I sit on the Standing Committee on Economics and this bill seeks to introduce major changes to the relationship between credit providers and consumers in respect of credit cards and home loans. It forms part of the banking reforms announced by the government designed to empower consumers, to support smaller lenders and to secure the flow of credit to our economy. In principle we do support this bill. However, there are some points raised during taking evidence and listening to witnesses that it is prudent for me tonight to pass on so that we have an entirety. This bill is going to need constant massaging and constant monitoring as its implementation has an impact on the market.
The bill has a provision to introduce a requirement for lenders to produce a key facts sheet for standard home loans. We do not have a problem with that. The more information we can give a consumer to make a value decision the better. The downside to the fact sheets is that there will be an extra cost, an extra imposition on the banks, and undoubtedly the banks will pass that on. I do not see the banks shifting to an environment where their fine print will become less. It will be just another layer of administration. Notwithstanding that, I think there is substantial benefit in people being made aware of their financial responsibilities. The facts sheet would set out in a standardised format pricing and other information about their products, allowing consumers to readily compare different home loans. The banks will be encouraged to actually personalise the data for the client so that they will be able to shop apples against apples.
Also, the bill tends to regulate the circumstances in which borrowers can exceed their credit limit on their credit card and prohibits fees being charged by the credit provider when they do so, except when the consumer has adopted to have a higher buffer on which they can be charged fees. I do not get this, because the body of this bill speaks to protecting consumers with credit card debt from unsolicited invitations, but this part of the bill, with reference to a buffer, is something that I struggle with. If we are trying to restrict unsolicited limits to credit card holders, providing a buffer for the consumer is exactly the juxtaposed position of what the body of this bill speaks to. So whilst it is in there I will speak to it, but I definitely have concerns, unless I have misinterpreted it.
The bill also speaks to specifying a hierarchy of payments made under credit card contracts, requiring credit providers to allocate repayments by the borrower to that part of the balance of the credit card on which they have charged the highest interest rate, unless they have elected to make different payment arrangements. With most of the standard credit cards there are default or higher components of your credit card expenditure that are exposed to greater interest payments. For example, if you get a cash advance on your credit card you may be paying an extra two or three per cent or a fee to get that cash advance. So, when you go to make your minimum monthly payment the bill intends that the payment will be calculated to offset higher amount of outstanding funding. This part of the bill does make sense. Hopefully, it will reduce some of the burdens for consumers.
This bill speaks to restricting credit providers from making unsolicited invitations encouraging borrowers to increase their limits and credit cards, except when consumers have consented to receiving such offers. We have all seen the volume of such mail that comes through our letterboxes. If you have, or have had, a credit card the banks have taken a position of going out and soliciting increases in limits. My concern was—and I will give my defence of the banks later on in my speech—that the banks make these unsolicited offers, such as increasing a person's limit from $500 to $5,000, without being diligent enough about the capacity requirement or in their evaluation. Enormous cost-of-living pressures are being borne by society as a result of the fiscal management of this country at the moment. There are people in my electorate who are on their knees. Credit card payments and expenditure are the ways in which they are keeping their heads above water. They are paying their energy bills, kids school fees and buying fuel for their car on their credit card. Some of them are actually buying their weekly groceries on credit cards. When you have cost-of-living pressures mounting up to the back teeth and you have an offer from the bank to increase your credit limit from $500 to $5,000, it's Christmas! You are not a logical rational thinking person when it comes to taking up that option. As a result we have this pain in the marketplace.
We heard this from Consumer Action Law Centre and the Consumer Credit Legal Centre, who gave evidence. Some of the stats they referred to were that out of all the people they were dealing with who had credit card default problems 60 per cent had one credit card and 40 per cent had multiple cards. I thought that was an interesting statistic to share with you. We would probably not have to be dealing with this legislation as aggressively as we are if we had stronger fiscal responsibility and the cost-of-living pressures in society were not as intrusive as they are at the moment.
The last point the bill speaks to is an introduction of a requirement for lenders to provide a key facts sheet for credit card contracts. The bill makes it mandatory for credit card providers to include in credit application forms key information about annual percentage rates and other terms that would apply to a contract. This part of the bill just speaks to a mandatory note on your credit card bill alluding to the fact that if you continue to make the minimum monthly payment on your credit card your term for the outstanding balance should be shown. So, on a standard $5,000 credit card, if you make a minimum account balance payment you could be entering into a term of up to 15 to 20 years to pay back that debt. Passing that information to the consumer will hopefully motivate people to reduce their debts quicker.
