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Wednesday, 1 December 2004
Page: 49


Senator LUNDY (1:17 PM) —It is the first day of December today, and as we head into the Christmas-New Year period I would like to speak as shadow minister for consumer affairs about two major issues: consumer debt and product safety. The Christmas-New Year period is one of particularly high consumer spending, primarily on gifts and holidays. It is important for Australians to be aware of a number of issues and risks that may affect us during this period. Consumer confidence is generally high as we head into the holiday season, with the Reserve Bank of Australia this month revealing that consumer confidence surged to its second highest level in 30 years. Recent fluctuations notwithstanding, it is obviously a period of substantial spending. While this news is great for retailers, many Australian families will soon develop post holiday blues as they continue to struggle under a mountain of debt due to inadequate warnings on credit cards and the traps that come from spending a lot during this period.

Labor has been warning about the growing debt crisis for more than four years but the Treasurer and the Howard government have done little to address, inform and educate Australians about how they can better deal with rising levels of household debt. From a very practical point of view, the Howard government could be doing more to support consumers. With newspapers today carrying stories of record household debt, reporting that the average Australian household is spending 2.3 per cent more than it earns each week, it is clear that accumulating debt has become a way of life for many Australian households.

Today's stories come from the release of the AMP.NATSEM report yesterday: Household debt in Australia—walking the tightrope. The report confirms the new records Australians are setting in accumulating debt. The report found that all forms of debt are on the increase; home loans, other property loans, personal loans, HECS and credit card debt are at record levels. It is worth placing these statistics on the record. In 2002, Australian households owed $422 billion in housing and other loans and on credit cards. This accumulated household debt amounted to just under 60 per cent of the value of Australia's gross domestic product. This means, according to the AMP.NATSEM report, that in 2002 each household in Australia carried a debt of $60,000 which, given an average disposable household income of about $46,000, means that the level of debt represents 1.3 years of income. This implies that many Australians will be burdened with high levels of debt for years to come.

As a nation we are spending more than we earn, which is why it has become so important that as much information as possible about the levels of debt we are incurring reaches Australians. Record levels of combined household debt place increasing pressure on families at this time of the year, when credit cards are often used to purchase Christmas presents or while holidaying, because people are finding it harder to save for the increased expenses incurred during the year.

Credit card debt is increasing at an alarming rate, with Reserve Bank of Australia figures showing this month that Australians owe nearly $28 billion on our credit and charge cards. The figures I am referring to increased by another $157 million in just one month, from August to September this year. The interest bill for Australians in September alone was a whopping $266 million. That is almost $9 million a day. Credit card debt is an issue that affects the majority of Australians, with around 69 per cent of Australian households responsible for either a credit or charge account, with an average household credit and charge card debt in excess of $5,300. This figure has skyrocketed under the Howard government, going from $1,601 in June 1996, just a few months after they took office, to $5,309 in September 2004. It is just not acceptable that the Howard government sit back and watch Australians fall further and further into the debt trap with no inkling of an attempt to curb the credit and charge card crisis. While the Howard government sit dormant on addressing this issue, it is the Australian public who lose out. The Howard government should follow Labor's lead in this area to address credit card debt.

I would like to refer to a series of points that Labor contained in its policy leading up to the last election. They include: firstly, requiring that credit limits be increased only at the request of the cardholder; secondly, prohibiting unsolicited promotional material with preapproved limits; thirdly, requiring financial health warnings to ensure that consumers are made aware of the potential cost of credit card finance; and, fourthly, ensuring that monthly statements contain warnings about how long it would take to repay debt if only minimum payments were made and the amount of interest that would be paid. Those are four commonsense points that certainly some jurisdictions in Australia have already acted upon. But there has been a singular lack of leadership from the Howard government to address those issues and provide a bit of practical support.

Before I move on to product safety I also want to make a general comment about rising household debt. The last time household debt was so high was in the early nineties, and the reason for that increase pointed to high interest rates. At that time, the possibility of that matter being resolved was linked to the decrease in interest rates that followed. That puts it in sharp perspective now, when we are experiencing record household debt at a time when interest rates are low. If they are low and we have this immense amount of household debt, it highlights consumers' vulnerability to interest rate rises right across the nation. If you have that exposure of household debt when interest rates are so low, the risk to households and families of interest rates rising is potentially disastrous. We all know this is the sentiment that the Howard government tried to tap into during the election campaign. But it is the vulnerability that consumers have been placed in as a result of that debt that the government must take responsibility for and not try to mislead or trick Australian people into believing that they are better off having this high household debt while interest rates are so low. It is a very daunting situation for anyone who has a big mortgage and debts to face.

