Fair Trading Amendment (Responsible Credit) Bill 2005
Reverend the Hon. Dr GORDON MOYES: I am pleased to contribute to the debate on the Fair Trading Amendment (Responsible Credit) Bill. The bill is designed to increase responsibility on credit card providers to ensure that they conduct ability-to-pay assessments before increasing credit card limits. The Christian Democratic Party has a great deal of sympathy with this bill. We know that the Opposition intends to vote against the bill, but would encourage the Government to vote for it. Australians used their credit cards more than one billion times last year, finishing with a record festive season binge that pushed the national credit card bill above $30 billion for the first time. It was a bumper month for the use of plastic when 121.2 million credit card purchases were made in the one month. A record $16 billion was spent on credit cards in the month, with the amount of cash withdrawals also reaching an all-time high. However, financial services firm Virgin Money released a survey which showed that 2.5 million Australians overspent on their own estimates in December by an average of $750.
The changing Australian retail payments landscape publication in the Reserve Bank Bulletin of July 2003 indicated that we had an enormous surge of growth in credit card transactions in the late 1990s, and the ability to use credit cards for non face-to-face transactions, particularly over the Internet, has spurred their use since that time. I have had a long-term interest in this issue, and in 1977—which seems aeons ago now—I established a plan for the first credit line counselling service to be established in Australia. I am pleased to say that still exists and is, to this day, the largest credit counselling service in Australia. It became the father of financial counselling services.
I thank Ms Sylvia Hale for her references to credit counselling and to Credit Line, an organisation I established. I thank also the Hon. Melinda Pavey, who referred to the Consumer Credit Legal Centre in New South Wales, with which I have had close contact. The centre has carried on some of the work I instituted back in 1979. In those early days I established a service called Debt Line, which was later changed to Credit Line. Credit Line has very large financial counselling offices in the city, in areas such as Fairfield, Sutherland and Penrith, and in about 43 other places around New South Wales. It provides face-to-face counselling for people who are suffering credit card problems. We provide a national telephone credit help line that is used by professional counsellors to gain information on how to support their clients.
We also run a large raft of consumer education programs, including consumer education in TAFE colleges and schools, and, particularly in recent years, in gaols. Many prisoners have financial issues, and before release many of them go through our Wesley Mission education programs. We work not only in correctional centres but also in refuges and churches, and with financial counsellors and many other parties.
In 1994 I felt the need to set up the Wesley Community Legal Service, which now has five full-time lawyers. Many people who run into financial trouble do not have sufficient wherewithal to pay for private legal support. We provide advice on debt recovery and insolvency, and guidance on consumer credit. We work with people through the criminal law as a result of their misuse of credit cards and overexpenditure. We also work in the field of family law. We do not provide general legal services, but we provide legal services to those who get into problems with the law because of their misuse of money.
That flowed over to another service I established in, I think, 1984: the first gambling counselling legal service to be established in Australia. I thank the then Premier, Barrie Unsworth, who told me that his advisers had indicated that gambling would become a very serious problem in the future of this State. He asked me whether I would be interested in developing gambling counselling and, subsequently, legal services. Those services continue to this day and, once more, we are the largest provider of those services in Australia.
The Consumer Credit Legal Centre was an outgrowth of some of this work. It is an independent community legal centre providing information or legal advice on credit, debt and banking matters. The centre now operates the Credit and Debt Hotline, which was formerly the Credit Helpline operated by Wesley Mission, and it continues to provide financial counselling, information and referral services for New South Wales residents. In fact, over the eight months the service has operated, a vast number of callers have sought assistance with credit card debt.
Most of this work that was undertaken by Wesley Mission was not funded by any government. It was an initiative undertaken to help people who were unable to handle the multitude of credit cards, many of whom received cards unsolicited through the mail. Indeed, I recall that on one day I received three unsolicited credit cards in the mail. Is there a problem these days with credit card debt in Australia? All the anecdotal evidence and other evidence we can provide shows we have a severe credit card debt problem. The Reserve Bank puts Australia’s total outstanding credit card debt at more than $30 billion.
The Financial Counselling Association of New South Wales partnered with an academic from the University of Newcastle to analyse clients presenting for financial counselling over a two-year period. Their study found that more than 2,500 clients who use financial counselling services for assistance in overcoming their financial difficulties indicated that their most frequent problem arose because they overspent on their credit cards. This is an important bill; I believe it puts the onus where it really belongs: on the providers of services. It is up to them to ensure that people who are given credit cards—which, in reality, extend to not just credit but also cash—have the ability to pay. The Christian Democratic Party supports the Fair Trading Amendment (Responsible Credit) Bill, and encourages the Government to also support it.