In an address to the AFR Banking & Wealth Summit on Tuesday (26 March), shadow treasurer Chris Bowen criticised the Coalition government’s “inaction” in response to the Treasury-led Review into Small Amount Credit Contract Laws (SACC), and the Senate reference committee’s inquiry into credit and financial products targeted at Australians at risk of financial products.
The inquiries flagged risks associated with the rise in payday lending, particularly to “vulnerable Australians”.
“It has been four years since Josh Frydenberg commissioned an independent review of small amount credit contracts or payday loans and ‘consumer leases’ – and 1,070 days since the Liberals received that report,” Mr Bowen said.
“During that time – where exactly nothing has happened to protect Australia’s most vulnerable from dodgy payday loans – more than 800,000 Australians have accessed these poorly regulated loans, with all of spiralling in debt and broader social cost that can come with these credit products.”
Mr Bowen said that, if elected to government, the Labor Party would “act urgently” on legislating the recommendations of the independent report into SACC.
In addition, Mr Bowen said that a Labor government would also provide $60 million over four years ($15 million per year) from the Banking Fairness Fund to “give vulnerable Australians an alternative to payday loans” by “doubling” funding for not-for-profit microfinance programs across Australia.
“The $60 million investment will expand programs run by the Good Shepherd Microfinance, which will see microfinance open up for 307,000 new clients, delivering up to 76,800 new low-cost loans to vulnerable Australians,” Mr Bowen added.
“What this means in a nutshell is: Australians experiencing financial hardship have a viable pathway other than using harmful financial products that might see them spiral into debt and bankruptcy.”
Mr Bowen concluded by claiming that Good Shepherd Microfinance’s No Interest Loans Scheme (NILS) and the StepUP loans scheme offer “a financial lifeline to individuals who might otherwise turn to these high-interest credit products”.