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Monday, 19 October 2015
Page: 11518


Mr EWEN JONES (HerbertGovernment Whip) (11:56): I am pretty much in direct concurrence with the member for Werriwa on these things, because I think there is a real issue here. It will be a great day when we all have enough money to pay our bills and buy the things we need for our families. But, until that day comes, there is a need for people to be able to access credit under sensible guidelines. I think we may be coming at these things from an ideologically different perspective, but we all want the same things. We want people to be able to move in this space with clear guidelines, understanding what is going to happen.

In the hands of the right people at the right time these facilities are an absolute lifesaver. Credit is a fantastic thing if you use it correctly. When I was a child, there was only a certain type of person who would avail themselves of hire-purchase. Your parents would look down the end of their noses at people who would turn up and take things on terms. You paid cash for things. The advent of Bankcard in 1974 changed all that—the way we access our funds, the way we move our funds and the way we do these things. That means that consumer credit is now part of our lives. When the member for Werriwa and I were kids, the saying, 'Look after your pennies and the pounds will take care of themselves,' was a creed by which everyone lived. Now we find that people tend to save by paying something off. They will borrow and then they will pay something off.

I spent 10 years collecting debt on consumer credit on Bankcard, MasterCard and those sorts of things for one of the major banks. This was from 1981 to 1990. It was painfully obvious to me that people did not understand what they were getting into. We still lack that basic education. We see the way we run our housing market. For people in Sydney, there is a rising housing market. If you have a housing market that is on fire, everyone jumps in and wants to buy. We do not do that with shares. We do not do it with anything else. We just do it with housing. So it comes down to that basic education.

The key to everything here is that if there was no market for a product there would be no product. For some people this is a vital way of doing things. Like the member for Werriwa said, this has been around for a while. In the previous parliament, in the six years of the Labor government, there were always politics at play. That is what the situation is here. But Centrepay and those consumer leases have been around since 1998. Where you have a system with a set of rules that are open to interpretation it is open to abuse.

Having been in consumer finance where you sell finance for motor cars and things like that, I know there is a certain type of person out there who is not particularly worried about the terms and conditions. They just want the loan to get the car, fridge or whatever it is they need because they are desperate. You will find that their eyes will roll back in their heads and they will just keep on nodding. The saying goes in the sales industry and the finance industry: 'If they are nodding, you are selling.'

But you still have to get it through, and you will find that your big four banks will preclude people because it is not possible for them to qualify for a loan, which opens them up to second-tier and third-tier lenders where access is easy but interest is very high. Used correctly, if you are repaying it over a month, high annual interest is not a big deal, because you are not talking about a substantially large amount of money. The member for Werriwa was incredibly correct when he talked about the establishment of loans and what happens when the people start to consolidate loans and roll them into other loans. You find that one loan may have been going for six months, and you have paid the interest and you are just rolling the principal over to start again. Those are the issues we have to deal with.

There is a sensible solution here. What we have to do in this space is understand that not all credit is bad, that not all operators are bad, that not all interest rates are bad. There is lending for risk, and if you are in there you have to make sure that you are available for that. But if we spend a little bit more time explaining to kids when they get to school and in their final six weeks of high school in year 12 what responsible service of alcohol is, what responsible lending, what a credit card can actually do to you, what consumer credit can do to you and how it can affect your life forever, you would not find nearly as many people getting into trouble with being bankrupted or having defaults against them for telephone bills and all that sort of thing. Consumer credit is a massive part of our lives, and there is a massive amount of work that we have to do.

Debate adjourned.