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Tuesday, 23 February 2010
Page: 1531


Mr HARTSUYKER (4:39 PM) —I welcome the opportunity to speak on the National Consumer Credit Protection Amendment Bill 2010. The bill supports the referral of state powers under the National Consumer Credit Protection Act which was passed by the parliament last year. The credit act implemented a number of reforms, including a national licensing regime for all providers of consumer credit and services across Australia, including 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. We worked with the government to enhance the bill’s operation by making amendments in the Senate which would require credit providers to verify information provided in a preliminary credit assessment and provide reasons for rejecting applications for hardship variations and stays of enforcement.

Consumer credit is an important area of the Australian economy. Households need to know that they are borrowing with a strong national regulatory system in place. Demand for credit has dropped significantly over the course of the global financial downturn. RBA statistics on personal lending show a drop in demand of around 10 per cent since the peak in May 2008. This is a drop of some $16.4 billion over the 19 months to December 2009. It is estimated that consumer spending accounts for around 70 per cent of demand in the economy. Therefore, any significant drop in credit demand and the availability of credit has an impact on the economy as a whole. Consumers need the confidence of a national system to borrow and purchase under the backdrop of a stable regulatory environment. The Howard government recognised the need to standardise credit regulation and started the process of uniformity by releasing the national consumer credit code in March 2006. In the two years after the code was released, demand for personal credit jumped by $32.8 billion to March 2008—around a 28 per cent increase.

The uniformity of credit regulation is the logical outcome of the introduction of the credit code and COAG discussions under both the Howard and Rudd governments. A stable regulatory environment for credit is needed, particularly when the government’s spending and massive debt threaten 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 an effective referral of state powers. This will allow the legislation to commence on 1 July 2010. The states agreed with the Commonwealth to modify the credit act in December last year to insert carve-out provisions allowing certain subject matter to be excluded from the state referral bills. The carve-out provisions allow the states to protect their constitutional rights over certain powers such as state taxes and duties as well as powers in relation to real property registrations. The states will have the option of adopting the Commonwealth’s legislation or enacting their own referral bill.

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. The coalition support the national credit regime and we support this bill, which allows the regime to operate effectively. I commend the bill to the House.