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Monday, 22 September 2008
Page: 8208

Ms PARKE (8:26 PM) —The Rudd Labor government is committed to taking the pressure off family budgets and tackling the problem of spiralling consumer debt with long-term, considered policy. The action proposed by the member for Maranoa to deal with the potential danger of unsolicited credit is in itself neither a solution to the debt burden and other financial problems that many families are already trying to cope with nor a complete protection against the accumulation of further unwise debt. In fact, in the current circumstances one might observe that there is likely to be considerably less appetite for personal credit and less capacity to extend such credit as a result of the present global financial turmoil. Indeed, considering the fact that it was under the Howard government that personal debt exploded to its existing levels, one might say that that particular ship has sailed.

I would also note that consumer credit law is currently a responsibility of the state and territory governments. Nevertheless, through the Council of Australian Governments, COAG, the Rudd government has taken the initiative of developing a system of national regulation of consumer credit, to be administered by the Commonwealth. When this occurs, the Commonwealth will be in a position to better monitor the operative framework of consumer protections. Cooperative national regulation of consumer credit, led by the Commonwealth, will provide a consistent regime that addresses the gaps and conflicts that currently exist. The new scheme will introduce licensing, conduct, advice and disclosure requirements that meet the needs of consumers and businesses alike and that will ensure that consumers are better protected in their dealings with credit products and credit providers, including brokers and advisers.

We need to address the reasons that people turn to credit they cannot afford and accept credit they have not sought. Common sense tells us that the two main reasons for this are, first and foremost, that people are overwhelmed by financial pressures and, second, a lack of appreciation of the risks and costs involved in taking on debt, especially credit card debt. In those terms, constraining the ability of credit providers to offer increased credit limits may in the end be less effective than increasing the financial literacy of Australians. There are some great programs and information services available to the public. One task of government is to ensure that the financial planning information that is available reaches those who need it through effective financial education, in formal schooling, through government service providers such as Centrelink and through adequate support to non-government service providers such as community legal centres.

In my electorate I know that the Fremantle Community Legal Centre receives a steady stream of people who use its financial counselling service. From my time as the solicitor in charge of the Bunbury Community Legal Centre I have seen firsthand the desperate financial situations that people can find themselves in and the value therefore of proper financial counselling. I look forward to the report of the COAG Business Regulation and Competition Working Group which is due next month and looks at the regulation and provision of financial counselling.

I say in conclusion that the action proposed in the motion before us today is presently a matter for state and territory governments, with their jurisdiction over consumer credit laws. Nevertheless, it is true that, through COAG and through a range of other measures, this government is committed to tackling the full scope of the reforms needed to protect consumers and to make our financial system more transparent and safely regulated in the interests of Australian families. The issue of unsolicited credit offerings will be considered as part of this process.

The DEPUTY SPEAKER (Mr AJ Schultz)—Order! The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.