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Tuesday, 2 February 2016
Page: 104

Mr BOWEN (McMahon) (18:38): The Competition and Consumer Amendment (Payment Surcharges) Bill 2015 will be supported by the opposition. It is an important bill. It arises out of a recommendation of the Financial System Inquiry, commonly known as the Murray report, which recommended this action that surcharging in relation to credit cards be closely regulated and that, in effect, over-surcharging not be allowed. This is an important matter, because, frankly, consumers are being ripped off as we speak. It is interesting that of all the issues which were given attention during the Murray inquiry process none received anywhere near as many submissions from the public as this particular matter. It is quite understandable that that is the case, because consumers have every right to be angry when they are ripped off in this fashion.

It is right and appropriate that retailers be able to pass on the costs of using a credit card for their transactions—they add up. It is a substantial cost and, I think it is fair to say, nobody reasonable in the debate objects to retailers being able to pass on reasonable costs; that is appropriate and it is protected under this bill. What is not appropriate is excessive surcharging. In many cases, people have very little choice as to how they pay, but the costs are more than passed on and retailers make a profit out of what is meant to be a user charge.

When surcharging was first allowed for the cost of credit card transactions, it was envisaged by the Reserve Bank of Australia, which allowed this to occur, that it would be to recoup reasonable costs. As we speak today, the Reserve Bank estimates that it would cost a merchant an average of 0.82 per cent per transaction to accept the normal, most utilised cards—MasterCard and Visa. Of course, 0.82 per cent is a low figure compared to what people are charged in the vast majority of instances; charges of two per cent, three per cent or more are quite common.

This legislation is appropriate and will be supported by the opposition strongly. In fact, I indicated support for this, on behalf of the Labor Party, when the Murray report was first released in 2014. Here we are, in 2016, and we are only now legislating. If anything, it is perplexing that it has taken so long to reach this point, because the Labor Party would have supported this legislation, facilitated its passage, much earlier than we are doing so today. The government responded formally to the Murray review last year. I am relieved to say that this legislation and explanatory memorandum make much more sense than the Treasurer's explanation of it at the time.

The Treasurer has had some very ordinary interviews in his so far brief tenure as Treasurer, but this one was particularly special: he was asked on the Todayshow how this legislation would work. Karl Stefanovic asked him about a surcharge for a well-known airline which might be able to charge you when taking credit card payments. The Treasurer responded, not very confidently:

Well, let's say it is 0.5 per cent for argument sake, as best as I can predict, 0.55 per cent is what they could charge …

I am not sure where the 0.05 came from, as an appropriate or reasonable charge to pass on. This went on. The Treasurer then said:

It might be 0.01 per cent … let's say it is 0.5 per cent which is the average of what merchants get charged, those merchants won't be able to pass on any more than that 0.5 per cent, right, they can't charge 7, they can't charge 2, they can't charge 1, they can only charge what it is costing them to actually provide that service.

Even Karl Stefanovic said:

You seem a bit vague but it may just be because it is early days.

The Treasurer said, with his normal arrogance:

No, I'm not vague at all. It is absolute.

Well, he was very vague. It is quite clear he had no idea what he was talking about. He had no idea how this legislation would work. He had absolutely no idea of the detail. But I have looked at the legislation and the explanatory memorandum, and it is much clearer. Clearly the government's legislative drafters have gone to work; this is a good piece of legislation.

This bill is important, not only as a matter of fairness, but because electronic payments are, of course, more and more a part of our economy and they are, by and large, efficient. There is no reason to discourage them; in fact, they can be and should be encouraged. Allowing the use of electronic payments through credit cards without excessive surcharging is good policy, as well as being fair. It is appropriate that the ACCC be established as the body responsible for enforcing the legislation. The ACCC has experience and expertise in this field, and we would certainly endorse the mandating of the ACCC to ensure that this law is implemented as effective.

The legislation will clarify the regulation and enhance competitive neutrality between systems providers. At the moment, there is a process of blending—charging one surcharge regardless of the credit card used, although some credit cards have considerably more costs—which has caused some angst to some credit card providers, for understandable reasons. For example, American Express is generally much more expensive for a merchant. That is a matter of choice. I disclose that I have an American Express card. I use it; that is something which I have chosen to do. If there is a higher charge to use an American Express card, customers of Visa and MasterCard—I also have a Visa card—should not be penalised for doing so. It should be the case that the blending process is, in effect, unfair and is, in effect, a surcharge. Of course, the charge which dominates is the higher charge. For example, a charge for American Express would dominate the blending process and people using Visa or MasterCard would be charged more than they otherwise should be.

It will of course also improve the efficiency and effectiveness of price signals—that is, it would encourage credit card providers to even more increase efficiency and drive down their processing costs. It will make their product more attractive to consumers if consumers know that they are only going to be charged for the cost, and the cost to the credit card becomes more relevant. At the moment it is frankly irrelevant because the consumer is going to be charged more than that in any event. It has the potential to reduce cross-subsidisation, as I said, between customer groups and merchant groups through that blending process.

The bill amends the act not only to include a ban on surcharging but also to allow the ACCC to take actions against corporations that are involved in excessive surcharging. As I said, that is something the opposition supports. The surcharge will be excessive if that surcharge exceeds the level for surcharging permitted under the Reserve Bank standard, which covers the kind of payment and sets out the regulations. The Reserve Bank has considerable expertise that it has built up since having responsibility for payment systems through the Payments System Board and it is appropriate that the Reserve Bank has that authority under this bill.

I trust that some sensible definitions of what is to be considered excessive will be created as part of the process in this bill. I support the bill on the basis that those definitions will not inhibit competition between retailers on surcharge levies, because that again is something which would provide competition to encourage not only credit card providers but also retailers to make sure that their offering is as sharp as possible and that only the relevant charges are being passed on, and consumers, at the end of the day, will benefit. This is a proconsumer piece of legislation, it is a procompetition piece of legislation and it is a sensible piece of legislation. The Labor Party will facilitate its passage through this House and the other House so that it becomes the rule of the land as quickly as possible. I am disappointed it has taken this long to get it to this point. It is something which could have been dealt with very easily last year. Obviously, the government had other things on its agenda, but, nevertheless, now that it is before the House we will facilitate its passage with our support.