29 August 2016
Transcript - #2016049, 2016

Interview with Tom Tilley, Triple J Hack, ABC

SUBJECTS: Small amount credit contracts, Parliament, Same sex marriage.

TOM TILLEY:

We have got Kelly O’Dwyer with us, she is the Minister for Revenue and Financial Services and she was actually given recommendations from an independent review into small amount credit contract laws. Kelly thanks so much for joining us.

MINISTER O’DWYER:

Great to be with you Tom.

TILLEY:

What concerns do you have about the practices around short term and small credit loans?

MINISTER O'DWYER:

We were very concerned that some very vulnerable people were being trapped into paying off their debts by getting into even more debt. I think Caitlin’s story is a very good example of that. What we did is we initiated an independent expert review to look at not only small amount credit contracts and the very high percentages that would charge for very small loans, in some cases up to 350 per cent on a $500 loan…

TILLEY:

Wow.

MINISTER O'DWYER:

Which is really extraordinary. We actually also decided that it was important to look at consumer leases as well where people are leasing out goods and paying extortionate amounts to do that. So we have had some recommendations come in from the expert panel, we have been consulting with industry, we then had the election in between that and we are now looking at whether or not there ought to be some caps for consumer leases as well as for small amount credit contracts. So we are very close to finalising it.

TILLEY:

Ok, well you got the review in March so when do you think you will actually decide which of the recommendations you will introduce?

MINISTER O’DWYER:

I think the recommendations are very sensible and the government will be in a position certainly before the end of the year not only to respond but to look at the implementation of a lot of these recommendations. One of the particular concerns that we have is in relation to people who are in an even more vulnerable position than Caitlin, people who are being paid by the government who might have Centrelink payments and are using those payments to pay interest on some of these small credit contracts.

TILLEY:

Yes, and I saw that one of the recommendations was that only ten per cent of their income would be allowed to pay off these short term loans?

MINISTER O’DWYER:

That’s right so that people aren’t finding themselves in a positon where they are getting into multiple loan arrangements and not having the ability to actually pay it off. We are also considering a recommendation as to whether or not that cap ought to apply across the board.

TILLEY:

Ok, the other interesting thing about Caitlin’s story was that she actually I guess got one of these loans in the first place. For her it was over four years ago when she first got into that kind of trouble. In 2013 a law was introduced to stop loans of less than 16 days, so does that mean that Caitlin’s situation shouldn’t be able to happen anymore to anyone?

MINISTER O’DWYER:

Yes, that is right. So small amount contracts for loans of up to $2,000 where the term of the contract is less than 16 days was actually made illegal from the 1st of March 2013.

TILLEY:

Right, ok and is that being enforced or are suppliers finding ways around that?

MINISTER O’DWYER:

Well it is illegal so it is being enforced.

TILLEY:

Yeah right, ok. Now one of the practices that seems really dodgy is quoting of monthly interest rates. So in Caitlin's case, she was quoted a four per cent per month interest rate but when you actually do the math, that’s the equivalent of an annual rate of 48 per cent which is completely off the charts. Are you considering a law that makes it illegal to quote a monthly interest rate?

MINISTER O'DWYER:

We are obviously considering how information is disclosed and I think the point you make Tom is a very good one, which is that people need to be very careful that all of these rates compound and they increase the amount of debt if you're not actually paying back some of the balance but are only paying some of the interest so it means that you are getting further and further into debt.

TILLEY:

Someone's made a point about education, someone says is it not a lack of education that people spend too much or sign up for these dodgy loans? Not everyone understands the concept of compound interest.

MINISTER O'DWYER:

This is where ASIC have got a really good toolkit, the ASIC MoneySmart website, where people can actually plug in their details and actually see the impact of some of their financial decisions, to actually educate themselves before they make these sorts of decisions.

TILLEY:

Anton from Sydney has made a point about this as well. He says, fool me once, shame on you. Fool me twice, shame on me. Maybe legislation should be tight, but people need to take some responsibility for their actions, there's no such thing as a free lunch. How much of a role do you think Governments should play and how much should we, I guess, be responsible for ourselves?

MINISTER O'DWYER:

There's no question that people who borrow money need to understand that at some stage, they're actually going to have to pay it back. You don’t get to borrow money and not have to pay it back. But at the same time, we do know there are situations where people are extremely vulnerable and they are certainly taken advantage of and we want to make sure that for those people that there are adequate protections in place. But your point Tom is right and the point of your listener is absolutely right, to say that people do need to take on some responsibility for the financial decisions that they do make and it's not a smart idea to be paying off debt by creating more debt.

TILLEY:

Absolutely. You are listening to Kelly O'Dwyer who is the Minister for Revenue and Financial Services and we've been talking pay day loans or dangerous short term loans. We'll get back to your stories in just a moment but quickly, Kelly O'Dwyer, I want to ask you about some of the other big political stories of the day because tomorrow the new Parliament goes back, are you excited?

MINISTER O'DWYER:

Very excited, always Tom. I'm sure all of your listeners are equally excited about it.

TILLEY:

I cannot wait to hear how Question Time goes down for the first time.

MINISTER O'DWYER:

It won't be tomorrow, we've got lots of procedural motions tomorrow with the new Speaker, then we go across to the Senate and then we go back and the Governor-General gives a speech so tomorrow is pretty ceremonial but Wednesday is the day where if you're interested in Question Time that all of the action will take place.

TILLEY:

One issue getting a lot of attention is the same sex marriage plebiscite. Labor and the Greens oppose the idea of a peoples vote and today we have found out that the Senate powerbroker, Nick Xenophon, said he won’t vote for it either. Which begs the question whether or not the plebiscite can actually get through Parliament? We actually put that question to Nick Xenophon today.

JOURNALIST:

Does this spell the end of a plebiscite? Is it dead-in the water now?

NICK XENOPHON:

Well, unless the government can find other numbers for it, whether it is the opposition or any other parties; it seems to be the case. If the Opposition and the Greens hold to their position I expect they will that’s it. But that doesn’t mean that the debate isn’t over, this is an important issue. This is an issue that ought to be determined by the Parliament.

TILLEY:

So the plebiscite could get pushed back a long way. It sounds like it’s going to play out perfectly for the conservatives in your party.

MINISTER O'DWYER:

I think it is no secret that obviously I have got a very strong view on same sex marriage. I am a strong proponent of change to the Marriage Act and I would like to see that happen as soon as possible. We did take a commitment to the last election, and that commitment was to allow everybody in Australia to have their say on this particular issue. We are going to honour that commitment because it is important. We put our hand on our heart and we said we were going to do it and now we actually need to do that.

I think it’s really quite extraordinary that the Labor party, the Greens, and Nick Xenophon are saying that the people of Australia can’t be trusted to have their say on this very important issue. I certainly trust the people of Australia to have a very civilised debate. I think that the vast bulk of Australians will agree with my position which is to change the Marriage Act, and the more that we delay this decision, the less likely that we will be able to bring forward legislation to change the Marriage Act.

TILLEY:

Alright well I guess we will see how civilised the debate is in Parliament before it gets to the public. Kelly O’Dwyer, great to have you on the show, thanks for joining us.

MINISTER O'DWYER:

Great to be with you, Tom.

TILLEY:

That is Kelly O’Dwyer, who is the Minister for Revenue and Financial Services.