Home - Claire Moore - Labor Senator for Queensland

BILLS: Social Security (Administration) Amendment (Consumer Lease Exclusion) Bill 2015 - Second Reading

Senator MOORE (Queensland) (10:28): I wish to congratulate Senator Cameron for drawing the attention of so many in this place and also in the wider community to how the horror-and I use the term quite deliberately-of the situation of those who are most vulnerable in our community can be made worse by the actions of people with a completely profit driven motive.

The bill that Senator Cameron has put before us not only looks at the area of consumer leases which have been considered over a period of time; it particularly asks whether our Centrepay system-which works through the Department of Social Services with the Centrelink network to support people with their budgeting and coping strategies-is the right model for those who have such a profit driven impost on them. That is the background to the bill.

The bill is a stimulant to look at wider issues. This argument that Senator Siewert has put before us is one element of a much wider discussion. It does not pretend to be the answer to all the ills of poverty in our society, it does not pretend to identify all the many impacts that cause people-through desperation, illness or isolation-to make decisions about which they have no real knowledge or power. But it does take one step forward and I think it needs to be considered. Already it has raised awareness in this place, in the department and in the wider community about the issues of which we are speaking. That is in itself a result.

I acknowledge the work that Senator Cameron has done over the last couple of months within the community and also within the department to ensure that change does occur. I also want to acknowledge the work that has been done by the minister. She has responded by looking at how the Centrelink process could operate better, but we do not think it goes far enough. I know that Senator Seselja, in his contribution, worked through the department's responses, but the actions that were taken in June this year by the minister, through the department, to restrict the way the process operates, do not stop it happening. Basically we are saying: with respect to the extent of interest payments that are linked to the process of people being caught up in extended consumer lease payments for things that they need in their lives, that should not be paid for through the social welfare system.

This is not a new discussion. I know that for many years people in the community have been asking questions about whether the system of consumer lease should be able to operate in a largely unregulated market. There does not seem to be any real restriction on the conditions around consumer leases and the amount of extra interest that consumers must pay if they are caught up in one of these leases. And it covers a wide range of areas. So far in the discussion we have concentrated on white goods, but it is not limited to white goods. If you look at the brochures and the consumer advertising, you see that just about any consumable-from computers to household goods-is available through a range of firms which operate in the Australian market. They are all legal and they are all public. I share Senator Siewert's discomfort about restricting choice. Often I am up here saying that we should encourage choice and provide a wide range of choices, and that is my dilemma in this whole debate: on the one hand allowing everybody in our community to have open choice and, on the other hand, saying through this bill that there should be a limit for the social security system in paying in that way.

I have agonised about this and I have listened to so many people, including Senator Cameron, about the point. But when I actually look at the evidence which has come out from consumer groups, consumer legal groups and ACOSS, I am troubled by the predatory nature of the marketing that can cause people to make decisions and then be caught up in a system over which they have no control. So I have come down on the side of supporting Senator Cameron's push that we should have restrictions in the Centrepay system which say, 'this is one element that should not be supported in this way.' I say that because I believe that the circle of poverty that Senator Siewert described in her contribution links into this whole area.

We have also had discussions in this place over many years about the need for financial literacy and for acknowledgement and transparency of processes. I have looked at some of the contracts and I see that there is detail provided in many of them about the terms of the rental processes and the amount of money that is involved; but when you see information that says that you can buy a fridge for $1,148 at an outlet but, through a consumer lease process, it can cost $4,602 over three years, I see a problem. Or when I see a laptop that can be bought for $898 but someone who takes up a consumer lease pays $2,644, I cannot accept that that is a fair system. I cannot accept that the process that says, 'this is what you can get for immediate ownership of a product but this is the kind of added cost that you would have.' I have trouble with that. I also have trouble with the fact that someone who takes on such a contract may not be fully aware of what they are doing and they do not have any opportunity, without further financial impost, to get out of that process. That is on the one side in terms of the products about which we are speaking.

The other element is that we are supporting that process through the Department of Social Security, through a system which was set up to support. We are actually supporting a market share of businesses through the most vulnerable people, who have the most reduced incomes, who are often completely reliant on social welfare. The discussion about the wider impact of consumer leases, how they operate and how they are regulated-and we have already seen issues around payday lenders in the same discussion-is one issue. This bill is saying that that should not be an allowable deduction through the Centrepay system which is in place already.

I am fully aware that the intent of the Centrepay system was to support people with their financial needs, and I well remember the focus at the time when it was introduced, because I was working in the area, and I remember how we promoted the system in the community. It was looking at people being able to balance things like energy expenses and rent-processes that they already had in their budget. The system would ensure that there would be a regular process through which they would have security that they would be able to have those things paid. Over the years, as Centrepay has developed, guidelines have been put in place which point out what can be funded through this process and what cannot be. And there has been an evolution to respond to people's needs. Through that process, this area where people have had their consumer leases paid in this way has fallen in as one of the allowable aspects. When people are caught up in these contracts, they know and the businesses certainly know that they will have absolute security of payment because it will go through someone's Centrelink payment.

The figures for the percentage of Centrepay that goes to businesses that are involved in the consumer lease market have grown, to the extent that it is now one of the highest payment areas. That in itself should be cause to question why this is happening and how many people are involved in this way, and to see whether there are any links with the consumer about their knowledge and about their consumer awareness and consumer literacy in the process.

