Today in Onehunga a community coalition to Stop Loan Sharks was launched. Throughout last year I committed to continuing this campaign no matter what happened to the ‘Credit Reform (Responsible Lending)’ Bill I had picked up from Charles Chauvel. Since the defeat of the Bill at the hands of National and ACT I have been constantly asked ”why” and “what next”.
And of course the need for action has continued increasing – ever increasing prices, evidenced today by a huge increase in the CPI, and static or reducing incomes (often starting from an inadequate base!) are a recipe for disaster for many New Zealanders. New Zealanders who struggle to make ends meet, New Zealanders who need food parcels and increasing numbers of New Zealanders who end up taking out loans at excessive interest rates that they cannot realistically pay back.
Today I was joined by my colleagues Charles Chauvel, Carmel Sepuloni and Green MP David Clendon all of whom along with the rest of our fellow party members will continue to campaign on this issue within Parliament. Carmel and I will both be putting Members Bills in the ballot. Both will deal with the need for responsible lending practices and both of which (in different ways) seek to limit excessive interest rates.
We were joined by groups and individuals committed to dealing with the fringe lending sector. They included Church organisations, budgeting organisations, unions, lawyers, anti-poverty groups and credit unions. In addition to me the speakers included the Salvation Army, the NZ Federation of Family Budgeting Services, FINSEC, Charles Chauvel and the Mangere Budgeting Service. We were also addressed by a fine young man who last year, not far from where we were today, went ‘undercover’ seeking to obtain loans from a number of loan companies. He pointed out how easy it was to get money and how no real checks were undertaken. One of the interest rates he did manage to get disclosed was 24% per month.
In the course of the launch we heard of the massive increase in food parcels being supplied by organisations like the Salvation Army, the massive increase in workloads of our budgeting services and the increasing level of indebtedness of those seeking help at budgeting services. The case studies we heard included a pensioner with six loans with interest rates varying between 25% and 49% and a Samoan family of five with multiple loans with interest rates between 19% and 82%. We heard of the reality of many families (both on benefits and in work) where paying food and rent comes after the payment of high interest loans. The impact on children was stressed and how the consequences can be with them for the rest of their lives.
The Government’s response is seen as not only inadequate but also irresponsible. The delay in the review of Consumer Credit is impossible to fathom. The delay was a deliberate decision of the Government. The Ministry of Consumer Affairs website states that submissions which closed in August 2009 are still being scrutinised! It should be noted that while there are positive suggestions from that review which are languishing this doesn’t include proposals to deal with excessive interest rates.
The Community Coalition to Stop Loan Sharks will seek in this election year to keep the issues centre stage and to put pressure on all parties to identify solutions. Solutions that other countries have been far more proactive in seeking than New Zealand.
In the end this issue is about people, often people who have children, people who are poor and who are vulnerable. How we react to this issue is a measure of our sense of decency and fairness. I am absolutely clear that most New Zealanders find loan shark behaviour abhorrent and that they want the Government to take action.
I’d be interested to see how many problems those trucks that you see everywhere in South Auckland who offer various goods on credit cause…
“I am absolutely clear that most New Zealanders find loan shark behaviour abhorrent and that they want the Government to take action”
Would you also agree that loan sharks only exist because of poor choices made financially by people? I disagree with the concept that people are so desparate that their only choice is a loan shark.
“In the end this issue is about people, often people who have children, people who are poor and who are vulnerable. How we react to this issue is a measure of our sense of decency and fairness.”
Carol, that’s all you’re doing – reacting. Reacting by legislating doesn’t fix the problem, which is about inadequate income. We all know about these problems, Carol – they’ve been around for years and in fact got worse under Labour.
Again, we all ask: What is Labour going to do? Will it be more benefit cuts like the ones you were responsible for when you were the government? If not, what then? And what’s so different now that should make us believe you?
In fairness Anton, the minimum wage shot up under Labour, voted against everytime by ACT and it’s junior party, National.
Labour is going to put an extra $5 a week in the pockets of these citizens with removal of GST on fruit and veggies, hopefully on milk and cheese etc too. Something about $5000 tax free too, which in combination puts another $15 a week into low earners pockets. That’s what Cunnliffe said this morning.
Anton, if the failures of previous policy are the reason to do nothing then it is no wonder voter apathy in NZ exists.
I agree that reactive politics can be pointless but legislating around abhorant practices is important in bringing them under control. And yes, you are right, the problem is inadequate income, this is especially true in lower decile areas like south Auckland. There is no evidence to suggest that life for those less well off has got any easier in the last 2 years nor any suggestion that things will improve under a new National govt. A plan to help the vulnerable in our society is vital, curbing loan shark behaviour is a part of a bigger Labour picture, at least someone is thinking
@tracey, the minimum wage may have, but nobodies else’s did, and this adds exactly zero to our economy. Also as Labour can’t pay for any of their tax promises without imposing more taxes on middle income families, Goff certainly didn’t seem to know where its coming from. Perhaps you might want to let Labour know your ideas about where the money comes from. Who pays then? Before you start saying the “rich”, we don’t have enough of them to make a skerrick of difference to the tax take, no matter how many you think are hiding somewhere. I also mean genuinely rich, not Labour rich ($50,000+ p.a.).
Really Dave? Lots of people’s salaries went up during Labour, and many of them were at high management levels. That ought to be praised by those who worship at the alter of the mighty dollar.
And ACT’s tax cuts, came from where? Oh that’s right borrowings.
You do make me smile, you haven’t once questioned National’s tax cuts, that were never designed to stimulate the economy and are paid for by cuts to many many services and were all going to be tax neutral but aren’t.
I was thinking of something really outside the square Dave, something national hasn’t even dipped their toes into yet. I thought Labour could try and stimulate the economy. Afterall no one has tried it for nearly 3 years.
