I rise today to raise an issue regarding the effects on constituents in all our electorates of payday lending and consumer leases, also known as small amount credit contracts. As COVID-19 affects many South Australians' employment and financial affairs, it is expected that the demand for finance will rise. That is why it is important that the payday lending industry is properly regulated and that governments have sufficient support for those affected during this unprecedented time.
For the benefit of members, a very predatory example provided by ASIC relates to a small amount contract involving a washing machine that cost $769 and was offered on a three-year lease, which ultimately cost $4,517. There is no justification for consumers, many of whom are vulnerable, to face these costs.
I last updated the house on this issue on 12 September last year, when I informed the house that, at the Consumer Affairs Forum, state and territory governments called for urgent action by the commonwealth on this issue. Indeed, in taking on this responsibility, I indicated to the former member for Enfield my commitment to pursuing what had been his five-year quest to try to have this matter brought to fruition.
The national Assistant Treasurer had said that he was hopeful that a draft bill would be released for consultation by the end of last year but was not willing to commit to that time frame. I understood that. However, my office has contacted his office to request an update or clarification as to timeliness, regrettably without any success. Indeed, I received a letter from minister Sukkar in March that was a response to one I had sent him nine months earlier. So things still move at a glacial pace in Canberra, let me say.
I want to remind members that the commonwealth caused a review into small amount credit contracts back in 2015. Since that time, frankly, it has gone nowhere, but the pressure is on. There have been exposure drafts, private members' bills introduced and, most recently, the establishment of a Senate committee. I foreshadowed, at the Consumer Affairs Forum in New Zealand and in this house, that I would act if the commonwealth did not. It is not my preference, in fact, for the state to operate outside a nationally consistent model; however, urgent action was already required long before COVID-19 hit, and none is forthcoming from the commonwealth.
I have therefore instructed Consumer and Business Services to provide me with advice on state-based legislation, about which I have already had legal advice, as to the protections to include a cap on the total repayment amount, amending the affordability provisions based on gross earnings to net earnings, requiring that there be equal amounts paid at equal intervals, not charging additional fees for the ordinary life of the loan in cases of early repayment and preventing these lenders from making unsolicited invitations to current or former customers to apply for credit.
All these protections align with those of the 2015 review. I look forward to returning to the house and providing you with a further update to ensure that we do protect vulnerable citizens. May I conclude by saying that, since the forum in New Zealand, the New Zealand minister has progressed his bill through the New Zealand parliament. Well done to the minister and the New Zealand government for doing so. We will have one here in South Australia if it is not done by the commonwealth.