Fair Trading Amendment (Cash Loan Machines) Bill

Photo of Australian various denominations of banknotes
30 May 2019

Mr ALISTER HENSKENS (Ku-ring-gai) (11:04:43): I speak in opposition to the Fair Trading Amendment (Cash Loan Machines) Bill 2019. In doing so, I draw attention to the need for this House to ensure that it handles legislation in a way that is in line with the Australian Constitution. If any of those opposite troubled themselves to read the bill drafted by Parliamentary Counsel they would see immediately that the new section 58O, which this bill proposes to insert into the Fair Trading Act, itself draws upon the National Consumer Credit Protection Act 2009. That is a statute of the Commonwealth Parliament. The National Credit Code was created by schedule 1 to that Act.

That immediately raises a significant constitutional issue. Many members in this place would like to amend a number of policies and laws legislated by the Commonwealth Parliament. The desire for change has led State Parliaments across Australia to pass legislation that contradicts Commonwealth legislation. Nobody is doubting the sincerity of the member for Swansea in bringing forward the bill; it is admirable to take a stand on matters that are important to us. But we must respect the constitutional structure of our Federation. We must respect the Commonwealth Constitution and the way in which legislative change occurs within the great Commonwealth of Australia. The law and the Constitution do matter.

The approach of the member for Swansea through this bill, although well intentioned, is a little like a scene from the great Australian filmThe Castle—simply thinking that the "vibe" of the thing is great is not enough. You need to have legislative power to make changes to the law. If anybody who supports the bill had regard to the Commonwealth of Australia Constitution Act section 51 (xiii) it would be abundantly clear to them that the power to make laws in this area is part of the legislative power of the Commonwealth Parliament. Any Labor members who are cognisant of political, legislative and constitutional history will know that was the power the Federal Labor Party tried to use to nationalise the Australian banking system. That case went all the way to the Privy Council, where it was successfully argued by future Federal Liberal Attorney-General Sir Garfield Barwick. The Privy Council overturned the proposed nationalisation of the Australian banking system.

The legislative power that this bill seeks to interfere with is clearly a legislative power of the Commonwealth. That is made clear on the face of the bill. The bill refers to Commonwealth legislation that it seeks to interfere with. I commend the Minister for Better Regulation and Innovation for observing appropriate constitutional process. He informed the House that he has written to the Federal Minister with responsibility for this area, asking him to be cognisant of this issue. I respectfully suggest to this House that this is the entirely appropriate constitutional way to deal with the issue that has been raised by the member for Swansea. Rather than take up the time of this Parliament debating an unlawful, unconstitutional bill, the member for Swansea could have simply written to the State Minister to draw his attention to the issue and then Minister Anderson could have written to the responsible Federal Minister and appropriate processes would have been put in place.

The Government understands the need to protect those who are most financially vulnerable. However, the greatest concern this bill raises is that the substance of the bill does not deal with the entirety of the issue at hand. The risk the bill poses is that it will divert the conversation from the broader issue and simply confine it to a small part of the broader issue, which is the machines that are issuing this kind of credit. There are only nine of these machines in New South Wales. If we remove those nine machines, we certainly would not remove access to the contracts and thus address the important issue of a business model designed to take advantage of vulnerable people, which is the much bigger and much more important issue at hand. If we remove those nine machines, we would still have the high interest rates—indeed, usury rates—the often unreasonable payment terms and the disproportionate penalties.

Removing the machines would have only a minimal impact upon the problem. Merely removing the machines does not provide adequate protection for consumers, which is the very matter that Minister Anderson has written to his Federal counterpart about. Many of us may be fortunate never to have been in a situation of being down to our last dollar, needing to raise funds for an unexpected emergency that has arisen and therefore being vulnerable to a desire to avail ourselves of this kind of very aggressive lending. A number of things can give rise to people having to avail themselves of such loans: It could be a broken appliance, car repairs, home repairs or an unexpected travel bill perhaps to attend the funeral of a loved one. It is at those times that financially vulnerable people may look for extra financial assistance, fall prey to these merchants of usury credit and find themselves vulnerable to entering into improvident lending agreements.

I raise this matter because access to finance is becoming a more important issue. Since the global financial crisis lending processes have certainly tightened and, as a consequence of the royal commission into the financial services sector, credit from top-tier lenders is possibly more constrained than it has ever been. It is an important issue and we on this side of the House do not gainsay that it is not an important issue. However, there is a proper way to deal with this issue, and the bill before the House is not the right way to go about it. We, as parliamentarians, are custodians of the legislation of this State. It is imperative that we do not undertake hollow gesturing exercises in this place when there is no constitutional power to achieve the objective, no matter how well meaning the exercise may be.

The simple question that each member should ask themselves when voting on this bill is: Will I truly help the problem if I pass a bill, which under section 109 of the Commonwealth of Australia Constitution Act will be inconsistent with a piece of national legislation and therefore invalid? The bill's invalidity will be very clear. So let us not turn this Parliament into some hollow gestures exercise. Let us recognise the constitutional structure of our great Commonwealth of Australia and let us recognise that this issue falls fairly and squarely within the legislative power of the Commonwealth of Australia. We should support the Minister's actions in that regard.