Over the years, I have worked with consumer advocates and with the Consumer Action Law Centre, who have done a lot of work in this area. As always, we can talk in theory and in generalities but the real issue is that it comes down to individuals and the impact on them. One of the Consumer Action Law Centre's newsletters actually put the issue out there about the way Centrepay operates. It had a heading which attracted my attention, 'It's the human cost of rent to buy.' It is a public document. The article was about a Fitzroy resident who was a customer of Radio Rentals and how she was signed up for a product. She said that it was the normal practice when she signed up and gave her details that the options for a Centrepay payment was part of the transaction. It was not a request, not an add-on; it was an automatic part of the transaction. That was how the process operated. There was no alternative offered to Centrepay; it was automatic.

She said that from the time she signed her contract in 2013 for the product, she received constant communication offering her more products to rent. As she was a customer of good standing because she had a secure way of paying because it was through Centrelink, she was offered more and more attractive options. We all fall into that, when we are offered something that is attractive. For some people, though, that can develop into a spiral of debt and a spiral of commitment which can get out of control. It was hard for her to keep control and it got to the stage where she could not pay any other bills because the amount of money that had to be put into the Centrepay process for her consumer leases took so much of her payment.

Whilst that is a personal example and only one, and there could be reasons in her particular circumstances, I think it highlights the issue that if you have a business model which is based on security of payment through the social welfare system, questions should be asked about the way that operates. In fact, there must be questions asked about the way that operates. This is what this bill is all about.

One of the other things that must be put in place is to ensure that there are options for people who have emergency need. That has always been an issue and it was certainly one of the issues that was raised by the welfare rights centre, who do strong work in the community for people who are linked into our social welfare scheme. The welfare rights organisation did raise issues around giving people options for choice. One of the things that has come through the discussions over the last few months on this issue is the need for a secure way of financing people who are in need. One of those must be the Good Shepherd Microfinance centre, which our government introduced when we were in government and has been supported throughout.

Good Shepherd Microfinance provides certainty and a guaranteed process for people in the social welfare area for loans of up to $1,200 for particular purposes. They have over 690 outlets across the country. I want to see more of these centres made available. They work very closely with people who are seeking financial support who have limited income and who are often reliant on social welfare but need an option for immediate purposes. The Good Shepherd offer NILS, the No Interest Loan Scheme, which works with individuals to build up their strength and knowledge of the system. They provide the financial literacy which is so necessary for dealing with people's ability to budget and their financial security.

In providing the loan, they work with people to ensure they know about the strictures that surround repayment and how to budget. They have a personal relationship with the process. This is a very strong system. It has been in place now for a number of years. There are fantastic audit reports about how it operates. It is also supported by some of the larger financial institutions in our country which is a good thing and shows these financial institutions understand the need to provide financial security and knowledge for these people.

The bill before us offers one element of discussion about how we handle the overwhelming issues of people in need and people who are disadvantaged. This is a form of protection and it is a necessary intervention, I think, by government. My background is that I worked with the then Department of Social Security. At that time, there was a concern about how vulnerable people can be taken advantage of by businesses in different ways and how they can keep these people ignorant of their financial circumstances and force them into choices over which they have not control. There were terrible stories of businesses and organisations that would even keep people's payments for a period of time rather than allowing them to have ownership of their entitlements. We stopped that. There was organised research and organised intervention by the government to ensure that we had rules that ensured that people would have ownership of their own payment-that they would not have anybody else being able to take that and profit by their disadvantage. That was in the 1980s and early 1990s, and we do not have that overt operation any longer.

What we have are much more sophisticated financial business processes. We have seen the way the Centrepay system has been able to be used effectively by business to ensure that their business is secure, that their payments are secure, without any regard for the needs or the pressures on the people who are taking out their consumer leases. To me that shows a more sophisticated model of people being able to perceive disadvantage and profit by it, and that is offensive. We should not allow our government systems to be able to be used in such a way.

I respect the fact that the government has looked at the range of information and the lobbying that has gone on over the last few years and there have been changes made. As I have said, the minister put out a process in July which has limited some aspects of consumer leases. What is most worrying is that the day after the minister made that announcement some of the largest businesses who are involved in this process publicly announced it would have little impact on their business. That is not only concerning but also, for me, almost a challenge. If their business will not be impacted by the changes that have already been made, I believe there should be information and acknowledgement that there needs to be more change. Senator Cameron's bill puts that challenge to all of us to acknowledge that this, we believe, is a misuse of a system that was set up to be supportive. This does not acknowledge that the real need is for the people who are already having financial difficulty and who are already in the social welfare system. Their needs and their concerns should be the priority concern rather than ensuring that businesses are able to make the best use of the Centrepay system.

It is really important that the Senate consider this work. It is important that we work with the organisations that I have already named that have been working in this field for many years, and continue to work together so that we can not only come up with a response to the issue of consumer leases but also take on board the wider concerns we have about people who need to have effective support in our community. We need to have a social welfare system that does provide realistic support. We need to truly consider how we as a community ensure that there is not the kind of vulnerability, or business practice, that causes people to be damaged rather than supported.