One of the issues raised by the parties in relation to the consultation process was the short time frame permitted for submissions to be made. I have some dates here. The exposure draft was released by Treasury on 4 March. Given the importance of this bill and the number of people it affects, it was a little unfair that the closing date for submissions was—wait for it—8 March. Treasury put it out on Friday the 4th; then there was the weekend and Monday. This had to be submitted by Tuesday, 8 March—way too short a time for consideration and for the market and stakeholders to respond. The Australian Bankers Association articulated a concern that the banking industry has not been able to fully assess the potential impact or the likelihood—
The DEPUTY SPEAKER ( Ms AE Burke ): Order! It being 8 pm I have to interrupt the member for Wright. He will understand. Earlier today the honourable member for Fadden drew the attention of the Speaker to the state of the House. In accordance with standing order 55(c) I will count the House if the member so desires. I invite the member for Fadden to indicate whether he requires a count of the House to be taken.
Mr Robert: My desire has eluded me, Madam Deputy Speaker.
The DEPUTY SPEAKER: Surprise, surprise! I thank the member for Fadden. The member for Wright has the call.
Mr BUCHHOLZ: Thank you, Madam Deputy Speaker. I was just alluding to the fact that the Australian Bankers Association articulated a concern that the banking industry had not been able to fully assess the potential impact or the likelihood of unintended consequences of the new rules. Predominantly, that was as a result of the time frame that they had to work with. Groups also broadly shared the concern that, as many of the substantive provisions would be included in this regulations, comprehensive comments on the policy detail were not possible at this stage of the legislation. Predominantly that speaks to the lack of substantial regulation included in this bill.
Often you will hear us, as the opposition, oppose. We oppose policy that is put up for a very good reason: often it is pretty ordinary policy. But on this particular occasion I am more than happy not to oppose it but to support it. I can see the intent. (Quorum called)While we have the members of the government in the House, this is the first time that we have actually supported a bill and you called a quorum. I was actually speaking for your motion. That is how disconnected you guys are from reality. It was bad policy, but I could see that you were having a go. I could see your intent.
Government members interjecting—
Mr BUCHHOLZ: You guys have just absolutely lost it. For the first time you can no longer say no, no, no, no. You guys have just screwed this one. You have taken it the wrong—
The DEPUTY SPEAKER: The member for Wright is trying my patience. He will refer to the bill.
Mr BUCHHOLZ: I am sorry, Madam Deputy Speaker.
The DEPUTY SPEAKER: The members will leave the chamber.
Mr BUCHHOLZ: With 29 seconds to go I have shown my intent to support the legislation. However, sometimes the standard practice of this House is quite confusing to a new member.
Tonight I take this opportunity to call on Australians to regretfully wear black on 24 June to commemorate Julia Gillard's first anniversary of becoming Prime Minister.
The DEPUTY SPEAKER ( Hon. Peter Slipper ): Order! The member for Wright, under standing order 64, ought to refer to the Prime Minister by her title and not by her name.
Mr BUCHHOLZ: I call on Australians to wear black on 24 June to commemorate the Prime Minister's first anniversary of becoming Prime Minister and to mark the death of fiscal responsibility. My electorate is one that does not rely on the resources sector, but my mums and dads are struggling and my businesses are struggling. (Quorum formed)
It has been recorded that my electorate of Wright is the economic weathervane of the nation. It is my responsibility to represent the silent majority that are struggling with record defaults on mortgages. When we have a look at the cost-of-living pressures that burden my electorate at the moment and you start to join the dots as to why they are struggling to put food on the table and why they are running their credit card debt up, and when we start to have a look at some of the taxes that have been imposed since this government came to office—the alcopops tax announced on 27 April that is expected to raise $3.1 billion over four years, a new tax on Australians working overseas announced in May 2009 that is expected to raise—(Time expired)
I will pick up my speech with the announcement on 12 May that the government has cut what Australians can put into superannuation tax free. The revenue gained from that for the government will be $2.8 billion over four years. There were restrictions on business losses announced on 12 May as well. This will generate additional revenue of over $700 billion in the forward estimates. There were also changes to the employee share scheme announced on 12 May. These will generate revenue of over $200 million over the forward estimates. The cigarette tax hike of 25 per cent announced on 29 April is expected to raise $5 billion over four years. It did not even miss the poor smoker.
The impost of the mining tax was first announced on 2 May and there have been multiple predictions of what the revenue from that is going to look like. Ethanol tax increases were announced just recently. An LPG excise increase was announced on 11 May—and this was after the government encouraged people to go and invest in LPG conversions, only to pull the rug out from under them with excise. The tighter restrictions on medical expenses…
Irrespective of the tactics tonight, this government will not drown out the voice of the silent majority of my electorate. The increase in the luxury car tax has put a burden on my growers and graziers, whose only accessible way to town is by four-wheel drive. The impost of the flood levy announced on 27 January is expected to raise $1.8 billion, and all of that is coming out of the pockets of my mums and dads. The tax increase on company cars announced on Tuesday, 10 May is expected to raise over $970 million on the forward estimates. That will come out of Australia's pockets. The abolition of the entrepreneurs tax offset announced on Tuesday, 10 May is expected to raise $365 million over the forward estimates. (Quorum formed)
Increased tax on company cars— (Time expired)
Mr Adams: Where are all the Liberals? They are out. They should not be paid for not being here!
