Submission: In response to the April 2012 Treasury Discussion Paper

RLC identifies economic rights as important in the attainment of a just society and we have long recognised  that people are unable to maintain other rights without the ability to exercise their economic rights. Economic rights ate essential to effective and productive participation in society. including keeping families together, safe housing, jobs and freedom. For this reason, RLC has continued to emphasise casework delivery to people in relation to banking, credit and debt problems.

Our view in summary

RLC agrees that there is an urgent need to identify and implement appropriate strategies for reducing reliance on small amount credit contracts. We do not consider that providing high-cost credit to low-income consumers is a solution to money problems. We consider that a small amount credit contract industry is currently able to take advantage of certain features of the market to profit from loans that are unaffordable to consumers (for example, the use of direct debit arrangements). 

The continued use of small amount credit contracts by low-income consumers, in spire of the high costs, reveals that there is a need to small amount loans. It is essential that consumers be provided with viable alternatives to high-cost small amount loans, to assist them to manage their finances in a responsible and sustainable manner, and without causing greater hardship.