PAUL RICKARD:
Welcome to Scott Morrison, Federal Treasurer. Hello.
TREASURER:
G’day, sir.
PETER SWITZER:
How are you, Scott?
TREASURER:
I’m good, Peter, good to be with you and everyone else.
RICKARD:
Scott, I’m going to push you across to Peter in a moment but we actually wanted to get you on today to talk about some reforms you’ve announced today to credit card practices – in particular, clamping down on the banks and the sort of things that they can offer you on a credit card. So would you like to just take us through the key reforms that you’ve announced?
TREASURER:
Yes, sure. We’ll be introducing legislation when we come back, the next time Parliament sits, and what this does is deals with those situations where people can get themselves into quite a bit of strife on their credit cards. They might be under a lot of financial stress and then you’ve got people offering you higher limits and new cards and all the rest of it. So, what we’re going to be doing is ensuring that you can’t make unsolicited offers for credit card limit increases. Currently that just applies to not being able to send you written ones but this means not by phone, not inadvertently – they cannot make unsolicited offers for increasing credit limits. They are going to be simplifying how interest is calculated, so people better understand what they’re getting into. We’re going to require that the card companies, banks and others, who provide these products, that they work out whether someone can have one of these cards or these higher limits based on their ability to repay the whole limit – not just the minimum repayments.
RICKARD:
So they have to take into account the whole amount of the limit and working out whether they can service the debt. Is that the…?
TREASURER:
That’s exactly right. At the moment, they just do it on the minimum repayment amount and so people will say, “The card company says I can have this limit. They reckon I can afford it. So, I must be able to.” And when you’re under a lot of stress and a lot of financial pressure, it’s pretty tempting to believe that. And the final thing that we’re doing is it requires them to have more options online so they can cancel their cards and they can reduce their credit limits. So, it’s trying to protect people who are in a very vulnerable space. We all need to manage our own debts and we’re responsible for our own debts but when people get under the pump, we don’t want them to be taken advantage of by credit card sharks.
RICKARD:
And the timetable to have the legislation? Is it expected to be supported by both parties?
TREASURER:
I would think so. We announced this a little while ago in terms of the consultation process. We’ve gone through that after the election and I announced it in the Budget, and so now we’ll be putting that into legislation and it will come into place before the end of the year.
RICKARD:
Right, okay. And just on the – you said you’d make it easier to calculate, at least explain, the interest rate on credit cards. Can you just take us through that reform?
TREASURER:
Well, it’s so people understand what their total repayments would need to be and how the interest applies to all of that – not just how things relate to just the minimum repayments. People can confuse the two things.
RICKARD:
Yes, people get very confused about that, don’t they?
TREASURER:
I think that is the point sometimes. If people are unsure then they’re unsure of what they’re getting themselves into and where they might otherwise go, “Well, hang on a tick, I don’t think that’s a cracker idea. I think I’ll rethink that.” And that’s really the environment which a lot of this sort of behaviour takes place and they’re seeking to profiteer from people when they’re down. And that’s such an un-Australian thing to do.
SWITZER:
I do have a question. Thanks. Scott, have you thought about – I think one of your critics said that it would be a great idea if they could put comparison rates when the interest rates are put out there for credit cards because comparison rates obviously include all expenses and it’s probably the more effective or real rate. Would you guys consider that?
TREASURER:
Look, we’re still open to further changes, Peter. I mean, I don’t see any of these things as a closed shop. If there are other good ideas that come up as a result of this, we’re very happy to take those on. So, part of the reason we’re talking to you today and making sure people understand these things are coming, we’re always open to better ways to protect people in these situations. So, I think that’s a good idea.
RICKARD:
Well, Federal Treasurer, we’re always happy to chat to Switz about some of his great successes. He’s always happy to wear you as the feather in his cap as a student…
TREASURER:
Well, that’s good news.
RICKARD:
No, it is good. As the student that showed some promise and went on, but can we turn the tables?
TREASURER:
Sure.
RICKARD:
What was Mr P. Switzer like as a uni lecturer for economics back in the day? Please enlighten us.
TREASURER:
Well, both of us had a bit more hair, I remember that.
SWITZER:
[laughs]
TREASURER:
And Peter, at that time, I think he was just starting in his media career at around about that time. But what we saw as students was that very easy way that Peter had to explain economic concepts to students. He’s done a great job in doing that for his listeners and people he’s advised over many years. So, it didn’t surprise me that his media career has been so successful because as a lecturer, he was quite a funny bloke. He was very easy to relate to. I don’t remember too many lecturers from that time but I always remember Pete.
RICKARD:
Gosh, we gave you a chance to give him a roast but you’ve dodged a bullet Switz.
SWITZER:
That is the promo I want played every day before the show. Alright?
TREASURER:
Get me on Sky, I will do it on there too, Pete. There you go.
RICKARD:
Thank you, Scott Morrison, appreciate your time.
TREASURER:
Cheers.