Adams Paul: Credit Contracts and Consumer Finance Bill — In Committee 
Adams Paul: Credit Contracts and Consumer Finance Bill — In Committee 
[Volume:611;Page:8847] 
PAUL ADAMS (United Future) 
: 
 I will take a call on the schedules. I just want to pick up on one point Don Brash mentioned and that was educating people regarding their credit debt. I think it is a very good point. There is no way unfortunately that we can legislate in Parliament for people’s success as much as we would love to. We must have laws; nobody would doubt that. But we need to understand that we cannot legislate for people’s success and we need also to be responsible for educating them and letting them know exactly what they are getting into when they take on debt. 
I have learnt in life as probably many members have also learnt that money is a wonderful servant but it is a terrible master. Yet we all have to learn in life by experience. But sadly with debt that can be a very painful lesson to learn. Sometimes it does concern me. The other day I was in a queue and there were some young people in front of me—and I love young people so hear me correctly on this—and one said to the other: “Look I’ll give you the cash and you just put this cost on your credit card.” Well the answer amused me because the person turned round and said: “I’m sorry I think my card is full.” Well I thought that “full” was an interesting way of saying: “I have reached my maximum credit allowance.” 
I heard another conversation between two ladies. One said to the other: “Let’s go shopping.” Now of course one never has to convince a lady to go shopping. She said: “Why are we going shopping?”. The other lady said: “I have just discovered that my card owes me $5000.” I thought that was another interesting saying. So I had to ask her: “What do you mean ‘my card owes me $5000’ ”? She explained to me that she thought she was at the maximum of her credit card balance but she had just got her account and in actual fact she still had $5000 to go and she thought that the card owed her that amount. That sort of comment scares me because I think that people do not fully understand the debt they are getting into. As I said earlier the current credit card interest rate of 18.75 percent—which I think banks in New Zealand need seriously to look at—is an extremely high interest rate. We have 90-day bill rates at below 6 percent yet banks are still charging the average New Zealander 18.75 percent interest on a credit card. If a person cut up his or her card when it was at the maximum balance of $3000 and never spent another cent on it but just continued to pay the minimum balance which is 2 percent per month most New Zealanders do not understand that it would take that person 37 years to pay off the card. 
So as we bring in this legislation I just want to make that point because I think it is a very good opportunity to mention that we can legislate. This is great legislation and United Future is supporting it. But I think we have a responsibility to make sure that as a Government we let people know exactly what debt is costing them and encourage this nation again to begin saving—because once again that would be United Future common-sense policy.