I am pleased to be speaking on this bill, the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024, which continues our government’s delivery when it comes to financial matters—making a difference to consumers, as well as delivering on important issues that we committed to at the last election.

I will start with buy now, pay later. The changes in this bill are really focused on the government protecting Australians from the risk of financial harms. We are putting in place commonsense protections that will make it safer for consumers who choose to use buy-now pay-later schemes. Buy-now pay-later schemes can be very useful for many consumers, but we do need to realise that there are also risks involved, and I think we also need to realise the types of uses that people are using buy now, pay later for. There is often a sense that someone may be buying that new jacket or dress that is just a little bit out of reach. In fact, what a lot of the data shows us is that it is people on quite low incomes often trying to buy essentials. We don’t want those people left in a more vulnerable position than they already are.

Primarily, what this bill does is to ensure that Australia’s credit laws are appropriate for current needs. It responds to trends we’re seeing in the credit markets. In our first six months in government, we delivered on legislation that made payday loans and consumer leases safer, with better regulations in place to protect people using them. Now it is time to, similarly, deliver this appropriate regulation on buy-now pay-later schemes.

As I said, while buy-now pay-later schemes can benefit both consumers and businesses, they can also cause financial harm. Research conducted by Good Shepherd Australia New Zealand in 2022 found some concerning points in relation to how buy-now pay-later schemes were being used by many people in Australia. Around 73 per cent of the financial counsellors working for Good Shepherd said that their clients had missed other payments and had cut back on or gone without essentials in order to pay and service their buy-now pay-later debt. It is people on lower incomes that are using buy now, pay later for essentials—more so, as I said, than it is people using it as a tool for that discretionary spending.

So there is a need for sensible regulation that provides appropriate consumer protections while also allowing consumers to continue to benefit from buy now, pay later. This bill brings buy-now pay-later products into line with other products like credit cards and personal loans, ensuring they are regulated under the credit act. The regulatory framework is designed to operate in a way that’s flexible, adaptable and proportionate to the risk of consumer harm.

Buy-now pay-later arrangements often involve a third party providing consumer finance to cover purchases of goods and services and the payment of bills. Providers in this space pay the merchant the value of the purchase upfront, and they then collect repayments from consumers in instalments.

Despite this, really, functionally, being a form of credit, as I’ve said, buy-now pay-later products are not currently subject to the regulatory framework that applies to other credit products. So we have a gap here which has been exposing people to potentially harmful outcomes. It can lead to poor product disclosure, inadequate dispute resolution processes, excessive default fees and unaffordable lending practices that lead to hardship and financial stress.

These amendments will require buy-now pay-later providers to hold an Australian credit licence and comply with existing requirements under the credit act—including in relation to product disclosure, dispute resolution and hardship assistance. And buy-now pay-later providers will also be subject to responsible lending obligations.

These are really reasonable changes. They are not overly onerous. They are about ensuring there is the appropriate level of consumer protection in place for products that we know a lot of people use. They will ensure Australians can continue to enjoy the benefits of buy-now pay-later while also receiving those appropriate protections, making sure we keep up with the technological change that we see, recognising that these types of credit products are increasingly popular, and all the while making sure that we keep the focus on how we support consumers in this space.

Another important part of this bill that I want to highlight is the work we are doing on build-to-rent investments. This will be important in helping to expand Australia’s housing supply. It will help to increase rental supply at scale, at a time when there is an acute shortage of new rental stock. That ‘at scale’ part is actually quite important in this. We know that we need more rental houses in this country—just like we need more affordable houses, more social houses, more houses in general—but we absolutely need more rental supply at scale. Build-to-rent is already an established practice in the United States and the United Kingdom, but it has been a relatively small industry here in Australia. There is significant scope for build-to-rent developments to now contribute to increasing our nation’s rental housing supply at a time when we really need it.

This bill provides two tax incentives which encourage investment in the build-to-rent sector and increase housing supply. It will increase the depreciation rate for capital works in eligible projects to four per cent per annum, reducing the period these costs are depreciated over from 40 years to 25 years. And it reduces the final withholding tax rate on eligible fund payments from managed investment trust investments to 15 per cent from 30 per cent, increasing after-tax returns for foreign residents who invest in eligible projects.

In addition, at least 10 per cent of dwellings in the new developments assisted by these measures must be tenanted on an affordable basis, again delivering more long-term affordable rental supply—much needed and much needed at scale. These affordable dwellings must have their rent set at 74.9 per cent, or less than that, of the market rent of a comparable dwelling in the same project. For tenants to be eligible for these affordable houses, their household income must be under the required income limits, which are set according to the composition of their household. The affordable dwellings will have to be comparable to the non-affordable dwellings, making sure that the affordable houses are of equal status as the non-affordable houses. This will be really important in picking up an area that has been underdone in this country, where we have scope to expand and where we desperately need investment in more rental housing. These measures will apply from 1 July this year.

There is a lot more in this bill, including a Medicare levy exemption for lump-sum payments, multinational tax transparency, and DGR status for more organisations. There is some work on the National Skills Agreement. There is the instant asset write-off. There are a lot of important commitments that our government has made and is delivering on. I will conclude my remarks there and commend the bill to the House.

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