Local, Independant and Effective

Pay Day Lender Motion Debate

Posted August 13, 2018


Cathy has called on the Government to bring forward its legislation to tighten regulations on pay day loans.

Ms McGOWAN (Indi) (12:25): I move:

That this House:

(1) notes that:

(a) the Government last year released draft legislation concerning pay day lending which would have capped the maximum amount a consumer could repay on a small loan of less than $2,000 at 10 per cent of their net income;

(b) the draft legislation also called for pay day lenders to be barred from making continued offers of credit to vulnerable borrowers;

(c) there is no legislation before Parliament despite the Government in late 2016 flagging new laws to protect consumers and releasing draft legislation;

(d) people continue to get into financial difficulty because of high-interest contracts;

(e) the 2016 Review of the Small Amount Credit Contract laws found payday loans were being inappropriately handed to low-income and vulnerable Australians—the high-interest, high-fee cash advances continue to trap people in cycles of debt; and

(f) Good Shepherd, St Stephens and other consumer advocates are concerned about the impact of the delay in presenting this legislation to the Parliament; and

(2) calls on the Government to bring the draft legislation before the Parliament as soon as possible in order to give consumer advocates an assurance that legislative change will be considered to address the increasing number of vulnerable borrowers impacted by these lending practices.

In moving this motion, I give notice that in the current sitting period I will bring forward a series of measures to address the emerging cracks and compounding impact of failures in the social service legislation. For many of my constituents, an increasing reliance on social services puts those already in a vulnerable position in a more vulnerable position, makes them more marginalised and, ultimately, makes them less valued members of our society. Ideally, social service payments should act as a safety net, providing enough resources for movement off welfare and out of the welfare system. But in many cases it is doing exactly the opposite. Low payment levels leave little room to move out of the welfare system, and an increasing reliance limits the ability to break through.

I raise these issues because I know that these are the issues that are important in my electorate. Colleagues, for every year I have been in parliament I have asked my community for feedback post-budget—for advice and for solutions. This budget impact survey is one of the ways I investigate, measure and report back to parliament. In this year's budget impact survey, social security was identified in the top of Indi's five concerns: 24 per cent of respondents raised social services as one of the top three issues and 80 per cent of respondents ranked social services as either very important or fairly important. Comments included: 'It's not adequate for the needs of many who are in the lower income brackets'; 'We are treated as numbers with little bits of money attached to us'; 'We are attended by a different Centrelink employee every single time, so it's often the case they don't understand our unique situation—nor do they care'; 'Centrelink forms could be made much more accessible for us doddering old people to alleviate some of the anxiety involved in getting the thing right'; and 'We have a moral obligation, if we have a social conscience, to ensure we assist those who do not have the same advantages as others.'

Next Monday I will table in parliament the social security commission bill 2018. The objective of this bill is to establish a social security commission to provide the parliament with independent and considered advice on a fair and reasonable social safety net for those who are dependent—in whole or in part—on social security payments. This commission will ensure an acceptable standard of living for recipients of social security payments and whether the current level of payment provides adequate support.

However, today I want to talk about payday loans. For those reliant on social service payments to meet everyday living costs, a payday loan is an attractive and quick solution. Loans allow quick access to cash to meet everyday living costs and to pay unexpected bills, but increasingly they are being used to pay other payday loans. A number of constituents have contacted my office about the problems experienced by borrowers of these products and the targeting of the most vulnerable. Today in parliament, I'd like to acknowledge Sandra Blake. Sandra is a financial counsellor. She works with St Stephens UnitingCare in Wodonga and she is chair of the Hume Region's Financial and Consumer Rights Council of Victoria. I acknowledge her work in bringing this motion to the parliament.

My constituents support the government's proposed legislation to address the recommendations in the 2016 review of the small amounts credit contract law, as do many community advocates within my electorate. We know that without this legislation the high-interest, high-fee cash advances continue to trap people in the cycle of debt. My constituents are concerned that payday loans will continue to be inappropriately handed to low-income and vulnerable Australians while the delay in presenting this legislation to parliament continues. A loan of, for example, $120 in October 2017 has resulted in a debt of $1,159 in February 2018. There are many, many more statistics. So I call on the government to bring the draft legislation before the parliament as soon as possible in order to give consumer advocates an assurance that legislative change will be considered to address the increasing number of vulnerable people with loans impacted by these lending practices. I thank my colleagues opposite and members of the opposition for being part of this debate, but let's get this legislation before the parliament, let's get it voted on and let's get the changes we know need to be made.

The DEPUTY SPEAKER ( Ms Vamvakinou ): Is the motion seconded?

Mr Keogh: I second the motion and reserve my right to speak.

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