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Thursday, 25 February 2010
Page: 1196

Senator JOYCE (Leader of the Nationals in the Senate) (12:45 PM) —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.