July 2010. The states will have the option of adopting the Commonwealth’s legislation or enacting their own referral bill. It is important to note that certain subject matter will be excluded, allowing the states to protect their constitutional rights over certain powers such as state taxes, duties and real property registration.

Under the amendment bill, a state’s referral will remain effective if the referral act provides that the referral will terminate in certain circumstances, where the uniform regulation will impede upon state powers or where amendments to the credit act do not include excluded items. This will ensure that the states can refer their powers without limitation, whilst ensuring their constitutional rights are protected. The amendments have no impact on the operation of the credit act and will simply allow an effective referral.

As the shadow finance minister, I am pleased to see that this bill will not have any financial impact on the federal budget. The coalition supports a national credit regime and we support this bill, which allows the regime to operate effectively. I commend the bill to the Senate.

Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

in reply—I thank Senator Joyce for his contribution to the debate. This is an uncontroversial piece of legislation. It will amend the Commonwealth’s consumer credit legislation to ensure an effective referral of power from the states to the Commonwealth in relation to consumer credit. As senators may be aware, last year the government enacted legislation to implement phase one of the national consumer credit reform package, delivering on the Rudd Labor government’s commitment to modernise Australia’s consumer credit laws.

This credit reform package will, for the first time in Australia, provide for a single standard national regime for the regulation of consumer credit, replacing the state based regimes which operate inconsistently across eight jurisdictions. It is a landmark reform and has only been possible through the strong commitment of the Commonwealth, state and territory governments, working in a spirit of cooperation to realise the COAG’s reform vision for a single uniform national credit law. This was evidenced by the signing of the intergovernmental National Credit Law Agreement by the Commonwealth, state and territory governments in December last year, and by a commitment of all governments to commence the national credit law at the same time later this year.

With other legislation, this represents the final move of state regulation of financial services, consumer credit, trustee companies and, interestingly, margin lending, which is a state responsibility. There has been a good deal of controversy about margin lending in the context of Storm Financial, and I pay credit to some of Senator Joyce’s colleagues who have been active in focusing attention on that. This is the final transfer of the remaining powers of the states in respect to financial regulation to the Commonwealth and, as such, it represents an important final chapter—a single standard national regulation.

This bill amends the National Consumer Credit Protection Act 2009, the credit act, to recognise certain exclusions to the scope of the amendment power in the referral bill and to enable an effective reference of state power to be made either with or without any exclusions to that power. I thank Senator Joyce for the Liberal-National Party support of the legislation. I commend it to the Senate.

Question agreed to.

Bill read a second time.