Legislation has failed to materialise – and Labor says conservative backbenchers are to blame
The federal government has been accused of indefinitely shelving
plans for a crackdown on dodgy payday lending operators after a
significant lobbying effort from the industry.
The Coalition had promised to usher in strict new rules on payday lending last year, after a 2016 review found they were being inappropriately handed to low-income and vulnerable Australians. The high-interest, high-fee cash advances can trap people in cycles of debt.
Cash Converters, one of the largest lenders, was ordered to refund $10.8m and pay a $1.35m penalty in 2016 after the corporate regulator found it was lending to people without checking their capacity to repay.
Payday lenders have engaged multiple lobbyists and Labor says a group of conservative backbenchers, whom it dubs “the parliamentary friends of payday lending”, has formed to pressure the government.
At the last estimates, Treasury officials said they expected the legislation to be introduced by April, which passed without any sign of the legislation. On Tuesday Treasury officials were unable to give any new timeframe, saying it was a matter for the government.
That has prompted shadow treasurer, Chris Bowen, to accuse the government of shelving the plans “indefinitely”.
“Once again, it’s the conservative backbench, including the ‘parliamentary friends of payday lending’, setting this government’s agenda – not the cabinet, not the relevant ministers, and certainly not the prime minister,” he said.
But the assistant minister to the treasurer, Michael Sukkar, said the government would progress legislation this year, with changes applying 12 months after the bill’s passage.
“The government is currently considering the submissions it received following public consultation on exposure draft legislation in late 2017,” he said. “Legislation will be progressed this year with the changes applying 12 months after its passage.”
“Implementation of these reforms will ensure vulnerable consumers are afforded appropriate levels of protection while allowing consumers to continue to access small amount credit contracts and consumer leases.”
In estimates on Tuesday the Labor senator Chris Ketter said he was “at a loss to understand” the delays, and asked the Treasury deputy secretary John Lonsdale what was taking so long. Lonsdale said the policy was contested and that it was not unusual for the government to take time to consider both sides of the debate.
“It is not unusual, in my experience, that government would weigh up arguments, on both sides, very carefully before coming to a decision,” he said.
Lonsdale took exception to the suggestion that there had been a delay. “The way I would rephrase the question … is when will legislation be introduced? And that is a matter for government, senator.”
Among other things, the 2016 review recommended a cap on the amount of payday loan repayments to 10% of a person’s net income. It also called for lenders to be barred from bombarding borrowers with continued offers of credit.
The Coalition had promised to usher in strict new rules on payday lending last year, after a 2016 review found they were being inappropriately handed to low-income and vulnerable Australians. The high-interest, high-fee cash advances can trap people in cycles of debt.
Cash Converters, one of the largest lenders, was ordered to refund $10.8m and pay a $1.35m penalty in 2016 after the corporate regulator found it was lending to people without checking their capacity to repay.
Payday lenders have engaged multiple lobbyists and Labor says a group of conservative backbenchers, whom it dubs “the parliamentary friends of payday lending”, has formed to pressure the government.
At the last estimates, Treasury officials said they expected the legislation to be introduced by April, which passed without any sign of the legislation. On Tuesday Treasury officials were unable to give any new timeframe, saying it was a matter for the government.
That has prompted shadow treasurer, Chris Bowen, to accuse the government of shelving the plans “indefinitely”.
“Once again, it’s the conservative backbench, including the ‘parliamentary friends of payday lending’, setting this government’s agenda – not the cabinet, not the relevant ministers, and certainly not the prime minister,” he said.
But the assistant minister to the treasurer, Michael Sukkar, said the government would progress legislation this year, with changes applying 12 months after the bill’s passage.
“The government is currently considering the submissions it received following public consultation on exposure draft legislation in late 2017,” he said. “Legislation will be progressed this year with the changes applying 12 months after its passage.”
“Implementation of these reforms will ensure vulnerable consumers are afforded appropriate levels of protection while allowing consumers to continue to access small amount credit contracts and consumer leases.”
In estimates on Tuesday the Labor senator Chris Ketter said he was “at a loss to understand” the delays, and asked the Treasury deputy secretary John Lonsdale what was taking so long. Lonsdale said the policy was contested and that it was not unusual for the government to take time to consider both sides of the debate.
“It is not unusual, in my experience, that government would weigh up arguments, on both sides, very carefully before coming to a decision,” he said.
Lonsdale took exception to the suggestion that there had been a delay. “The way I would rephrase the question … is when will legislation be introduced? And that is a matter for government, senator.”
Among other things, the 2016 review recommended a cap on the amount of payday loan repayments to 10% of a person’s net income. It also called for lenders to be barred from bombarding borrowers with continued offers of credit.
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