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Monday, 9 November 2020
Page: 5542

Senator McALLISTER (New South Wales) (10:06): Many families are doing it tough. Many families struggle to bridge the gap between their income and their basic needs. This has been true for too long and, in the recession that we are, unfortunately, experiencing, it is likely to be exacerbated. It should not be beyond us to ensure that, when these families reach out for credit, that credit is affordable and offered on just terms. Yet, too often, families who are most in need find themselves in the hands of lenders whose products are neither affordable nor fair. The consequences for those families and those individuals are far reaching. They are seen daily by the financial counsellors who struggle to attend to the spiral of debt and the problems that rack up for those families.

The bill before us, the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2019 (No. 2), responds to a gross failure by this government to respond to the needs of those individuals and those households. It's a bill that I am pleased to sponsor with Senator Griff. It replicates the exposure draft legislation introduced back in 2017 by the government itself. One wonders what has been happening since 2017. But the story is even worse than that because that exposure draft legislation responded to a review the government commissioned in 2015. It has been five years—five years during which the exploitation of people who entered into small amount credit contracts and consumer leases has been left unattended and ignored by a government that simply refuses to see the consequences for people who need its help most.

When that legislation was introduced in 2017, stakeholders and the broader community engaged in good faith; they perhaps expected that the government would listen to their responses, make some amendments, fine-tune the legislation and get on with it. But for three years there has been an absolutely deafening silence on this question. Instead of implementing the measures foreshadowed in the exposure draft back in 2017, the government has failed to act. In this same period of time, hundreds of thousands of people have been exposed to financial products without adequate protection from harm. That is why Senator Griff and I have introduced the government's own legislation—and that is the bill that is before us today.

In the past few weeks, there's been another announcement. The government has flagged further changes to consumer credit laws. We have little detail, and I'll return to that later in my remarks. But I make this point: based on the government's performance to date, we have very little reason to trust that it will bring forward the necessary changes to protect vulnerable people. Reform is urgent. The current arrangements are simply unconscionable. Payday lenders can charge equivalent rates of more than 200 per cent per annum. There is no capital on the costs that can be charged by consumer lease providers, and lenders continue to sign up people to loans and leases with unaffordable repayments, which can cause people to wind up in a spiral of debt. Struggling families are left entrenched in debt and poverty.

This bill directly responds to those challenges, and it's supported by advocates who work on a daily basis with victims of the current arrangements. It includes caps on the total payments that can be made under a consumer release. It includes better regulation of repayment and payment intervals. It removes fees for loans that have been fully paid. It prohibits door-to-door selling. It includes anti-avoidance protections and stronger penalties for wrongdoing in a sector where noncompliance with the existing arrangements is rife. The committee report for this bill speaks to the support from stakeholders for this legislation, and the Senate now has the opportunity to take the lead to do what the government should have done years ago. The parliament can act when the government will not.

There are many compelling reasons for the passage of this legislation, but I want to speak today about an issue of particular relevance for my role as shadow assistant minister for communities and the prevention of family violence. Financial counsellors tell us that women fleeing family violence are frequently turning to risky financial products at a time of great vulnerability. In addition, where perpetrators are perpetrating financial abuse, these products can be turned into a tool of abuse themselves. This bill includes reforms that explicitly identify family violence as a reasonable cause of financial hardship, for the purposes of the hardship provisions under the National Credit Code.

The need is acute. The Stop the Debt Trap Alliance is a national coalition of over 20 consumer advocacy organisations from around Australia, including financial experts, community advocates and service providers. They offer the story of Sarah, a 43-year-old woman who moved to Australia with her child and now ex-husband. Shortly after that, Sarah was forced to flee her family home to escape violence. With only a few dollars in her pocket and nowhere to turn she found herself, effectively, homeless for months couch surfing, staying in refuges and in short-term accommodation. Fortunately, as so many women do, Sarah found full-time work. She was able to start looking for a permanent housing option. However, her financial circumstances were such that Sarah took out six loans, over a five-month period, in order to pay the bond and rent for rental properties, including four small amount credit contracts, SACCs. At the time of taking out the fourth small amount credit contract, Sarah was already behind in repayments on the other three SACCs and two other loans. She also had two buy-now, pay-later debts. While the fourth SACC recorded on the documents that the purpose of the loan was to pay for rental bond and the first month's rent, they didn't include these costs when they were assessing the sustainability of the loan. This is a sector that is ripe for poor practice.

It is time for the government to take the exploitation that is occurring daily in this sector seriously and to take actual steps to protect vulnerable people like Sarah. The protections offered in the legislation before us today will go some way to reducing these risks. Unbelievably, at the end of September, the government, effectively, ditched the position they'd established—the result of the process that had commenced five years ago—and indicated that there are new changes to consumer laws. As is so often the case with the government, there is an announcement, there is a press release and there is very little detail. There is no indication from the government's recent announcement that they intend to deal with most of the matters covered in this bill.

To name just a few examples, this bill requires small amount credit providers to have equal repayments and equal repayment intervals over the life of the loan. It prohibits small amount credit providers from charging or requiring payment from an unexpired permitted monthly fee where the consumer fully repays the loan. It prevents unsolicited invitations. But years after work on this process began, it is unclear whether the government intends to offer these protections in the legislation that it says it will bring forward.

I look forward to the Senate having the opportunity to examine this legislation, should it ever be introduced. But I would say to this chamber that we should not wait. If we want to take action to protect consumers, we have the power to act now. We have a bill before us. It is the result of extensive review and consultation. It is supported by stakeholders, and we could pass it today. With the ongoing economic fallout from the pandemic and the winding back of support measures, it is absolutely critical that the parliament now, finally, implement key reforms to protect people from exploitative lenders who seek to take advantage of their financial vulnerability. The power of these lenders, the payday lenders and the consumer-lease providers, must be curtailed. Passing this bill will reduce the vulnerability of people on low incomes to these harmful financial products and put in place better protections for consumers.

There is substantial evidence in favour of change. The technical arguments for change are logical and they're well substantiated. But the most compelling argument for change is found in the voices of the victims of exploitation, let down by the operation of the law as it currently stands. When it comes to meaningfully responding to the overwhelming evidence presented time and time again through inquiry after inquiry, the government has chosen inaction. This inaction has consequences for vulnerable Australians. There should be no more excuses or delays.

In closing, I'd like to acknowledge that many of my Labor colleagues here and in the House of Representatives have campaigned on this issue for years and years. We take seriously the voices of the victims—the voices of those who've been exploited. We take seriously the negative impacts that unscrupulous lenders have on people in our communities, and we are not giving up. My colleagues and I will continue to fight until there is meaningful reform in this area.