I would now like to turn to product safety. This issue, again around Christmas time, is particularly important. People have a right to know when they are purchasing gifts for family and friends that their gifts are safe and reliable. The state governments are in effect the front line of consumer affairs. I wish to take this opportunity to acknowledge the excellent efforts undertaken by the states and territories in leading the way in advocating the rights of consumers and ensuring that appropriate regulations and laws are in place to protect these rights. Secondary to the states are the four federal agencies dealing with aspects of consumer affairs. Despite this secondary role, there is an increasing necessity for the Commonwealth to play a collaborative role and provide leadership. They have a responsibility to bring about greater harmonisation between the states and territories and their respective laws, particularly on the issue of product safety.

It is very easy for consumers to become confused when attempting to check on a product or report a faulty product when they have to grapple with the concept of separate agencies in their states and in the federal jurisdiction. Product safety information can become even more confusing for consumers, particularly at Christmas time when everyone's life is in a bit of a flurry and they are trying to purchase many toys and gifts for their children or for other children. The states and territories have had little choice but to act independently in the banning of toy products deemed unsafe. For example, the Victorian state government conducted a blitz on dangerous and banned toys late last week in the lead-up to Christmas.

The Victorian government are communicating to Victorian consumers the products to be wary of. To their credit they have been involved in a concerted effort for all the states and territories to work more closely together. That raises the important question: why is the Howard government leaving it up to individual state and territory governments to source and research these products to determine whether they meet safety standards? Surely the government has a role to play. The complete lack of federal leadership shown in relation to developing national uniform product safety legislation or guidelines is, unfortunately, typical of this government on issues of consumer affairs. It is just not good enough and it is not unacceptable when there is a constructive role it could play. I know that the states would welcome the constructive involvement of the federal government were it forthcoming.

But the fact is that the Howard-Costello government have paid little regard to the Ministerial Council on Consumer Affairs, which represents state and federal ministers. They have had little input and taken little from the discussions of this group to develop improved consumer affairs policy. It is hoped that Mr Chris Pearce, the member for Aston and Parliamentary Secretary to the Treasurer, who I understand is now the chair of the ministerial council, will show a little more leadership from the federal government.

Australians need a consumer advice service which deals with product safety nationally and which is available for all Australians, and it should be led by the federal government. It is not acceptable to wait until a state gets sick and tired of doubling up and other inefficiencies and instigates its own interstate agreements. I commend the states on the efforts they have made in trying to cooperate. It is not good enough for the federal government to sit back and do nothing. They should be taking a lead in this area and supporting the good work of the states to date. The Ministerial Council on Consumer Affairs, in their `Review of the Australian consumer product safety system' discussion paper released in August this year, stated:

The involvement of multiple jurisdictions in regulating the safety of consumer products results in duplication of effort which places pressure on Government resources. This is because similar regulatory tasks, such as issuing mandatory standards or bans, are often conducted by each jurisdiction in respect of the same product.

They further stated:

There is a need for a system that ensures the clear, comprehensive treatment of products in a way which draws upon the expertise and resources of businesses and is supported by more efficient use of the resources available to government.

That says it how it is. The doubling up affects not only the consumer as the report states; the development of product safety legislation over time in each jurisdiction has created some obstacles and additional costs for businesses that wish to sell their products to consumers throughout Australia. So there is an issue of red tape caused by having the same product sold in a range of jurisdictions. Surely, if nothing else, that would motivate this government to act.

The government needs to heed this report and to recognise the problems in its product safety system. The Labor opposition will be on the back of the government to ensure it follows through in addressing the issues raised in the paper and that it implements the changes to the Australian product safety system. Whether it is a council report or the federal government's own report, time and again we see that the report is released only after years of completely ignoring the issues. The report is then placed on the shelf in the minister's office somewhere and nothing is done about it. We want to see a change from the Howard government. Labor want to see some activity, not a government that sits back and observes the ridiculous doubling up and inefficiencies it is inflicting upon our state and territory governments in the consumer regulatory systems. It is incumbent upon this government to show the sort of leadership expected from a federal government acting on its own report.

During the election Labor committed to providing improved consolidated information and research regarding product safety through the office of consumer affairs, and Labor will continue to keep this government accountable for fixing their system. This particular issue, as I said, has been around for a long time. I have not tried to detail all of the products here, but I do urge people who are listening to note that consumer affairs and product safety are critical issues. People do not want to be put in the appalling situation of either giving a gift or purchasing something they need only to find that there is an unacceptable risk associated with that product. The circumstances around that sort of situation could be tragic. It is obviously a place where government can step forward, work with the state and territory jurisdictions and move very quickly to show federal leadership and get unsafe products out of the marketplace.

Finally, I would like to go back to the issue of household debt. This issue is not going to go away. It is in the context of poor economic management overall. I think that, over time, many Australians will come to see just how vulnerable a position the Howard government has allowed them to find themselves in with its handling of rising household debt.