JAMES GLENDAY:
Let’s head to Canberra now because the federal government says it is taking a major step towards protecting Australian consumers from harmful lending. It is introducing long‑awaited legislation to force all Buy Now, Pay Later providers to hold a credit licence. For more on this the Minister for Financial Services Stephen Jones joins us now. Good morning, Minister.
STEPHEN JONES:
Good to be with you.
GLENDAY:
So this change has been in the works for a long time. What is going to change when someone goes to use a service, say like Afterpay?
JONES:
It’s all in the back end. So what most consumers won’t know is when they go to their shops and they see on the counter a sign that says you can pay by Mastercard or Visa or Afterpay or some other brands, is that Mastercard and Visa are regulated by our national consumer credit laws, but Afterpay and most of the other Buy Now, Pay Later operators are not. From a consumer point of view they function just the same way as any other credit product, and functionally they are credit, but they’re not regulated in the same way. We want to ensure that those consumer protections that we think are necessary for credit products apply to the Buy Now, Pay Later sector, and when we put in place these new laws that’s exactly what will happen. It will ensure that we maintain the great innovation and competition that the Buy Now, Pay Later sector has introduced into credit markets, but the same consumer protections will be in place as well.
GLENDAY:
So will this ensure that people who use these products will have the means to definitely repay them? Because consumer groups have been quite concerned for a while now about people potentially taking out multiple versions of these services and then getting stuck in a debt spiral.
JONES:
Yeah, look, technically we call this stuff the responsible lending obligations under the consumer credit act. What it will mean is that Buy Now, Pay Later operators will have to do some basic credit checks on people to ensure that the credit product that they are signing up to is going to be affordable for the individual. Setting the bar just high enough to ensure that irresponsible lending isn’t occurring but not too high that it means that credit isn’t available to people who need it, and that everyday consumers who are using these products responsibly and can afford it, are able to access the services they’ve been using for many years.
GLENDAY:
In a recent newspaper report some concerns were raised about this by the industry. Do you think it will ultimately support this legislation?
JONES:
Look, I think industry has known it’s coming for quite some time. We promised before the election that we’d do this. We’ve been working with them and the consumers and others over the last year and a half to get the balance right. Look, there’ll be some who are saying we should be setting the bar higher, some who will be saying we haven’t set it high enough. We think we’ve got the measure right; we’ve got the balance right. Having regulation in place which is appropriate for the risk. Acknowledging these aren’t home loans that people are signing up to, so all the bells and whistles, credit checks that are necessary when you take out a multi‑year, many hundreds of thousands of dollar loan might not be necessary, but that doesn’t mean that there aren’t risks involved. You mentioned in the lead‑in people who have got multiple accounts racking up thousands and thousands of dollars worth of debt that they can’t pay. They’re the sorts of things that we’re trying to ensure that we have some protections against, and the new laws will do just that.
GLENDAY:
Okay. Just on another topic, Minister, we’ve been reporting today about what was revealed in Senate Estimates that some criminals had been trying to and manipulating participants in the National Disability Insurance Scheme to use things like money on drugs, holidays and cars. Were you shocked by these revelations?
JONES:
It’s an outrage. I mean it’s an absolute outrage. You’ve got the National Disability Insurance Scheme set up, a great scheme, set up to ensure that we can transform the lives of people with disabilities, and you’ve got criminals and fraudsters in there ripping off not only people with disabilities but the Australian taxpayer. It’s why a year ago we stood up a specialist fraud team inside the NDIS and it’s why we’ve got reforms before the Parliament right now. We want to ensure that the NDIS is here in another 10, 20 years’ time, and unless we are cracking down on these criminals and these people without conscience who are ripping off people with disabilities and the Australian taxpayer, the scheme won’t be sustainable.
GLENDAY:
How long do you expect to take to stamp out this sort of fraud? I mean do you think it’ll be happening in 2, 3, 4 years’ time?
JONES:
Look, wherever there’s government money available you can be pretty sure that there’ll be unconscionable people trying to find a way to trick either the government or individuals out of that money. It’s why all government departments will have fraud teams engaged in protecting Australian taxpayers and Australian consumers. So it’s an ongoing fight but some of the really egregious stuff that’s going on at the moment, a huge effort is needed and it’s what Bill Shorten’s been working on to reform the NDIS to ensure we can crackdown on these fraudsters, we get more price control into the system, and we put the NDIS on a sustainable footing. But this is the message I have to the criminals who are out there trying to rip off people with disabilities: we’re coming for you.
GLENDAY:
Finally, Minister, it was revealed this week that a speech writer for Government Services Minister Bill Shorten was contracted by one of his Departments to receive about $600,000 for 2 years work. I have no idea what the going rate for a really good speech writer is, maybe that’s accurate, but would you be happy if someone in your Department put in place a contract like this?
JONES:
Look, I’d be surprised if anyone in my office or my Department is earning that, but I understand the person engaged – look, I don’t have all the details but what I’ve seen through Senate Estimates and the other stuff that’s on the record is the person involved is doing a wide range of work for the Department, not just speech writing but other communications assistance. I’ve got to say my preference is for direct employment and I write my own speeches, and it’s a source of great frustration to my staff that they spend hours putting time into writing a speech and I often just deliver the speech that I want to give to fit the moment. But look, I’m sure the person that has been engaged in Bill’s Department is working hard and earning their keep. The preference for the government overall is for direct employment, it’s why we’ve been putting so much in to ensure that we bring all of that work back in‑house.
GLENDAY:
All right, Minister, it’s good to know you write your own zingers. Thank you so much for your time on News Breakfast this morning.