The Credit (Commonwealth Powers) Bill 2009, which I shall refer to as the referral bill, provides
for the referral of power to the Commonwealth parliament to make laws for the regulation of credit and
repeals relevant credit legislation in Queensland. The referral bill will enable the Commonwealth to
establish a single national law for the regulation of credit. Consumer credit in Australia is presently
regulated by states and territories by way of the uniform Consumer Credit Code.
The Consumer Credit Code applies to most consumer credit including personal loans, continuing
credit contracts, housing loans, leases and hire purchase agreements where the credit is for personal,
domestic or household use. However, over the years some states and territories have introduced
additional credit laws that are not consistent or even present in each jurisdiction—for example, interest
rate caps and finance brokers legislation.
Because of these inconsistencies and the acknowledgement that credit does not end at state
borders, in 2008 the Council of Australian Governments, COAG, agreed that responsibility for the
regulation of credit matters, including finance broking, should be transferred from the states and
territories to the Commonwealth. A seamless national regime will assist in ensuring that consumers are
better protected in their dealings with credit products and credit providers, including finance brokers.
Upon completion of the transition, the Commonwealth will be the sole regulator and enforcer of
the national credit laws. ASIC will be given extra powers to police the scheme. The transition of credit to
the Commonwealth will be implemented in two phases.
Phase 1 will be the transfer of responsibility for existing key credit regulation to the
Commonwealth. The majority of the national laws will commence on 1 July 2010. However, low-level
registration requirements, which require credit providers and finance brokers to provide their contact
details to ASIC, will commence earlier, on 1 April 2010.
The existing state and territory legislation, the Consumer Credit Code, will transition to a schedule
to the Commonwealth’s National Consumer Credit Protection Bill 2009. The transition of the current
Consumer Credit Code is an acknowledgement of the good work states and territories have done in the
credit area to date.
The scope of the present Consumer Credit Code will be extended by the Commonwealth to
include regulation of credit provided to purchase, renovate, improve or refinance a residential
investment property. Other key elements of phase 1 include a licensing regime for all providers of
consumer credit and credit related services, and industry-wide responsible lending conduct
requirements on licensees.
The Commonwealth drafted its phase 1 laws in consultation with representatives from industry,
consumer groups, and external dispute resolution schemes. Each state and territory has participated in
the transition process through the Financial Services and Credit Reform Implementation Task Force,
which is chaired by the Commonwealth. The Australian government introduced the National Consumer
Credit Protection Bill 2009 into the federal parliament on 25 June 2009. The bill was referred to the
Senate Economics Legislation Committee for a public inquiry and was subsequently passed by the
Senate in late October 2009.
Phase 2 of the transition consists of the Commonwealth considering additional credit matters
such as extending the credit laws to small business and an examination of state approaches to interest
rate caps. The Queensland government has strongly urged the Commonwealth to include an interest
rate cap in its national regime and will continue to do so. All jurisdictions that currently have an interest
rate cap will maintain them while the Commonwealth assesses the operation of the first phase of the
national reforms in states both with and without interest rate caps. Queensland remains committed to an
interest rate cap, and the bill gives effect to this by continuing Queensland’s interest rate cap regime.
To enable the Commonwealth to implement its new national credit laws, the states and territories
must first pass legislation referring power for the regulation of credit to the Commonwealth. I turn now to
the referral bill being introduced here today. The referral bill is based on section 51(xxxvii) of the
Commonwealth Constitution, and is model legislation developed by all states and territories through the
Parliamentary Counsel’s Committee.
The provisions of the bill accord with the terms of an intergovernmental agreement—namely, the
National Credit Law Agreement 2009—to which the Commonwealth, states and territories will be
parties. The referral bill provides for a two-tiered approach to the referral of powers to the
Commonwealth for credit matters. The initial reference is a text reference, which means that the text of
the National Consumer Credit Protection Bill 2009 and the National Consumer Credit Protection
(Transitional and Consequential Provisions) Bill 2009, as tabled in the Legislative Assembly of
Tasmania, is the lead referring state. I table a copy of those Commonwealth bills, which can also be
accessed electronically at the Commonwealth government website at www.comlaw.gov.au.
