Federation Chamber

Dr HAINES (Indi) (17:42): I’d like to thank the member for Mayo for moving this motion. Her leadership on consumer protection and against predatory lending should serve as the standard in this place.

We all know that feeling of wanting to buy something you can’t afford and the heartsick longing as you rapidly calculate what you could sacrifice to get it and then, if reason wins over passion, walking away or closing the tab. It’s this feeling that buy-now pay-later products circumvent. By paying for items over intervals, buy-now pay-later is seen to make purchases more affordable and manageable, with no upfront costs, interest or complicated paperwork. Its popularity has exploded in recent years, with companies such as Afterpay and Zip reporting astronomical growth. That was before the pandemic shuttered bricks and mortar retail and online shopping became a national pastime, including in regional Australia, where it has grown by 46 per cent year on year.

Buy-now pay-later may seem like a low-risk option for purchases under a couple of thousand dollars, but ASIC’s report on the sector last month illustrates the full cost of this easy access to credit. ASIC reported that one in five buy-now pay-later users had missed a payment in the last 12 months, incurring late payment fees of up to 25 per cent of the purchase price. It’s not just the immediate hip-pocket pain; late repayments can affect credit scores, jeopardising subsequent loan applications for cars or mortgages. More shocking is the fact that one in five buy-now pay-later users are cutting back on or going without essentials to meet their repayment obligations. It is simply devastating to think that people are skipping meals, not buying grocery or missing their mortgage repayments to pay off a buy-now pay-later loan.

Unlike other forms of credit, there are no responsible lending obligations on buy-now pay-later providers. They don’t have to do due diligence on a consumer’s financial situation or assess if the arrangement is suitable. For a credit offering with such monumental consequences this is unacceptable. The industry is developing a self-regulating code under the oversight of ASIC. The same responsible lending standards should be applied to all consumers, no matter where they get their credit.

Responsible lending laws are also under threat. The government has flagged its intention to wind back or completely remove these protections. I’ve received dozens of emails from constituents alarmed at this prospect and from professionals who’ve seen lives destroyed by unaffordable loans. Sandra Blake, a financial counsellor with 10 years local experience, currently assists small businesses with bushfire recovery financials, and she says the current laws deter lenders from offering unaffordable loans. She is concerned: ‘that government is planning to remove these protections in the middle of a recession when it is more likely than ever that people will be more vulnerable to being taken advantage of by lenders’. Karyn O’Brien is a rural social worker and adult educator who works each day with vulnerable people. She says: ‘Any relaxing of protections will seriously harm the most at-risk members of our local community and increase bankruptcy, homelessness and stress around their finances’. And, in a joint letter, the Hume Riverina Community Legal Service and Upper Murray Family Care say: ‘These laws currently prevent lenders from selling unaffordable loans and saddling people with debt they will never be able to pay off. The last thing we need is for banks and lenders to sell people bad debts’.

As the Independent federal member for Indi, I put the interests of my constituents first, not those of big banks or credit providers. That’s why I cannot support these changes in their current form. They contradict the first recommendations of the banking royal commission. They will be introduced at the same time that JobKeeper ceases and JobSeeker will be cut. Over 7,300 of my constituents receive JobSeeker, and 6,016 Indi businesses have applied for JobKeeper. This will be a time of great financial uncertainty for these jobseekers and employees who rely on these payments.

There are other ways we can support consumers to invest in the economy, such as keeping JobSeeker at the current rate. I’m yet to see a compelling reason for the reform. If access to credit is holding our recovery back, there are other policy levers we can pull that don’t put the onus back on vulnerable consumers and risk hurting families. I will not support any legislation that would leave vulnerable people in my community saddled with bad debt. I urge the government to reconsider its reforms and commit to a fair and responsible credit environment for everyone.

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