As printed in the Daily Telegraph (15 October 2020)
If you want to borrow money, don’t buy a pram, especially for your sister. Don’t even think about getting a promotion after graduating from University, and no matter how tempting, please refrain from subscribing to NetFlix or ordering Uber Eats.
Because these are all reasons that financial institutions have cited for not giving someone a home loan. It is not their fault, it is the law. That is why, despite the moaning from the taxpayer funded grievance industry, we need to reform the Rudd era restrictive lending practices.
Everyone knows nine times out of 10, when a loan goes wrong, it is because of an unforeseen life-changing event, not because someone didn’t pour over your Uber receipts
The reforms Josh Frydenberg announced to Australia’s restrictive lending laws will empower individuals to get better loans at better prices.
Current laws make it nigh on impossible for anyone but privileged insiders to get a choice in loans. It is wrong, it is pretty much intergenerational theft by a cabal of advocates that have no evidence that these laws do any good.
In fact, quite the opposite. The little evidence that does exist shows that credit impairment was lower before these laws were introduced.
As the Federal Court found, the argument that these laws act as a protection for consumers is at best dubious, and more likely, just wrong. All that these restrictive lending laws have created is endless paperwork for people and financial institutions.
Everyone knows nine times out of 10, when a loan goes wrong, it is because of an unforeseen life-changing event, not because someone didn’t pour over your Uber receipts. As of today, scientists are yet to find a correlation between Uber receipts and death, serious illness, loss of employment or divorce. If the truth be told these laws were baked from the beginning; they make absolutely no sense; it was a law looking for a reason to exist; the very definition of an existential crisis.
Sure, the Global Financial Crisis was caused by defaults in US mortgages (as Margot Robbie explained in a bubble bath in the movie The Biggest Short). I know some people have delusions of grandeur in Canberra, but whatever was in the water the day someone thought the Australian Parliament could fix US sub-prime mortgage defaults must be weapons grade strength.
With our changes, protections are meaningful. By reforming the law the regulators can watch out for outcomes not tick-a-box exercises that protect no one. And it is bad business for financial institutions to make bad loans.
We’re also adding new protections against payday lenders.
Unsurprisingly, Labor, not wanting to upset a former PM, have their heads in the sand. So once again the Liberal Party trying to empower disadvantaged people while Labor, despite their rhetoric, is standing in the way.
The Comprehensive Credit Reform legislation allows financial institutions to access data with credit bureaus including whether customers have credit cards, if they are behind on their mortgage payments and other important data. This measure empowers borrowers and strengthens protections, but Labor won’t help us to help people.
For too long, in too many places, we have allowed that which our parents had easy access to, become harder for the next generation to share in. This Government is going to reverse that; it is making sure that everyone can share in our nation’s promise, so when you have a go, you get a go.
Jason Falinski is Liberal member for Mackellar