National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020 - Second Reading

I thank the member for Burt for his insightful contribution. I am pleased to have the opportunity to put on record my concerns about this bill, the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020. This bill makes several changes to existing consumer credit legislation, but the headline here is the amendments remove responsible lending obligations for most consumer credit contracts and potentially expose consumers to significant harm. This is in direct contradiction of the first recommendation of the banking royal commission. It really takes something for a government to go to the expense—very reluctantly, I must say—of actually setting up a royal commission, promising to implement the recommendations and then, at the first opportunity, seeking to unwind the very first recommendation of that royal commission. This essentially represents a massive gift to the big banks from the government, who cannot be trusted. They show us time and again that they cannot be trusted when it comes to financial sector regulation.

Labor are referring this bill to a Senate inquiry once it goes through the House and will settle a final position on the bill following that inquiry, but our overwhelming disposition, from the tenor of the debate on this side of the House, is to stand with Australian consumers in opposing this bill as it stands. It really says something that we've had Labor member after Labor member standing up to speak on this bill in this place on behalf of consumers, on behalf of Australians, and the government members are nowhere to be seen. They're so eager to support this legislation that they're nowhere to be seen.

Anglicare Tasmania in its submission to the Senate inquiry into the bill stated:

… there should be no weakening of current consumer protections and the Parliament should vote against this Bill in its entirety.

Anglicare has the largest team of financial counsellors in Tasmania. They support people to avoid and manage debt, they negotiate with creditors and they understand their legal rights and responsibilities. This is an organisation that knows what it's talking about. It has people in the field every single day dealing with vulnerable Tasmanians who are in debt up to their neck, and they are saying: 'Don't do this. It will hurt people.' Anglicare Tasmania works every day with people who will be most impacted by this legislation, and they should be listened to. It has warned that passing this bill will result in more Australians being pressured into loans that they are unable to repay.

I understand, like many on this side of the House. We come from fairly modest upbringings. My parents would take short-term loans—enter rental agreements for a new fridge or whatever—and then they'd have to try and pay them off. It always costs more in the long run, but they were so desperate to get the appliance that they went into these loans. I understand the appeal of these things, especially when salespeople are out there saying: 'Do this. You can have a new appliance—a new fridge, a new TV, a new whatever. Give your family what they deserve.' It's a very seductive proposition. When you're hoping for a better life and somebody's there saying: 'It's there, right in front of you. It's just a few short dollars a week,' it's very easy to grab onto it. A drowning man will grab onto anything, and he'll bring the next person down as well. It's our job as legislators in this place to ensure that we put protections in law to ensure that vulnerable people don't get into those positions.

This legislation will remove many of the tools that financial counsellors use to assist people affected by inappropriate lending conduct. The Tasmanian Council of Social Service, TasCOSS, also strongly opposes this bill. TasCOSS is the peak body for the community services sector in Tasmania. It advocates on behalf of Tasmanians on low incomes, especially those who experience vulnerability and disadvantage. TasCOSS argue that weakening consumers will lead to greater financial hardship that will hamper rather than support Australia's economic recovery. I know the argument on the government benches is that this will see investment flow into business. That's what they're saying this will do. Well, it won't. It will exacerbate vulnerable people and vulnerable businesses getting into more debt than they currently have.

The CEO of consumer rights group CHOICE, Alan Kirkland, has raised similar concerns to those of TasCOSS, saying that the timing of these changes is way off. He says:

Australia already has the second highest level of personal household debt in the world. Loading people up with even more debt will make it even more challenging for households already doing it tough.

It so happens that the member for Bruce on this side of the House has prepared a report. He's used his, I think, Christmas holidays to write this very detailed report. He's done a lot of research. It's all proper research. It's not a political document in terms of rhetoric. I'll briefly go through some bullet points. One is that household debt as a share of GDP in Australia is 119.4 per cent; we have the second-highest rate of 43 countries studied by the Bank for International Settlements. Another is that 37 per cent of Australians, more than one in three, admit to struggling to pay off personal debt, and this government wants to make it even easier to get into debt. Finally, as of 2016, Australians owed $2 trillion in private debt. I quote Richard Yetsenga, the ANZ chief economist:

… this pandemic has dialled up the risk profile of the economy because the most indebted sector — households — no longer have the buffer provided by future interest rate cuts."

That's where we are at the moment.

We are already massively in debt, at both the private and the public level, and this government wants to make it even easier for vulnerable people to get into debt. This has the potential to cause real harm, and not in an abstract sense. I'm talking about real people in real homes, in our neighbourhoods and in our communities, who will be harmed by this. It will affect children. It will affect pensioners. It will affect people who are least able to look after themselves.

As the member for Whitlam pointed out in his contribution to this debate, almost every Australian either is now or has been a bank customer. When things go wrong in that relationship, the effects can be devastating and life-changing for the customer. And it's never the banks that suffer. They have the power in the relationship. They always have the power in the relationship. The ordinary customer must rely on the law to protect them, and this legislation rolls those protections right back.

