Page 1824 - Week 07 - Wednesday, 22 August 2007
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There are two points to be made about the passage of section 28 of the Fair Trading Act. Firstly, the red tape that it necessitated in the banking industry led to serious difficulties following the 2003 bushfires, when residents—many of whom had been left with nothing—were unable to obtain immediate advances on their credit cards because of the changes to the Fair Trading Act. Secondly, and most significantly, data collected over three years following the introduction of section 28 showed that there was no impact on the relative rates of arrears in the ACT compared with the rest of Australia. ACT accounts, which had always been lower than the Australian average, tracked at the same rate as the rest of the country despite the unique changes to the law. Breaking from otherwise uniform legislation does not in this instance provide any measurable benefit.
This is an important issue. It deserves more than a knee-jerk response from the Greens. The Liberal Party is not supporting the second part of the Greens’ motion; the amendment that Mr Stefaniak has circulated is an appropriate response to this proposal.
Finally, it is worth noting that the current uniform consumer code does offer some protections, including, I understand, enabling a court to re-open unjust transactions. As the attorney said, there may be scope for strengthening in this area, but it is not an area that is bereft of protection.
Dr Foskey used the term “subprime loans”, which is a term that is more appropriate in the United States environment. In this country the reserve bank uses the expression “non-conforming lenders”; they are lenders who do not conform to the lending standards that are applied by banks et cetera—in other words the APRA-approved arrangements. It is a myth to say that everybody in the non-conforming lending market is a bad lender. Generally speaking, banks are unlikely to lend to someone with a bad credit history, because they consider them to involve too much risk. There is a new lending market that will lend into this space, but if this is done properly with checks and so forth then it is possible for people to repair a poor credit history. The idea of saying that people who have run into difficulties—and there are many people in this country who at different times of economic downturn have run into difficulties—should never be able to dig their way out of that because of the lending policies of banks is a most unjust approach and line.
I do not favour practices where people who are clearly extremely high risk should be put into positions where they could be put into further jeopardy, but some sense is required. Banks have now instituted much more conservative lending practices, particularly since the late 1980s. We should recognise that there is a legitimate market and there are legitimate lenders meeting a need from our communities.
DR FOSKEY (Molonglo) (11.16): I thank Mr Mulcahy, Mr Corbell and Mr Stefaniak for their contributions to this discussion.
MR SPEAKER: You will be speaking to the amendment, will you? I think there are other members who wish to speak on the motion.
DR FOSKEY: Thank you. It is always a worry when both sides of the house agree in stopping progressive legislation. We need to look more closely at that. We have heard
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