GLEN BARTHOLOMEW:
The Federal Government is moving to provide more assistance to people unable to meet mortgage payments because they lose their job. For the details of that, we're joined by the Superannuation and Corporate Governance Minister, Nick Sherry, and he's speaking to Marius Benson.
REPORTER:
Senator Sherry, as I understand it, at the moment there are hardship provisions which provide assistance to people with mortgages up to a limit of $312,400. You're now planning to raise that limit to half a million, is that the case?
NICK SHERRY:
Yes, we're going to increase that threshold for hardship applications significantly to half a million dollars.
REPORTER:
And how much help can you provide for those hardship cases?
NICK SHERRY:
Well, what happens is if a person is experiencing hardship, they go to their financial institution and they will assess the grounds of hardship. They can then postpone payment of principal or interest. If you're not satisfied with the decision of the financial provider, you can appeal that decision to an independent, low-cost dispute resolution hearing.
REPORTER:
And the Government will assist in that process?
NICK SHERRY:
Well, we've increased the threshold significantly from $312,000 to half a million.
I'll also be announcing today new responsible lending provisions. Providers will have to be - assess suitability for the product they provide to an individual as well as their capacity to repay the proposed credit.
REPORTER:
Does that suggest that you're concerned about a level of irresponsible lending going on right now?
NICK SHERRY:
Well, I certainly am. I do know that irresponsible lending occurs in Australia at the edge of our financial system, I'd have to say. It does cause some hurt for many thousands of people, unlike, of course, the United States when it was at the centre of their system and ultimately helped bring down their, of course, enormous dislocation to their financial system.
REPORTER:
And what's prompted these measures now? Is there something specific or is it just generally the worsening economic climate?
NICK SHERRY:
Well, we made the decision 18 months ago in principle to proceed. I think firstly it's important to have in financial services single, standard national legislation; currently these responsibilities lie with the states. So you have single, standard law at a national level.
But I think also the events in the United States have reinforced the Government's view that it was time to have a national set of laws in all financial services.
REPORTER:
And by increasing this threshold at which - to which people are allowed to seek this assistance from $312,000 to $500,000, how many more people will be covered by it, do you think?
NICK SHERRY:
Look, I'd have to carry out an assessment. I don't have precise numbers. But it would certainly be - would be in the thousands, I've got no doubt about that.
REPORTER:
Now, on another financial issue. Politicians are certain to be under fire today because there's news that electoral allowances are to be increased. You'll get about $4700 more in your kick, and a pay rise for politicians is never popular. Is it justified?
NICK SHERRY:
Well, it's not a pay rise. What I do with my electoral allowance is buy lots of raffle tickets, make lots of donations to charities and to individuals. I spend it every year. I understand it hasn't increased since the year 2000. So it's not a pay rise as such; it's there to spend in your electorate on your responsibilities.
REPORTER:
And is the allowance increase justified, in your view?
NICK SHERRY:
I understand it hasn't increased since the year 2000, and it's not for me to make the judgment. We've got an independent tribunal that determines that, and apparently the tribunal has determined it independently.
REPORTER:
Senator Sherry, thank you very much.
NICK SHERRY:
Thanks.
REPORTER:
That's the Superannuation and Corporate Governance Minister, Nick Sherry, with Marius Benson.
Do you keep the prize if you spend electoral allowances on raffle tickets? I'm not sure.