Credit (Commonwealth Powers) Bill

as ‘having substance, actually existing, not illusory’.

The shadow minister also asked about the Consumer Credit Fund. As at 31 March 2010 the fund

was at just under $800,000. After 1 July 2010 the fund will continue to be used in Queensland to enforce

the interest rate cap, including the provision of compliance officers, until its depletion.

The shadow minister also questioned whether costs of the national regime would be passed on to

consumers. Fees for providers would be based upon the amount of credit they provide or refer to a

provider. Application fees start at $450. By way of an example, a fee of $1,000 per annum is payable if

providing credit between $100 million and $200 million. As can be seen from this fee structure, the

amount of fees payable by a provider is small compared to the credit they are providing. Consumers

should therefore experience negligible impact. I remind the member that the interest rate cap will remain

in existence to confine the cost to consumers of obtaining credit.

The shadow minister also questioned the number of consumer complaints to the Office of Fair

Trading about credit. Complaints are as follows: as at 30 June 2008, 917 complaints; 30 June 2009, 870

complaints; and the current year to date, 927 complaints. The complaint numbers have remained

relatively consistent over time.

The shadow minister questioned whether the new national legislation will stop businesses from

avoiding the use of a business purpose declaration to avoid the uniform Consumer Credit Code. I am

aware of instances of avoidance having taken place causing detriment to consumers. The Australian

Securities and Investments Commission is already developing its compliance strategies, and I anticipate

that this will be one area of particular interest to them.

The shadow minister also questioned how much the Queensland government would save in no

longer having to enforce the uniform Consumer Credit Code. The aim of the referral of credit is not

savings for the government but, rather, savings for the credit industry and consumers, who will benefit

from a reduced regulatory burden thanks to a consistent national legislative scheme. The possible

potential savings to the Queensland government may include reduced prosecution and legal costs.

There is an ongoing administrative cost to maintain and administer the interest rate cap, which is

approximately $1.5 million per year.

Both the shadow minister and the member for Aspley sought assurances about the interest rate

cap. I can assure the members in the House that this is an issue on which Queensland has led the way

in the past and will, for the foreseeable future, continue to do so. I have to make it clear that the

government remains committed to a reasonable interest rate cap that protects the most vulnerable of

consumers.

The shadow minister raised concerns that consumers on low incomes should have continued

access to credit. I am pleased to be involved with the No Interest Loan Scheme, or NILS as it is known.

This scheme provides low-income earners with access to no-interest loans for essential household

purchases. I commend the dedication and enthusiasm of the NILS providers in Queensland, although it

will no longer have credit responsibilities after the transfer of credit to the Commonwealth. I am hopeful

that the NILS program can continue.

The Credit (Commonwealth Powers) Bill 2009, which I will refer to as the ‘referral bill’, provides for

the transfer of power to the Commonwealth parliament to make laws for the regulation of consumer

credit and repeals relevant credit legislation in Queensland. The referral bill is the result of significant

work undertaken by Queensland and other states and territories, Commonwealth Treasury and the

Australian Securities and Investments Commission. This effort has been achieved through consultation

and cooperation between the jurisdictions. The benefits of reforming credit law will be experienced by a

large number of Queenslanders as many of us are affected by the laws of credit.

The Commonwealth credit reform bill, namely the National Consumer Credit Protection Bill 2009,

was passed by the Senate on 26 October 2009 and is scheduled to come into force on 1 July 2010. The

Commonwealth will then have the responsibility for the regulation of consumer credit and finance

broking. This includes home loans, personal loans, credit cards, overdrafts and other products and

services.

This referral bill is the first step in the reform process for Queensland and facilitates the

Commonwealth’s two-stage approach to the transfer of powers for credit matters. During this first stage

the Commonwealth government will assume responsibility for the uniform Consumer Credit Code. The

uniform Consumer Credit Code will be a schedule to the National Consumer Credit Protection Bill 2009.

The second phase consists of the Commonwealth considering additional credit matters including

extending the credit laws to small business and an examination of state approaches to interest rate

caps. In order for the Commonwealth to legislate for second-phase matters and new credit products, an

amendment to this referral bill will be required.

Today I will move a number of amendments during consideration in detail. These amendments

are necessary in order to effect the inclusion of the ‘carve-outs’. These carve-outs make clear the extent

of the Commonwealth’s powers on the critical issues of sale of land and registration of mortgages and

stamp duty and put beyond doubt the Commonwealth’s limits of control over these matters.

The amendments to be moved during consideration in detail have also been necessary to change

the method of Queensland’s referral power to the Commonwealth from a referral method to an adoption

method. This change will result in greater constitutional certainty for the Commonwealth regulation of

consumer credit. While the Commonwealth will have responsibility for the regulation of consumer credit,

in the meantime Queensland is continuing our interest rate cap to ensure this important consumer

protection is maintained until the Commonwealth comes to a conclusion about the national interest rate

cap regime.

In conclusion, I would also like to acknowledge that the reform of consumer credit is just one of 27

Council of Australian Governments reforms that Queensland is involved in as part of the National

Partnership Agreement to Deliver a Seamless National Economy. Queensland has also passed the

Personal Property Securities (Commonwealth Powers) Bill 2009 and the Trade Measurement

Legislation Repeal Bill 2009 as part of this reform process.

This referral bill further contributes towards this goal of ensuring that business need only comply

with a single set of rules. This is also expected to lead to better consumer protection. I thank all

honourable members for their support for this bill. I also thank the departmental officers who worked on

the bill: Chris Irons, Damian Sammon, Shayna Smith, Kelly Wick, Martin Skorka and Anthea Walsh.

Question put—That the bill be now read a second time.

Motion agreed to.

Bill read a second time.

rate of credit contracts. As members can see, there is quite a difficult mathematical equation there for

the minister to deal with. Under the national competition and consumer policy, if difficulties in

repayments occur by the debtor and the term is required to be extended to allow for extenuating

circumstances, does that affect the equation after the fact, resulting in the credit provider being allowed

to charge interest for that extra period that may well, under that equation, exceed that 48 per cent? In

other words, a hardship clause comes in, which requires the person who owes the money to seek an

extension of time. From the credit provider’s point of view, is he limited by this equation to collecting any

more interest for that period because he is limited to the 48 per cent?

circumstances.

clause that basically says to the provider, ‘You have X amount of loans with X amount of interest due.’

You are saying to the credit provider, ‘Okay, you just have to extend that loan for hardship,’ which is

genuine, fair and reasonable. But you are now saying to Mr Credit Provider, ‘You can’t get any extra

interest.’

that opportunity. That will again reduce the capacity for those lenders to be out there in the community.

Queensland will not allow the 48 per cent cap to be exceeded. It is as simple as that.

Clause 31, as read, agreed to.

Clause 32, as read, agreed to.

Schedule, as read, agreed to.