Labor leader Bill Shorten will on Friday announce the ALP’s plan to shark the loan sharks by offering no-interest loans of up to $1500 to help families avoid dodgy payday lenders.
But before anyone jumps to conclusions that the ALP is starting a “people’s bank”, the Labor Party plans to fund an existing not-for-profit charity to offer the loans.
“We’ve all heard the stories of payday lenders preying on vulnerable customers – they built their profit model around targeting those who could least afford the loans,” Mr Shorten said.
“I have personally heard stories of victims whose lives were ruined by payday loans – I know we need to do more.
“This is a modest and sensible investment in helping people get loans to help them make ends meet when they need it – without turning to payday lenders.”
It’s the latest “fairness” measure to be funded from Labor’s new tax – The Banking Fairness Fund – a $640 million levy on the big banks.
The levy, which will raise $160 million a year for four years, will be used to fund the new no-interest loans program.
The $60 million investment from Labor’s Banking Fairness Fund will allow an existing provider, Good Shepherd Microfinance, to offer more low-income families loans.
The charity’s website states it offers loans of up to $1500 to low-income families.
“Without a fridge you can’t store fresh food. Without a computer kids can be left behind at school, and if you can’t afford the pre-apprenticeship course, education can stall before it even begins,” it states.
“The No Interest Loan Scheme offers people on low incomes safe, fair and affordable loans for fridges, washing machines and furniture, as well as education and medical expenses.”
Shadow Assistant Minister for Finance Jenny McAllister said low-income families are often locked out by traditional lenders.
“This funding boost will open up micro finance to 307,000 new clients, delivering up to 76,800 new low-cost loans to Australians in financial hardship each year,” she said.
“Harmful financial products are impacting on the families that can least afford it.
“It is estimated that one in five of the poorest Australians used payday loans or other high cost forms of credit – substantially higher than any other group of Australians.”