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Social Security (Administration) Amendment (Protecting Consumers from Predatory Leasing Practices) Bill 2020

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2019-2020

 

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

SENATE

 

 

 

 

 

SOCIAL SECURITY (ADMINISTRATION) AMENDMENT (PROTECTING CONSUMERS FROM PREDATORY LEASING PRACTICES) BILL 2020

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

(Circulated by authority of Senator Jenny McAllister)



 

SOCIAL SECURITY (ADMINISTRATION) AMENDMENT (PROTECTING CONSUMERS FROM PREDATORY LEASING PRACTICES) BILL 2020

 

OUTLINE

 

The purpose of the Social Security (Administration) Amendment (Protecting Consumers from Predatory Leasing Practices) Bill 2020 is to amend the Social Security (Administration) Act 1999 to provide that the department secretary may not make any deductions requested by a person from their social security payments if the deductions relate to goods hired under a consumer lease entered into by the person.

 

The Bill is needed to remove the potential for clients in receipt of social security payments from Services Australia to suffer financial harm as a result of entering into one or more consumer leases for household goods for which Centrepay deductions are available.

 

The main provisions of the Bill remove the power for the department secretary to enable deductions from a person’s social security payments in order to pay for a consumer lease.

 

Centrepay was established in 1998 as a budgeting and financial capability tool to assist Centrelink (now known as Services Australia) clients by paying rent and utility bills through automatic deductions from their welfare payments. More than 600,000 people use Centrepay to pay bills, rent and ongoing expenses.

 

However, Centrepay has been open to access by businesses whose products, particularly consumer leases, disadvantage consumers and have the potential to cause financial harm. The Australian Securities and Investments Commission (ASIC) has found the cost of household goods leased from rent-to-buy businesses can cost nearly nine times the retail price of the same goods.

 

Centrepay was established to enable people to budget and ensure that regular bills and essential living expenses are paid directly from their welfare payment or pension payment. The proliferation of consumer leasing businesses as approved Centrepay service providers is contrary to the policy rationale for Centrepay. It indicates that Centrepay is being used for the benefit of commercial interests, rather than the interests of Services Australia clients making the payments.

 

NOTES ON CLAUSES

 

1. Short Title

This clause is a formal provision and specifies the short title of Bill, once enacted, as the Social Security Legislation Amendment (Protecting Consumers from Predatory Leasing Practices) Act 2020 .

 

2. Commencement

This clause provides for the commencement of the Act. Sections 1 to 3 commence on the day the Act receives the Royal Assent. Schedule 1 commences on the day after it receives the Royal Assent.

 

3. Schedules

This clause states that each Act specified in a Schedule to the Bill is amended or repealed according to the provisions of the Bill.

 

Schedule 1 - Amendments

 

Social Security (Administration) Act 1999

 

Item 1

Section 61A of the Act provides the power to the secretary of the relevant department to pay certain deductions on request by a recipient of social security payments.

 

This item amends subsection 61A(2) of the Act to provide that the secretary may make deductions requested by a person subject to the proscription proposed to be inserted by item 2 of the Bill.

 

Item 2

This item amends section 61A of the Act to add an additional subsection (3) to provide that the secretary may not make deductions requested by the person if the deductions relate to goods hired under a consumer lease entered into by the person, under certain circumstances.

 

Item 3

This item amends subclause 1(1) of Schedule 1 to the Act to provide a definition of consumer lease .

A consumer lease means a contract for the hire of goods by a natural person or strata corporation under which that person or corporation does not have a right or obligation to purchase the goods.

 

Item 4

 

This item provides that despite the amendments made by the Bill, the secretary may still make deductions requested by a person if those deductions relate to goods hired by the person under a consumer lease prior to the commencement of this Bill.

 

This means that no individual who has entered into a consumer lease agreement using Centrepay will be required to terminate that consumer lease as a result of this legislation. The legislation will only prevent consumer lease agreements using Centrepay from being made in the future.

 

 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Social Security (Administration) Amendment (Protecting Consumers from Predatory Leasing Practices) Bill 2020

 

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

Overview of the Bill

 

The purpose of the Social Security (Administration) Amendment (Protecting Consumers from Predatory Leasing Practices) Bill 2020 is to amend the Social Security (Administration) Act 1999 to provide that the relevant department secretary may not make the deductions requested by a person from their social security payments if the deductions relate to goods hired under a consumer lease entered into by the person.

 

The Bill is needed to remove the potential for clients in receipt of social security payments from Services Australia to suffer financial harm as a result of entering into one or more consumer leases for household goods for which Centrepay deductions are available.

 

Human rights implications

 

This Bill does not engage any of the applicable rights or freedoms.

 

Conclusion

 

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

Senator Jenny McAllister