Adams Paul: Consumer Credit Bill — Second Reading 
Adams Paul: Consumer Credit Bill — Second Reading 
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PAUL ADAMS (United Future) 
: 
 I love lawyers like Mr Dail Jones. They go through the legislation and I really appreciate them doing that. But being a simple man I often find that when I go to see a lawyer about these types of contracts I come out more confused than when I go in. I mean no disrespect or anything by that—we need lawyers. 
This legislation is well overdue because over the years society has changed tremendously. I remember that when I was a young boy I had only cash in my pocket. It was quite simple—when it ran out it was finished. Nowadays however the young ones have the advantages and it is progress. It has been fantastic how electronic transactions have come on and that we can look at our finances on the Internet and all of those other things. It is good but likewise it has also become very easy for anybody to over-borrow. As it is often said: “If the incoming is not greater than the outgoing the shortfall will be your downfall.” 
I believe that financial pressure is one of the greatest pressures that one can live under. Those who have creditors knocking on their doors all of the time and have no ability to pay leave themselves open to the unscrupulous people in finance industries who prey upon those types of people. Because people are under pressure they are unfortunately more interested in obtaining the cash required to alleviate their immediate problem than standing back to see what the transaction will cost them. I welcome the fact that this bill requires greater transparency so that those borrowing the money will have the cost of the transaction clearly laid out before them. A small difference even in the interest rate at the point when people borrow the money can make a huge difference over the course of a loan. Just adding a few extra dollars per month to the payment on a 25-year mortgage can end up at thousands of dollars at the end of the day. 
One of the main issues is providing information to borrowers—not only at the beginning of the contract but also as the contract progresses through its term. People should be informed of these things. In the current market we see interest rates fluctuating on an incredibly regular basis. The days of signing up a mortgage for 25 years at a fixed rate for the term of the contract is long gone. Interest rates will alter at least every 90 days. Unscrupulous lenders tend to focus on those less able to pay what is necessary. I share Dail Jones’ concern about people having good legal advice so that they really do know what they are letting themselves in for. 
Internet transactions are recognised in the bill and I welcome that as this is the age we are going into. Within a short period of time most transactions will no longer be done by cash or possibly even by cheque but will become electronic. 
The high cost of interest on credit cards concerns me. I am not dead sure how these will be looked at as they alter according to the borrower but I trust that provisions will be in there. Lately I have been asking people whether they know the interest rates they are paying on their credit-card borrowings which can be 18.75 percent or higher. I have been amazed at the number who do not recognise the cost to them of those transactions. Interest seems to be a small amount when people pay it on a weekly or monthly basis. However over the years of a contract it is an incredibly large amount of money. 
In relation to the concerns about the compliance costs additional software will be required but that is just part of life these days. As things progress software always has to be updated. 
United Future is very supportive of this bill especially now that it brings in buy-back schemes. The only concern I have about those schemes is that the penalty for an offence will be up to 3 months’ imprisonment and/or a fine not exceeding $200000. Let us think about this a little bit. In many cases buy-back schemes concern the elderly who perhaps have freehold homes. All of a sudden they are told that a family member or somebody like that needs some cash and they are asked to just sign on the dotted line and not read the papers or know the full story. They then find that they have sold their houses and are now renting them and all of a sudden—a few years down the line—somebody comes knocking on their doors to take their homes away. Nobody in this House would find that acceptable. That is white-collar crime at the extreme. 
When I read that the penalties for theft by a servant which is an employee robbing his or her employer I would have to rate this type of offence in at least that league if not worse. I personally would like to see the maximum penalty for it increased to the same as for theft by a servant which is 7 years’ imprisonment. 
Dail Jones 
: Family members would have to be imprisoned as well. 
PAUL ADAMS 
: That may well be the case but that is a maximum sentence. A 3-month maximum sentence is far too short. The judiciary should have the ability to weigh up various situations and impose a maximum penalty of up to 7 years. The judiciary would have the wisdom to be able to do that. 
United Future welcomes this bill. We support it and commend it to the House.