McKim National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms)

Senator Nicholas McKIM
Senate Speech 9 Nov 2020 (Tasmania—Deputy Leader of the Australian Greens in the Senate) (10:39): The National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2019 (No. 2) effectively copies, word for word, the government's 2017 draft bill to better regulate payday lending. Of course, we do need to better regulate payday lending in order to protect people from rapacious lenders and, on that basis, the Australian Greens will be supporting this legislation.

Unfortunately, after releasing a draft bill in 2017, the government walked away from any reform of payday lending, until it decided to include a new set of reforms for payday lenders in its recently announced package. Again, unfortunately, the government's recently announced package basically blows up the entire system of consumer credit protection in this country so that the banks can continue to profit at the expense of the lives of so many Australians and their families.

We need to be clear about what the government is doing here. The government is walking away from the primary recommendation of the Hayne royal commission into banks in Australia—that is, recommendation 1.1 made by Commissioner Hayne:

The NCCP Act should not be amended to alter the obligation to assess unsuitability.

We now know that, in fact, the government is intending to amend the National Consumer Credit Protection Act in those terms—a blatant rejection of Commissioner Hayne's primary recommendations.

When this came out at estimates recently, I have to say government senators were particularly well scripted in their responses. I might add that their responses bore no relationship to reality, but they were very well scripted. Their defence of the decision by government to abandon its acceptance of recommendation 1.1 of the banking royal commission centres on what they say is the context for recommendation 1.1, namely Commissioner Hayne's consideration of the suggestion by some consumer groups that the test under the NCCP Act should be changed from assessing whether a loan is not unsuitable to whether a loan is suitable. In the government's contorted logic, government senators have equated the commissioner's rejection of this suggested change to mean that the commissioner didn't endorse the current test. This is a positively Orwellian attempt by the government to rewrite the history of the banking royal commission. Nothing could be further from the truth.

The commissioner was abundantly clear. To make that point, let me quote at length from the final report of the banking royal commission:

Subject to these matters—that is, consideration of whether to change the test from 'not unsuitable' to 'suitable'—there was little or no debate about the terms of the NCCP Act. And, as will be apparent from what I have said, I am not persuaded that the terms of the NCCP Act should be amended to alter the obligation to assess unsuitability. My conclusions about issues relating to the NCCP Act can be summed up as 'apply the law as it stands'.

But, of course, that's not what the government intends to do. After having accepted that recommendation in Treasurer Josh Frydenberg's name, under his signature, the government accepted the recommendation of the banking royal commission that the law should not be amended to alter the obligation on lenders to assess unsuitability. The government has now walked away from that recommendation and from its previous acceptance of that recommendation.

Commissioner Hayne was basically saying: 'Don't strengthen responsible lending laws. Don't weaken responsible lending laws. Just apply them as they stand.' He was abundantly clear on that, and he made that recommendation in order to protect ordinary Australians from the rapacious, unethical and greedy banks and from the toxic culture

of those banks that was exposed during the banking royal commission. Now the government is walking away from that primary recommendation of the banking royal commission.

What the royal commission showed was the banks' willingness to engage in predatory lending and the banks' willingness to engage in unlawful lending. But, instead of making the banks abide by the law, the government is now proposing to change the law to abide by the banks. Again the corporatocracy rules in this country, and the banks are some of the most powerful corporations in Australia.

We have already in this country some of the highest levels of household debt in the world. Make no mistake, looser lending standards—which is the road the government has decided to walk down—will make it easier for banks to lure people into even more debt. And because, if the government gets its way, lenders won't have to assess unsuitability there will be a greater chance that ordinary Australians will not be able to service their debts. That is, they will fall into a debt trap, and it is very difficult to haul yourself out of a debt trap once you have fallen in.

Proposing these changes, as the government is doing in the middle of a recession, when people are suffering even more financial stress than the already significant level of financial stress they were suffering pre-COVID, is a recipe for disaster. It is shameful in the extreme that the government, having been dragged kicking and screaming into setting up a banking royal commission in this country and having initially supported that primary recommendation from Commissioner Hayne, is now walking away because the banks have given it its marching orders. Again, big corporates are running the show. Whether it's big banks, big coal, big gas or big gaming, the corporate vested interests are exercising their power and their influence over the government. When the banks say, 'Jump,' this government reflexively asks, 'How high?' When the banks said to the government, 'You have to walk away from the primary and most important recommendation of the banking royal commission'—the banking royal commission that exposed predatory and unlawful lending practices by Australian banks and a culture of extreme toxicity within Australian banks—it didn't take this government long to crumble and crumble they did. The people who will pay the price for it will be ordinary Australians, and these banks, with their culture of greed and toxicity and who were exposed as acting in a predatory and unlawful way by the banking royal commission, will be the winners from what the government is doing.

Source: Transcript and Image Parliament of Australia Website 

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