Analysis: It’s time for government to stand up to payday lenders

FAMILIES are definitely doing it harder. Pay rises are hard to come by, and costs like private health insurance and childcare fees, only go one way – up.

• When you can’t dig your way out of debt
• EDITORIAL: Payday lenders must be called to account

WHILE inflation has not been out of control in Australia in the past few years, families are definitely doing it harder.

Pay rises are hard to come by, and costs like private health insurance and childcare fees, only go one way – up.

More Australians are living week-to-week. Statistics show people are not saving like they used to, which means when an unexpected event happens – like a car breakdown or the need for urgent work around the house – they do not have spare cash to pay for it.

With credit cards already maxed out, and advertisements telling people how easy it is to get fast cash, it is no wonder some turn to payday lenders. Others, who desperately need a new fridge or washing machine, are leasing them over a couple of years at ridiculous rates they are not made aware of at the time of signing a contract.

There is no doubt this type of money lending is needed (because of the small amounts borrowed) and not everyone who uses them falls into a trap.

But is it acceptable for a loan to carry an interest rate of 40-50 per cent and a consumer lease to have an interest rate of 800 per cent for a group of people already under financial stress? The answer is obvious.

And while there are legitimate concerns that too much legislation can turn Australia into a “nanny state”, there is a need for the Turnbull Government to intervene, in fact it’s own review recommended an overhaul. It is also clear the group representing the industry has been lobbing the Government to water down draft laws that were supposed to be introduced last year.

New Assistant Minister Michael Sukkar is now in charge of the proposed legislation. If he fails to adhere to commonsense it will give consumer groups ammunition that the Government is out of touch with struggle street and those living week-to-week, and that it is too business-centric.