Mr Husic interjecting—
The SPEAKER: Order! The member for Chifley will resume his seat. Before I proceed on the adjournment debate, I would ask those who are responsible for the tactics within this chamber on both sides to reflect on today's activities. When I have people who are whips for their political parties coming in to indicate to me that the tactic of calling quorums by either side would continue for weeks of parliamentary sittings, I think things have gone a bit too far. I am told that people have forgotten where they are when quorums are being called and all sorts of things that have been said across the chamber that people should regret. At a time when we have in the gallery, as I understand, representatives of local government, a sphere of government that seeks full recognition, I would hope and expect that they think that our behaviour, as the national parliament, should be better. I am at a loss to understand why events of over 24 hours ago can be used for irritating, disorderly tactics of quorum calling, but that does not justify the events that have happened also during the adjournment.
The question is that the House do now adjourn. The member for Chifley has the call and he will be heard in silence.
I can understand why the government does not want to hear how the increasing amount of taxes are a burden—
Mr Ripoll: We're all here. What are you complaining about?
Mr Sidebottom: What's your problem?
Mr Ripoll: We've come in to support you!
Mr BUCHHOLZ: I take those interjections, because the taxes that you guys have put on our mums and dads, our businesses, our people —
Government members interjecting—
Mr BUCHHOLZ: Let me just run through them: the tax increase on company cars, which is set to raise $970 million over the forward estimates; the abolishment of the entrepreneurs tax offset, announced on 10 May, which is expected to raise $365 million over the forward estimates; the phasing out of the dependent spouse tax offset, which is expected to raise $755 million over the forward estimates; the disallowing of deductions against government assistance payments, removing minors' eligibility for the low-income tax offset on unearned income; the deferral of tax breaks for green buildings, which will raise $295 million. It is 19 new taxes since you guys came to office. You have put your hands into the pockets or opened the purse strings of the mums and dads and the businesses of this nation—
Government members interjecting—
Mr BUCHHOLZ: Yell all you want from the other side of the House, but you will not drown out the voice of the Australian people! You are a joke when it comes to this. We have had a wave of taxes from this government. The death of fiscal responsibility is at your hands. For the first time in nine years, the people of Australia have not been given any type of tax relief or tax cuts. There is no relief. You guys make the point that you are a low-taxing government, but go through and calculate how much you guys are taxing. If you had put the carbon tax into your forward estimates or in your budget, you would have been the greatest-taxing government in the history of Australia. That would have superseded anything that we ever did.
Earlier this week, I sent out a note to the media saying that, as a nation, we were mourning because we have been dying economically since the Prime Minister knifed the member for Griffith and took over the purse strings of this nation. Not only are you guys struggling with reference to taxation; you are struggling with who is going to be your next leader. In the absence of a standout candidate—I hear it in the corridors: 'Is it going to be Simon Crean?'—
Opposition members interjecting—
Mr BUCHHOLZ: Sorry, I can't hear you. Member for where? Anyway, I can't use their names. In the absence of strong leadership, you guys are actually stuck with the person you have got.
The SPEAKER: Order! The member for Wright will refer his remarks through the chair.
Mr BUCHHOLZ: Of course, Mr Speaker, but the room understands the point that I am trying to make. These guys need to celebrate the fact that their polling is still in double figures. I do not think we can expect to see those for too long.
On the 24th, I encourage all of my colleagues and the nation to dress in black to mourn the death of fiscal responsibility since this government came to office. Only a coalition government will stand for the principles of less tax, less government and no wasteful spending. This government is more about hypocrisy than democracy. How else do you explain why we will not have a plebiscite on the issue of a carbon tax—a people's vote which would cost about $80 million?
Government members interjecting—
Mr BUCHHOLZ: We would not have the expense of that $80 million if you guys had got it right the first time. You guys must just roll over in your beds each night regretting the fact that the Prime Minister, six days before the election, said, 'There will be no carbon tax under a government I lead.' That is your Achilles heel. Surely $80 million will be seen as an investment in our nature's future and democracy when Australia risks losing as much of its gross domestic product.
Honourable members interjecting—
Mr BUCHHOLZ: Mr Speaker, the activities of the parliament tonight are not something that I am proud of. I hope we shift away from this disgraceful behaviour, but I can assure you that, as I said earlier, irrespective of how loud and how hard the government try and drown out my voice, they will never drown out the voice of the silent majority of my nation. (Time expired)
Mr Fitzgibbon: Can I just join with you, Mr Speaker, in expressing disappointment with the activities of the House of not only the last hour but the last three hours. It might be time the opposition learnt we are all about the proper functioning of this place.
The SPEAKER: Order! It being 10:30 pm, the debate is interrupted.