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Tuesday, 2 February 2016
Page: 106

Mr WHITELEY (BraddonGovernment Whip) (18:48): Mr Acting Deputy Speaker Goodenough, thank you for this opportunity. I rise to speak on the Competition and Consumer Amendment (Payment Surcharges) Bill 2015. In doing so, I am supporting the government's response to the financial systems inquiry. As a matter of response to the previous speaker—he questioned the timing of the bill—there are always schedules in this place and things are a priority. I would like to remind the shadow Treasurer, who should know this too well, that over the last two years we have spent most of our time trying to legislate in this place for savings that will bring the national budget back into the black to try to fill the hole that was left by a string of the worst treasurers that this country has ever seen. That is what we have been doing. Having said that, this is an important piece of legislation and it will ban card payment surcharges that are excessive and will protect the billions of customer transactions in electronic currency every year.

Currently, the law allows merchants to charge a consumer a surcharge on electronic payments that is greater than the cost of that transaction to the merchant. If ever you could pick up on an issue amongst your constituents that really sticks in their craw, it is this. This really irritates them because they walk into a shop and find that they are paying a transaction fee that nowhere near represents the true cost of that transaction. It may not be a large amount of money, but it happens all the time. Sometimes we are forced to pay transaction fees that are nowhere near fair. This is evident in transactions that have a fixed fee on top of the cost of the good for making a payment electronically. I think it is fair to say that we would all agree that airline companies are notorious. They are not the only ones, but they are notorious for this practice. These unfair charges are what the government seeks to address with this bill. I am sure the public will shout 'Hear, hear!' By changing the regulatory framework of electronic payments the ACCC is better equipped to protect customers and will have the ability to issue infringement notices to merchants who have an excessive surcharge on an electronic payment. I am sure that the constituents of Braddon and every other client around the country will be very quick to keep businesses in check when it comes to this practice.

What is deemed as an excessive charge will be determined by either existing Reserve Bank standards or regulations made for the purpose of the ban. It will be the Reserve Bank that determines the standards and permitted costs for which the merchant can recover payment surcharges. I would suggest that there will be a significant gap between that determination and what is currently happening as a matter of course. These reforms were committed to as part of the government's response to the financial systems inquiry. The government is delivering on its promise to protect consumers from excessive surcharging on card payments. Many merchants are fair in the charges they place on card payments. Generally, it is a minority who place excessive charges on card payments, but the time is up. Hopefully those days will be over and a fairer charge—one that is acceptable to both the consumer and the seller—will be in place shortly.

This bill will not place an extra burden on those who are currently doing the right thing. I must stress that: it will not place any extra burden on those who are currently doing the right thing and are treating their customers fairly. The bill will seek to rein in those who are charging unfair amounts to consumers who pay by card, and it will ensure that customers are not charged more than what reflects the true cost to the merchant in the acceptance of the payment.

Mr Deputy Speaker, this bill will have a particular impact in my electorate of Braddon. You would be aware, and others in the chamber would be aware, that while my electorate is on a beautiful island and is a magnificent part of the world covering the north-west coast of Tasmania, my constituents cannot simply jump in a car and go to Melbourne or Sydney quickly like many people on the mainland can. They have to fly or spend a day or night on the magnificently reinvigorated Spirit of Tasmania ferries that leave the beautiful city of Devonport in my electorate and head to Melbourne each and every day. As I remarked earlier, airlines are notorious for excessive surcharges on card payments. In thinking about how this bill will help the people of Braddon I did some minor research. Whether my constituents fly out of Wynyard, Devonport or, dare I say it, Launceston in the electorate of Lyons, they have to pay either a percentage-based or flat fee surcharge if they book online. Three of the big airline companies have flat fee surcharges on these flights. The lowest of these surcharges is a flat fee of $7. The highest surcharge is $8.50. Given that people in my electorate have no option most of the time but to fly using these services, it is highly unfair that they must incur these additional charges every time they seek to leave the island.

This government is committed to doing something about that. The Competition and Consumer Amendment (Payment Surcharges) Bill 2015 gives the Reserve Bank the power to regulate this surcharging so that it cannot be excessive compared to the actual cost to the merchant of processing the payment. The bill also gives power to the ACCC to fine companies who continue to charge excessive fees once the ban is in place.

I fully acknowledge, as I think all of us should, that there is nothing to stop companies adding a few dollars to the price of all their goods to compensate for the loss of revenue that results from the change in this legislation. The customer is king, and I would say to people, 'Be very careful.' My constituents, in particular, are very astute, and they do not like to be price gouged, but I acknowledge that this practice could take place as a result of this change in legislation. However, they will have to seek that compensation honestly, and the people of Braddon will be able to shop around for the cheapest fare or product rather than having to take into account sneaky surcharges.

