Federation Chamber
Monday 7 December 2020
I'm really pleased to enter the debate today and commend the members for Mayo and Warringah for bringing this item to the attention of the House. Sadly, this is not the first time that we've had this debate in this parliament. I really wish it was. The government has been delivered a litany of evidence, with case studies and evidence provided not only in the ASIC report into buy now pay later, which came down two months ago, but also in their own report into the small amount credit contacting legislation, which was promised to be delivered into this House to provide meaningful reform so that vulnerable Australians would not be ripped off.
I have sat down and talked with financial counsellors, organisations such as St Vincent de Paul and the Salvation Army, credit organisations and church groups in my community and across Australia. They have all said the same thing: this government has the power to crack down on practices which have seen vulnerable Australians ripped off. I will bring some facts to the attention of the chamber. Between April 2016 and July 2019—pre-pandemic—just over 4.7 million individual payday loans have been written, with an approximate total of $3.09 billion. That's 1.77 million households that have turned to payday loans. It's all very well for the member for Bowman to say that people have choice. They don't have choice. They don't have access to financial support.
Just when this government is ripping the rug out from under so many Australian families, we now see with ASIC's long-awaited report into buy-now pay-later schemes that the total amount of credit extended in the buy-now pay-later industry has doubled in 12 months. These transactions have increased from $16.8 million in the 2017-18 financial year to $32 million in 2018-19, representing an increase of 90 per cent. Missed payment fee revenue for all buy-now pay-later providers that ASIC looked at grew by 38 per cent to $43 million.
Revenue sources vary between different platforms. Late fees made up 20 per cent of Afterpay's revenue in 2018-19, with the balance from merchant fees, whereas Zip got most of its revenue from other fees charged to customers. This is good money for these companies. They are making money off the back of Australians who are turning to these schemes without adequate information or adequate protection. Among her clients, consumer advocate Rosie Fisk has observed, 'When consumers have got more than one of these products and they're trying to get on top of paying every fortnight and then the late fees as well, they really get into that financial vulnerability and go without their essential living expenses in favour of trying to pay their Afterpay or their other buy-now pay-later provider.'
The buy-now pay-later providers ASIC reviewed include Afterpay, Brighte, Humm, Openpay, Payright and Zip. Wherever you turn, there are these new kids on the block trying to rip off Australians. Users under the age of 35 accounted for 61 per cent of completed transactions in the 2018-19 financial year. But, for transactions that incurred missed payment fees, under-35s accounted for 67 per cent, and some 45 per cent of transactions that incurred a late fee were hit with more than one. These schemes are making money off the back of people who are missing payments. They are making huge sums of money. Hundreds of millions of dollars are going to the owners of these companies.
It's all very well for the member for Wentworth to say he's a shareholder. No wonder he's getting up here and defending this scheme. He's making a motza! I think it is astounding that any member of parliament, whether it be the member for Wentworth or the member for Bowman, would get into this place and somehow defend these loan sharks and defend what is happening. We know that the government is sitting on real reform. I introduced the private member's bill that Kelly O'Dwyer delivered to the House before the extreme right of the Liberal Party, the friends of payday lenders, withdrew it. But we're telling the government one thing today: we will continue to fight for these reforms for vulnerable Australians until they are passed.
