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Second reading, Social Security (Administration) Amendment (Protecting Consumers from Predatory Leasing Practices) Bill 2020, 7 December 2020

It’s my pleasure to rise and speak on the Social Security (Administration) Amendment (Protecting Consumers from Predatory Leasing Practices) Bill 2020. Before I speak about this bill, I just want to make some general responses to Senator Ayres’s contribution, which I found to be highly offensive and which wholly misrepresented the government’s actions that it has taken in so many respects to protect low-income earners across this country. We actually, in this country, have one of the most generous welfare systems in the world. Ayres’s attempts to misrepresent the fine work of our government in caring for those who most need our help is most offensive. Even ridiculous comments like ‘draining superannuation accounts’ when we have given Australians the ability to take some of their superannuation during this shocking year, the year of the coronavirus pandemic—this has been highly welcomed by so many Australians. I’m not going to stand here and accept Labor’s attempts to set up some sort of class warfare. I am incredibly proud of our government’s work to support low-income earners, particularly when I look at the work of this government this year: JobSeeker, JobKeeper, JobTrainer—the most massive amount of investment in Australians to get them through the coronavirus pandemic, in excess of $500 billion. We have stepped up, and we have stood side-by-side with all Australians during this very difficult year. It is quite telling that Senator Ayres never actually mentioned any of this in his contribution.

I want to explain the reasons why the government does not support this private member’s bill that is before the Senate this morning. If this bill were passed, it would impact Centrelink customers who want to use consumer leases and who want to use Centrepay as their preferred method of payment. To give a couple of facts, currently there are 94,000 customers, or 14 per cent of customers, who use Centrepay to manage the purchase of goods using consumer leases. The value of Centrepay deductions for consumer leases represents nine per cent of all deductions made. It’s really important to reiterate that entering into any consumer lease arrangement is voluntary. Using Centrepay to pay for a consumer lease is an important right of all Centrelink recipients. Deductions from a customer’s payment via Centrepay can cease at any time, although this does not cease any obligations, of course, under the consumer lease that has been signed. Customers have to provide informed consent before a deduction arrangement using Centrepay can be put in place. So there are a whole range of safeguards in relation to attempts to utilise Centrepay in some sort of improper way.

All consumer lease businesses currently accessing Centrepay must have other payment options available, such as BPAY, cash or credit card. To help protect customers and not unduly restrict their access to finance, Centrepay only allows consumer leases covered by the regulatory framework under the National Consumer Credit Protection Act 2009, and that is a point that’s not been made properly by those opposite. The regulatory framework is a very important safeguard which requires consumer lease businesses to be licensed and comply with responsible lending obligations overseen by the Australian Securities and Investments Commission, ASIC. Businesses that use Centrepay need to comply and act in accordance with the Centrepay policy and terms, and consumer protection laws.

In 2015, Services Australia made changes to protect customers by removing unregulated consumer lease businesses from Centrepay. Services Australia employs a range of measures to further protect Centrepay customers and ensure businesses meet their obligations under Centrepay terms and conditions, such as ongoing compliance activity and regular monitoring. It’s also important to point out that many Centrelink customers have limited access to microfinance. So, if there is an emergency, such as the need to replace a fridge, a Centrelink customer can use consumer leases to address that issue quickly. They can then choose whether and how to make those regular payments using, of course, Centrepay.

The government takes its responsibility to consumers very seriously. Centrepay is a free and voluntary service which allows people to pay bills and expenses as regular deductions from their Centrelink payments. People can start, change or cancel their Centrepay deductions at any time. To help protect customers and not unduly restrict their access to finance, as I’ve made very clear, there are very important safeguards included in access to Centrepay arrangements. It is a very important bill-paying service to support income support customers. Mostly, the Centrepay mechanism is used for housing and utilities costs, so obviously this is a very, very important scheme.
Since it was introduced in 1999, Centrepay has grown and expanded into more than just a means of paying a bill. In the last five years, 46 per cent of all Centrelink customers have used Centrepay for more than one service reason, suggesting it is actually used as a financial management tool.

