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Budget sets out fairer rules for big business

CHOICE welcomes a budget that holds the big end of town accountable.

09 May 2017

Consumer group CHOICE has welcomed reforms announced in the Federal Budget that will force large companies to treat consumers better. 

"The 2017-18 Federal Budget has recognised that companies doing the wrong thing by their customers need to be held accountable for their actions," says CHOICE CEO Alan Kirkland.  

"The government has announced reforms that will fundamentally change the way consumers interact with businesses for the better. These include significantly higher penalties for businesses that breach the Australian Consumer Law and major reforms to the banking sector that should improve competition and make it easier for consumers to find a better deal." 
Meaningful penalties for companies that break the law

CHOICE has welcomed the announcement that the government will increase penalties for companies and individuals that breach the consumer law. Companies caught ripping off or misleading consumers will have to pay the greater of $10 million, three times the value of the benefit the company received or 10% of annual turnover. This is up from $1.1 million now, which has proven to be woefully inadequate.

"We've seen a spate of recent cases where companies have been given a tiny penalty when they've made millions in profits from bad behaviour. Businesses will now pay attention to penalties, rather than being able to treat them as a minor write-off," Mr Kirkland says. 

Big changes for big banks deliver for consumers

"The government has announced game-changing reforms to the banking sector which include increasing scrutiny of major institutions, overhauling laws on credit cards and ensuring that consumers with disputes obtain effective redress," says Mr Kirkland.

"Consumers can expect better competition in banking, less risk that short-term bonuses drive bad behaviour, and improved complaints processes. 

"Giving consumers access to their own data, held by banks, will make it easier to compare products and avoid being ripped off."

Housing reforms must be the beginning of better rights for renters

"Tonight's budget has opened up an important conversation about the cost and quality of housing in Australia—especially for renters. Measures announced tonight represent a good start, but they will not be enough," Mr Kirkland says. 

"We welcome the focus on creating more supply of housing, especially affordable housing, through a bond aggregator model that will make it easier for community housing organisations to finance new housing stock. This will help renters but it will take some time to have an effect.

"We also welcome recognition of the need to focus on rental rights through looking at longer term leases—but we will need much bigger reform to tenancy laws to fix the problems many tenants face with unjustified eviction and failure of landlords to make urgent repairs. 

"With CHOICE research finding that 43% of renters have been renting for 10 years or more, renting is now the long-term reality for a growing number of Australians.[1] 

"When it comes to first home buyers, we are glad to see that the government's announcement encourages people saving for a deposit to add to their super, rather than drawing down upon it. This will, however, have limited effect—with a cap of $30,000, and assuming an 80% loan-to-valuation ratio, it will only provide a deposit towards a home purchase of around $150,000, which won't go far in most housing markets. This is in a context where many young people will also be facing higher repayments of higher education debts.

"The real weakness in the housing package is the lack of any measures to take investors out of the market, which would best be achieved through reforms to negative gearing or capital gains tax. In the absence of such measures, there will be no relief from upward pressure on prices."

Media contact: Tom Godfrey, CHOICE Head of Media: 0430 172 669

[1] CHOICE, National Shelter and NATO (2017), Unsettled, Life in Australia's private rental market, page 6 Choice 2017 Australian Rental Market Report.