A Shorten Labor Government will provide $60 million from the Banking Fairness Fund to give vulnerable Australians an alternative to dodgy payday lenders, doubling the funding for not-for-profit microfinance programs across the country.
Australians facing severe financial hardship are often locked out of mainstream financial products and unable to access affordable credit in times of crisis, like when the car breaks down or when the fridge stops working. These families have little alternative but to turn to high cost fringe credit products such as pay day loans or consumer leases.
Though the government first accepted the recommendations of the small amount credit contract review in 2016, they have failed to legislate the vital reforms to protect Australian consumers. It has now been 1066 days since the small amount credit contracts review’s final report. Since then more than 800,000 vulnerable Australian consumers have accessed these flawed loans, plunging them into spirals of debt.
The $60 million investment from Labor’s Banking Fairness Fund - $15 million a year for four years - will expand programs run by Good Shepherd Microfinance so that low-income Australians have greater access to affordable loans.
This funding boost will open up microfinance to 307,000 new clients delivering up to 76,800 new low cost loans to Australians in financial hardship each year.
Harmful financial products are impacting on the families that can least afford it. It is estimated that one in five of the poorest Australians used pay day loans or other high cost forms of credit – substantially higher than any other group of Australians. [1]
Labor’s plan to promote fair and affordable loans could see up to 173,880 people diverted from harmful financial products provided by fringe lenders, such as pay day loans or consumer leases.
Labor will make sure that Australians in financial hardship have affordable and safe financial options when life throws up unexpected difficulties.
GoodShepherd Microfinance’s No Interest Loans Scheme (NILs) and the StepUP loans scheme offer a financial life line to individuals who might otherwise turn to high-interest credit products.
Earlier this year, Senate Inquiry Credit and financial services targeted at Australians at risk of financial hardship chaired by Senator McAllister recommended that these programs be expanded.
Expanding access to affordable financial products is a part of Labor’s plan to support those in financial hardship and restore fairness to financial services.
Only Labor can be trusted to clean up the banks and stand up to the top end of town. Scott Morrison and the Liberals voted against the Banking Royal Commission 26 times, and they wanted to give the big banks a $17 billion tax handout.
Labor called for a Banking Royal Commission, Labor fought for a Banking Royal Commission, and Labor will ensure that victims of bank misconduct have the support they need to fight for their rights.