It’s used actively by government and non-government entities, including the likes of state governments for court fine repayments or not-for-profits offering low- and no-interest loans. The categories of goods and services approved for Centrepay include a cost for accommodation, education and employment, health, utilities, household goods, travel and transport, social and recreational purposes, legal and professional services and financial products. So Centrepay is a very important mechanism to assist customers in managing expenses which are consistent with the purpose of welfare payments and which have the effect of reducing financial risk and also supporting financial management.
In the 2019-20 year an average of 648,000 customers per month used the service to make 26 million Centrepay deductions worth $2.76 billion to approximately 14,000 approved businesses. Around 75 per cent of the moneys dispersed through Centrepay are for accommodation and utilities. This is the core foundation of Centrepay—that it is voluntary and designed for regular ongoing deductions. I will also make the very important point that it is since 2001 that consumer leases for household goods have been allowed under Centrepay. It is only in the last couple of years that Labor has decided that this is an issue. For all those years Labor was in power, it never took any appropriate action—one can only assume because it didn’t see that there was the need.

In 2015 the then Department of Human Services introduced the new Centrepay policy and terms that excluded unregulated consumer leases for household goods and also funeral insurance. So we understood where Australians were being improperly targeted and we took that action. Unregulated leases are those exempt under the National Consumer Credit Protection Act and are less than four months or indefinite in their duration. Due to the gap in accessibility for some customers to access microfinance and money for emergency, regulated consumer leases remained on Centrepay as a viable option. I think that’s really important. This is not necessarily the first port of call. Anyone engaging in any sort of consumer lease does need to be properly informed, and there are appropriate mechanisms to ensure that that happens. But payday lenders, short-term loan repayments to cash lenders, pawnbrokers and buy-now pay-later schemes like Afterpay are excluded from Centrepay and have never had access to Centrepay. That’s a really important safeguard. We understand that there are some operators in the market which are predatory and which will try to take advantage of more vulnerable Australians. That’s why the likes of payday lenders, short-term loan repayments to cash lenders and pawnbrokers do not have access to Centrepay.

But I’ll tell you who does have access to Centrepay: the Good Shepherd Microfinance no-interest loan scheme. It commenced using Centrepay for repayment of these loans in 2001. The Good Shepherd Microfinance scheme is a wonderful scheme. There are also no-interest loans provided by other welfare or not-for-profit organisations like the Salvos or St Vincent de Paul, and they also use Centrepay. So anyone who does need to access low-interest or no-interest loans because of an emergency or because of a dire need should absolutely look to these very credible providers to ensure that they get the best deal in the market.

It’s also important to reiterate that Services Australia undertakes assessment of business applications for Centrepay and compliance audits of approved businesses.

That’s why that category of lenders is excluded. It’s because the compliance work is done and we make sure that those safeguards are put in place. Approved businesses must meet and maintain essential criteria. And they’re tough; the criteria are tough. The assessment process needs to consider whether the business conducts its operations in a manner that is lawful, ethical and does not take unfair advantage of customers. It needs to consider the past behaviour of the business and the business representatives; information provided by regulatory bodies, consumers, consumer groups or law enforcement agencies; previous dealings with the business; and complaints made against the business. So the bottom line is that where there is a provider which has a poor or dubious record or has engaged in improper conduct—including conduct which may have given rise to issues under the law—then Centrepay will not approve them. But if there is a credible organisation, why should Australians be denied access to consumer leases and using Centrepay to manage their repayments for those emergency items? Otherwise, many Australians could be placed in a position that is even more vulnerable.

I also want to make the point that, where a business breaches Centrepay policies—including other laws and regulations—the agency will review the business and reconsider its ongoing approval for Centrepay. So, once a Centrepay provider is approved, it doesn’t stop there. There is an ongoing obligation to ensure that all businesses which provide a Centrepay option are acting in the best interests of consumers. In the 2019-20 financial year, 326 compliance audits were completed. The Centrepay policy and terms retain the discretion for Services Australia to not approve or to suspend or withdraw the approval of a business if, in its opinion, the business or representatives have not conducted or are not likely to conduct themselves in a lawful manner, have failed to comply with the Centrepay framework, are obviously subject to investigation or where other enforcement proceedings are brought against them. They’re just some of the reasons. So Services Australia is playing a very important role to safeguard consumers. Those are many of the reasons why the government does not support this bill.

7 December 2020

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