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Tuesday, 26 June 2012
Page: 7962

Mr HUNT (Flinders) (12:54): I refer to the contribution from the member for Braddon who eloquently outlined the cycle of debt as each year an entity borrows more, has higher levels of interest rates and then borrows to pay the interest rates. This has of course been the story of the Australian government over the last four years: annual deficits building to national debt, building to interest and all of that interest for the current year being met through further borrowing, which future generations will be saddled with and for which they will have to pay in their time.

But let me turn to the specifics of the Consumer Credit Corporations Legislation Amendment (Enhancements) Bill. The purpose and the intention of the bill is to ensure that the cycle of indebtedness is not exacerbated. It is a notable and important perspective. The goal is to weed out the shonks and the charlatans who prey upon those who are vulnerable, again a noble purpose. The fear is that as it was originally drafted this bill would have had an impact not necessarily on the shonks and the charlatans, the predators on the fringes of the industry, but on those who are legitimate microfinance providers. On that basis, we have put forward a suite of amendments designed to, intended to and aimed at protecting the genuine legitimate microfinance providers who play a critical role in helping those who may not have access to mainstream banks and who may not be able to provide the collateral. The message is get rid of the shonks, but do not destroy the legitimate microfinance providers.

We have been engaged in a long and arduous discussion with the government, with those who would not have dealt on their side with the genuine by-product of their legislation as to legitimate microfinance providers. To that extent I want to base the vast bulk of what I have to say on the words of Helen and Jeremy Spink, who are constituents of mine who operate a small microfinance business in the neighbouring electorate of Dunkley. Helen Spink wrote to me recently, and I beg the indulgence of the House to quote at length from her letter:

We own and run Cash Loan Money Centres, a micro finance business, in Young Street Frankston. We took out a large mortgage in 2006 to purchase our franchise business to enable us to see out the latter years of our working life serving people in our local community. We provide small amount loans of between $200 and $2000 over terms of 3, 6, 9, or 12 months. Our customers are more than satisfied with our affordable repayments and the flexible terms we offer.

In short, at this point they are serving the community. Helen goes on:

We have built wonderful friendships with many of our customers. Everyone that walks through our door is treated with kindness and respect, and consideration is given to all of their circumstances, not just their need for short term finance. We have been able to support many through major crises in their lives. Consumers from all walks of life have unexpected needs that have to be met. Our customers value freedom of choice and the ability to make their own decisions—this gives them dignity and self-respect.

Here I divert from Helen's letter and say to the government: do not for one moment detract from the ability of people who struggle and who are vulnerable to seek out their own 'dignity and respect', to use Helen's words. I continue with Helen's warnings:

Under this new legislation, most lenders like ourselves, will not be able to continue. The legislation is unworkable, confusing, and renders our business totally unviable. With borrowing costs, Credit licensing costs, Private Indemnity Insurance costs, and membership of an external dispute resolution scheme, not to mention wages, rent, and running costs, we cannot make a living under the cap rules in the new legislation. We don't understand why the government bothers to regulate the industry, only to sabotage its existence. This will mean job losses in departments of the regulators, rental premises empty everywhere, small businesses closing, staff losing their jobs, and so on.

Helen then continues:

We go out of our way to ensure a loan is suitable and affordable for a customer. We value them too much not to and its our money we are lending! We need it repaid and we try to encourage our customers with the value of honouring a commitment.

This is the value to which Helen and Jeremy are referring, not just of their own endeavours but of that heightened sense of independence and self-respect which they are attempting to give those who work with them. It is a noble purpose and it is designed in a way to give those who are most vulnerable an opportunity. As a country, we encourage microfinance programs through our aid budget. As a country, it would be folly not to believe that those on the fringes, those who are most vulnerable, should have the same rights as those which we are providing and encouraging for people who are most vulnerable in developing societies. The letter continues:

We stand to lose so much if this legislation is passed. We lose our business, our customers, our staff, and the prospect of finding new jobs as we approach 60 is frightening to say the least. But what upsets us most is the anguish on our customers faces when we tell them we may not be around much longer. We cannot tell them where they will go. Most don't fit the criteria for the Not For Profit loans or the lead time is too long for their immediate need.

We applaud the new regulated industry to weed out any unscrupulous loan sharks. Consumers have the right to be able to obtain finance in a safe, honest, transparent and responsible environment. Unfortunately we fear the consequences if this legislation is passed. Consumers will always need money for the unexpected and the emergence of unlawful operators is almost a certainty. The very law that was meant to protect our customers will in fact do the opposite.

Helen continues:

We feel cheated by Mr Bill Shorten. He has proven not to be a person of integrity. It appears by this whole process that all he is interested in is his own political goals. … he obviously has his own agenda and is extremely arrogant in his pursuit of it. The power that one person wields can potentially be catastrophic for many. It would be nice to think that we all have a savings stash for those unexpected expenses. The reality is that our customers don't and family support is often not an option either.

…   …   …

This government seems hell bent on destroying small business and hurting ordinary Australians. Why wipe us all out when you can simply prosecute or de-licence the few rogue lenders that operate in contravention of the Act.

Having set out Helen and Jeremy's letter, let me say that those comments were made before the government accepted the amendments we have proposed. I hope that those amendments and the government's acceptance of them deal with Helen's concerns. I have, however, deep concerns having witnessed the Home Insulation Program, the Green Loans Program, the Green Start program and the repeated random changes in solar hot water policy and solar PV policy. This is a government which has not understood the human consequences of its decisions time and again.

We are showing good faith to the government, having moved a range of amendments which the government appears set to adopt. But my concern is for Helen and Jeremy and their clients and customers. It is up to the government to ensure that everything of which they have warned does not come to pass, and we will hold this government responsible if these things do come to pass.

Debate adjourned.