TOM CONNELL:
Welcome back. Well, the government has introduced legislation to overhaul how Buy Now Pay Later services are regulated. Proposed reforms will bring the services under the Credit Act and require operators to hold a licence. It’s in a bid to better protect users. Joining me now is Assistant Treasurer and Financial Services Minister. Stephen Jones, thanks for your time, as ever. So, when it comes to this change, is it still going to be possible for someone who fails to get a credit card to get Buy Now Pay Later? Where the bar is set, I guess, is a bit higher than it is now, but not all the way up to a credit card. Is that a fair way to sum it up?
STEPHEN JONES:
Look, it would be fair to say that what we’re doing is bringing in the protections which are commensurate with the risk. Many people wouldn’t know that – like you walk into a shop today, you’ll see a sign on the counter that says you can pay with EFTPOS, Mastercard, credit card, Visa or Afterpay or Zip. Some of those products, not EFTPOS, of course, but some of those products are regulated as credit and some of them aren’t. And what we’re doing is saying is we’re going to bring all of the credit-like products inside the National Credit Code. The credit checks and the responsible lending obligations will be scaled to the size of risk involved. So, if you’re offering a credit facility with a 10 or a 20 thousand dollar credit limit, then the checks and balances in that are going to be a lot higher than if it’s a $200 facility, like a bunch of them are. So, checks and balances commensurate with the risk involved in the loan.
CONNELL:
But you still are comfortable enough with this product being something that’s easier to access with that smaller amount. If you’re getting 500 bucks to $1,000, then the higher level, so the people who are still a good fit for it and want to get that item now and want to access the zero interest payments in a responsible way, it’s not going to be something that basically can’t be used anymore? You’re confident of continued access?
JONES:
Yeah, look, what I’m trying to do here is get the balance right. Not one to make it so hard for everyone. The vast majority of people who are using this and never get into strife, never get into trouble. You don’t want to make it so hard for them that, you know, we crush the innovation and the competition, but just get a reasonable level of check and balance in there for people who are getting in there way over their heads. And the things that financial counsellors and others are bringing to me is people having multiple accounts, because there are no checks involved in people signing up. So, they’ll have multiple accounts, they might have 4, 5, 6, 7 accounts. And it’s that layering effect that makes it unaffordable for them. So, that’s the principal stuff that we’re trying to prevent, the harm that we’re trying to prevent, while not making it so hard or difficult for everybody who sees this as a great way of smoothing their income over the course of a fortnight.
CONNELL:
I wanted to talk about GDP, but something not really spoken about a lot. The ABS, in releasing this data, basically also revealed some hidden consumer demand and spending that they didn’t realise was there before. About $5 billion in travel spending. This is interesting, isn’t it? Does this indicate the economy wasn’t quite as soft and if you knew that before the Budget, would it have changed the sort of parameters on how much you wanted to help prop up the economy?
JONES:
In short, no. In short, what we take out of the GDP figures this week is we’ve got the balance right. Cost‑of‑living relief, no time to slash and burn in terms of government sector support for the economy, set ourselves up for the future. But what the travel data shows is that there are Australians who are doing it ok. We know a lot of Australians who are doing it tough, but there are also a lot of Australians who have got enough money or enough savings to head overseas and have their holidays. And for a lot of Australians, this is sort of pent up demand during the COVID period where they couldn’t travel much. So, we know a lot of that’s going on, but what we don’t want to do is set a rule for them that denies the fact that so many households and businesses are doing it tough.
CONNELL:
Yeah, there are still those pockets, you know, different people. For some people, an interest rate rise actually helps them out, it’s worth noting. The RBA Governor as well has made it clear energy rebates don’t really lower inflation. Particularly inflation, it looks at the trimmed mean. So, just being clear to voters on that, the rebate, which the government was saying, you know, partly mechanically lowers headline inflation. That will not, will it, bring any sort of rate cut relief – that will not allow that to happen?
JONES:
Well, let’s be clear. The objective of the energy bill rebate is to help people pay their power bills, and it’s probably one of the things that people raise with me and my colleagues most often. The number one objective is to ensure that we can help people pay their power bills, but not do it in a way which puts upward pressure on inflation, and indeed, as you pointed out, puts downward pressure on measured inflation. I wouldn’t put it any higher than that. Number one objective; help people with their bills.
CONNELL:
But the RBA Governor made it clear that even though there is this, it does mechanically lower the headline inflation. And even if that makes that headline inflation lower, you know, go below 3 because of what happened in the Budget, that doesn’t mean they’ll go, oh, we better have a rate cut. That’s true, isn’t it? If you want to just be upfront to voters about the impact of the Budget.
JONES:
Being very upfront with the impact of the Budget. I’m not going to get into commentary, Tom, on what the Reserve Bank Governor has said and get into a to and fro on that sort of thing.
CONNELL:
That’s not commentary. I’m just saying what she said about inflation.
JONES:
I’m just not, I’m not going to get drawn on about responding to things that the Reserve Bank Governer – I’m just not going to do it. I’ll be upfront about why we’re doing what we’re doing, and that is to provide some relief. Do it in a way that doesn’t put upward pressure on measured inflation. The majority of the impact of the Budget, though, as Jim and I and Katy have said time and time again, provide some near term support, set us up for the future. The great story over the last 2 years is the unemployment and the job story. We want to ensure that we don’t lose any of those benefits as we move through this soft period. We want to ensure that the majority of Australians are in a job and that their wages are growing. That’s the story we want to focus on and that’s the outcome that is going to drive the economy forward over the years ahead.
CONNELL:
Stephen Jones, got to leave it there. Thank you.
JONES:
Good to talk.