I hope the passage of this bill will restore trust and integrity in the electronic payment systems in our economy and, more importantly, save the people in my electorate and all over Australia some of their hard-earned money. In 2014 there were over two million actively trading businesses in Australia. When this is put into the context of our online global economy, where a majority of transactions are by card, the importance of this bill becomes much clearer. The 2015 World Payments Report estimated that in 2014 non-cash payments amounted to approximately 390 billion transactions worldwide. That is a big number. The only number that would go close to that would be the size of the deficit left by the previous government.

Dr Chalmers: You were going so well!

Mr WHITELEY: You saw that coming, didn't you? The 2015 Reserve Bank of Australia annual report noted the continued trend of cash payments falling, signifying the increase in card payments in Australia, so it is all the more important for us to deal with this in the way we are dealing with it today. The growth in electronic payments in our economy is a clear trend and obviously one that will not be turning around any time soon. It is a trend which it is reasonable to expect will go through the roof over the next few years as we as a society become even more technology driven. This is sad in some respects, if I could hark back to the more traditional days when we supported our local businesses and shopped locally. We walked into a store and tried on some shoes, bought them and took them home in a bag or a box. Compare that with today, where people are choosing to spend their money online.

It is not necessarily part of this bill, but I will take the opportunity, given that I have a few moments, to mention a specific example of the damage that can be done by our change of spending or payment culture. I will not give away the name of the town, but in a small town in my electorate that I visited recently I said to the person in the shop that I was in, 'What happened to the shop on the other side of the street from you? I can't remember exactly what shop it was.' There was a big empty space left. She said, 'That was the local shoe shop'—the only shoe shop, I understand—'but it has closed down.' I said, 'Why did it close down?' She said, 'Everybody around here was buying their shoes online.' I said, 'How do you know? It could have just been poor business, bad selection of shoe products for people to choose from, or bad service—how on earth would you know that it was purely to do with the purchase of shoes online?' They said, 'We're a pretty small town. You only have to talk to the local postman and he will tell you exactly what's happening.' The shape of a shoe box is pretty distinctive in anybody's language, and the postman was exceptionally busy over the previous year delivering more and more shoes to residential and even business addresses.

You could argue about why people chose to do that. Maybe they were not getting the product or the service, but I doubt it. I think that the place I am talking about would have given very good service, but it is just a change in spending and payment culture. I said to the person, 'How is that going down in your town?' She said, 'Not very well. People are very unhappy.' I said, 'Why would they have a right to be unhappy when in fact they themselves, by their spending payment habits, led to this outcome?' She said, 'They're really angry now, because when they do need a pair of shoes really quickly, or if the children rip the sole or heel off their school shoe and they want some this afternoon ready for tomorrow's school, they no longer have a shop to buy them.' This is quite a small town. So in a sense we need to be very careful what we wish for. We need to be very careful about what our habits and behaviour lead to, because at the end of the day there is nothing better than shopping locally, spending locally, supporting our local businesses and making sure they are there tomorrow.

As the pattern of growth continues in this way, it is vital for the health of our economy and for the bottoms of people's pockets, where they keep their loose change and notes, that the regulatory framework surrounding card payments is effective, efficient and fair

The consumer needs utmost confidence in the payments system. The integrity of this system is compromised when merchants can place excessive surcharges on products most of the time without the consumer's knowledge. The average consumer does not have access to the information to be able to determine if the surcharge they are paying is representative of the true cost of the payment to the merchant.

Once the reforms in this bill are implemented, consumers can have confidence that any surcharges they do pay will be representative of the true cost of that transaction to the merchant. More importantly, the consumer will not see excessive flat fees when it comes to the final stage of processing. Won't it be a great day when that ends! Consumers may still be asked to pay a card payment processing fee, but it will be a fee that is not disproportionate to the cost to the merchant. It will no longer be unfair.

Although businesses will no longer be able to charge excessive card payments, as I said, there is no stopping them from increasing their pricing. So I ask consumers to be aware and watch out to make sure that such price gouging is not in fact happening.

I am confident that the changes to the legislation will make consumers in Australia better off overall. As you add up those surcharges and those unfair fees through the course of the year—whether it be at the cost of you or your partner or your children who are old enough to have their own money who are also getting charged these fees—you will see that this will add up to a significant amount of money in each household's budget on an annual basis and should not be underestimated for one moment.

I support the reforms that this government has put forward to strive for greater efficiency and fairness in the Australian economy, and I thank the House for the opportunity to speak.