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.