Does John Key take the statutory 4 weeks leave a year or more? Just wondering. Actually I am wondering it about all MP’s. Who overseas this and who determines if they are on leave or working from home, as it were?
“THE GRAND AFFAIRS OF STATE
Prime Minister John Key is about to face one of his biggest challenges – getting his wife’s outfit for the royal wedding safely to London. Mr Key heads to Europe later this week for a short holiday before lunching with the Queen, meeting French President Nicolas Sarkozy, then attending the nuptials of Prince William and Kate Middleton at Westminster Abbey on April 29. What wife Bronagh will wear to the social event of the year is under wraps, but Mr Key has been charged with carrying it. “That is a responsibility far greater than running the country, to be perfectly honest.” “
I applaud this initiative. These operators prey on the less financially literate and do their best to hide what terrible terms they offer people.
indiana: in this case, predatory lenders put a lot of marketing effort into appearing to be a better choice than they really are. Many people don’t know of better alternatives or lack the numeracy to evaluate them correctly.
dave, anton: ooh look, a bunny rabbit! Yes, fixing the things that lead to financial desperation are important, but that doesn’t mean we shouldn’t make simple changes to the way the worst lenders operate. And the problem isn’t just a matter of inadequate income. Look at the ads for these places and the effort they put into making their offerings look normal, simple and cheap. Disgusting.
@Tracey – it’s still a reaction to a symptom not the cause. Creating or changing loan shark laws doesn’t address the cause which is inadequate income. You talk about the increases to the minimum wage under Labour. What did that do for the sick, elederly, carers of children and other unemployed? Nothing, and these are the groups most vulnerable to loan sharks. What Labour did for this group was to continue the practice of excluding beneficiaries from receiving tax cuts by decreasing the rate of gross benefit – something the nats began in 1996 and that Labour cried foul over! You talk about GST coming fresh fruit and vegetables and the $5000 tax exemption. Well, that’ll be okay, although will simply cause more inflation, and we all know who inflation dumps on the most. The main point about the latter, however, is that they haven’t happened yet. You’re singing Labour’s praises not only for things that don’t go anywhere near helping the poorest of the poor, but for things they say they’ll do, which given their track record how can we believe them?
@Stephen – You say …”but that doesn’t mean we shouldn’t make simple changes to the way the worst lenders operate.” That’s right, I agree, but who’s saying they shouldn’t legislate against these disgusting parasitic thieves? Did I say this? No. I simply said doing this doesn’t address the cause. What’s the relevance of talking about the cause? Well, Labour had a very big hand in making things worse for the poorest of the poor, it’s an election year and we don’t know what their welfare policies will be, except we do know they haven’t renounced any of what it did to social welfare between 1999 and 2008. I suggest you could do your bit by reading properly, and perhaps a bit more, and I’ll do mine by trying to write simply. By the way, what did you mean when you said “ooh look, a bunny rabbit!” Escaped me completely.
– what did you mean when you said “ooh look, a bunny rabbit!”
I’m saying that if your very first response to a positive initiative is to come up with a criticism about something else that you would rather talk about, it’s a distraction. Sorry, that was a bit elliptical.
I get tired of these loan sharks ripping the heart of our communities, not just the small scale ones that exploit in the shopping centres, but the large Parasite companies like GE Money which have the Trade Me and Hire Purchase industries sewn up. These people charge large interest rates and have very large and unjustified penalty and activity fees. Loan sharking is also a problem because it is totally unregulated and affects the most vulnerable members of society, namely the undereducated, underemployed, ethnic minorities and the people less likely to stand up for themselves, ironically the same people the Labour party actually care about unlike National who don’t care at all. Sometimes I wonder how loan sharks can sleep at night. Companies like Instant Finance, GE Money, Funaki, Pasifika Loans, Custom Credit and Geneva Finance are just as bad if not worse than the back street loan sharks who used to flood the columns of community newspapers. Mainly because they have tried to make this despicable practice respectable. Traditional lenders like banks are just to blame as they turn away the people who end up going to these sharks. Not just regulating these parasites, but public education is also needed. The way to stop the problem is to try and eliminate the need for people to even borrow cash in the first place and its here where certain churches and cultures that exploit the economic potential of their people should step up to the mark and re evaluate their stance in these matters.
@Stephen – If you think talking about the cause of a problem is talking about something else I’d rather talk about, and is “distracting”, then your attention span must surely be so low you’ve got no hope. Oooh, look! Stephen’s seen a bunny rabbit!
GOOD ON YOU GUYS STEPHEN AND TRACY
CAROL- WILL THIS STOP LOAN SHARKS REGULATE THE MOST LETHAL LENDERS THE BANKS?
BECAUSE THEY ARE ONES THAT WILL FORCLOSE ON SOMEONES PROPERTY AND THEY ARE THE ONES WHO GIVE OUT CREDIT CARDS LIKE FREE CANDY
OH AND ANTON OFFER SOMETHING CONSTRUCTIVE INSTEAD OF TRYING TO UNDERMINE EVERYONE ELSES SUGGESTIONS AND ASKING RHETORICAL
QUESTIONS
HOW ABOUT THE STOP OVERSEAS BANKS SUCKING THE ECONOMY DRY BILL
@Power Freek – so you think talking about the cause of a problem instead of ONLY looking at symptoms isn’t constructive, and “undermines everyone elses suggestions”? If this is what you believe then you’ve got less hope than your use of capital letters would otherwise indicate. Have a look at what others have said – there’s a groundswell of opinion that Labour needs to start saying what it will do, instead of “bleating from the sidelines”. I suggest you read what has been said and even perhaps respond (if you can understand it) instead of yelling at everyone. Your comments look like a big bulldozer ramming its way through the blog.