This is what I don't understand. We know what happens when consumers are not properly protected when dealing with the financial services industry. We know because we've just had a royal commission to tell us. We've just had witness after witness—more than 10,000 submissions to the Hayne royal commission—tell us about the costs to consumers, about what happens when the industry gets it wrong. That's 10,000 ordinary Australians who put their trust in a bank or a financial services institution and came out poorer for it at the other end.

Many years ago, when I was a journalist, we dealt with a gentleman who had buildings. He was a small developer. He was servicing his loans. His business was going well. The bank that he did business with was sold to a big bank. The big bank did a profile and decided: 'We don't want to do loans to small development businesses anymore. Call in those loans.' So they called in his loans. He was surprised; he'd been meeting all his obligations with no trouble at all. He said: 'Okay. Fair enough. Things happen.' He said, 'I'll need to sell one of those properties in order to release the capital so I can pay the loan.' They said: 'No, you can't do that. We put caveats over your properties. You can't sell them.' So he had no access to the properties in order to be able to sell them to meet the loans that had been called in. In the end, the bank sold those properties under him for an absolute song. He was massively into debt and, of course, went bankrupt. He was a successful businessman; he had done nothing wrong. And just because of the conduct of a bank, he went bankrupt like that.

That's one of the sorts of stories—one of 10,000 stories—that went to the Hayne royal commission, and this government seems to have learnt nothing from that. It's the first recommendation from the royal commissioner. The banking, superannuation and financial services royal commission identified the need for stronger, not weaker, rules and oversight of financial services. It's hardly surprising, because we know just how little weight this government really gave to the banking royal commission. It was absolutely dragged into that royal commission. They voted against it 26 times. There were votes in this place 26 times about setting up a banking royal commission, which Labor had called for consistently. On that side, the government side, they voted against it 26 times. They absolutely did not want a banking royal commission until they were dragged into it, until they just could not get out of it anymore. They've been reluctant about it ever since. They said it was 'a waste of time'.

And now they're walking back from Commissioner Hayne's first recommendation: to leave responsible lending obligations alone. It took bravery and courage for victims of bank misconduct to come forward to the royal commission. They did so because they wanted to protect their fellow Australians from experiencing what they went through. It was too late for them. They've lost their homes; they've lost their businesses. They've been through it all, but they presented evidence to the royal commission to help other people. What a slap in the face for the government to say to those brave Australians who fronted that royal commission, 'We're going to ignore the very first recommendation from that royal commission.'

Barely one-third of the 76 recommendations of the royal commission have been fully implemented two years after the government received the report. What an absolute crawl! They've failed to introduce the compensation scheme, which would provide relief to the victims of financial crime. When it comes to rorts and rip-offs in the banking system, this government has never been on the side of ordinary Australians. Those opposite were dragged kicking and screaming to the royal commission. They've done hardly anything over the two years since to really implement its recommendations, and they're ripping away the very first recommendation in this legislation. They've never cared about looking after Australians. They've never cared about really tackling bank misconduct. They believe that if you let the banks do what they want it's good for business. It doesn't matter if there's human collateral damage down the road. It doesn't matter if people lose their homes and businesses. That's just collateral damage. That's just the cost of doing business. The human wreckage that is left behind from this sort of legislation is just the cost of doing business.

After years of inaction, this government is using the pandemic as an excuse for everything. Those opposite have used it as an excuse to cut Australians' pay and to cut superannuation and now are using it as an excuse to undermine protections in the banking sector. In the current environment of high levels of unemployment, reduced income and the winding back of COVID-19 support measures, which come to an end on 31 March, introducing weaker consumer protections will result in more Australians being saddled with harmful debt or experiencing significant financial hardship. It will not support our economic recovery.

Supporting families, supporting small businesses and supporting workers should be the highest priority for this government, particularly at a time of greater community vulnerability due to the impacts of the pandemic and the winding back of the support measures. Instead, this government is leaving hardworking Australians exposed and vulnerable. Imagine what it's going to be like when JobKeeper comes to an end at the end of this month and people who are currently getting a certain level of income drop back to a JobSeeker rate. They'll still have bills to manage and repayments to make. Imagine, in those circumstances, being told by some spiv on the high street: 'You can get an easy loan. We'll wind back the protections.' In your heart of hearts, you'd think, 'Yes, I'll pay that back.' You'd be so desperate to do it. At the end of this month we're going to have a lot of people in this country suddenly bringing a lot less income into their households, at the same time as this government wants to bring in legislation which makes it easier for them to access credit which could harm them significantly. It's a recipe for disaster.

Unaffordable debt has a detrimental effect on physical and mental health, family wellbeing and the ability to pay for essentials such as groceries and electricity. People struggling with debt have been found to suffer from depression and suicidal ideation more often than those without financial problems. This legislation threatens to make harm worse and make Australians worse off, not better. I certainly do not commend this bill to the House.