Joint media release: Independent review confirms Centrepay is a good idea that has lost its way

Two of Australia’s leading consumer organisations have welcomed Ms Anna Buduls’ independent report into Centrepay—a payment system which helps Centrelink recipients manage their income. Financial Counselling Australia (FCA) and Consumer Action Law Centre said the report confirmed a number of their concerns with the way the system is being administered, in particular, that some inappropriate and even exploitative businesses are using and compromising Centrepay.

FCA and Consumer Action called on all parties to support the 600,000 Australians who use Centrepay by committing to act on the report’s findings should they win Government on September 7.

‘Centrepay allows users to set up direct debits to pay for utilities, rent, and other essential overheads. It helps them keep their finances on track, and it helps them keep their lives on track. But more and more companies are renting high-cost, non-essential items to low-income Australians and using Centrepay to receive payments. Sadly this has led many Australians into financial trouble—particularly where these companies are getting paid before the customer’s electricity or rent has been paid,’ said Fiona Guthrie of FCA.

‘The report identifies the areas of Centrepay that need fixing—the parties must read this report and put “fix Centrepay” right at the top of their to-do list if they form government. The report identifies a number of areas where the incoming Government can make some basic reforms and help protect hundreds of thousands of Australians.

‘The report’s findings provide the incoming federal government with a great opportunity to get on the front foot and begin working on this issue from the outset.’

Ms Guthrie also welcomed the Minister for Human Services’, The Hon Jan McLucas, plan to establish an advisory group to advance the issue. ‘This report and its recommendations need to be put into action, it’s too important to be left gathering dust. An advisory group, which must include consumer representatives, will help maintain momentum.’

Gerard Brody of Consumer Action said it was not uncommon for his financial counselling team to hear from Centrelink recipients paying off expensive lease contracts for furniture and electrical products using Centrepay, and struggling to put food on the table as a result.

‘This report hits the nail on the head when it says that Centrepay is a good idea, but one that needs some reform. Helping welfare recipients to manage payments is a valuable tool, but allowing so many businesses to use the system to secure payments has led to problems. Allowing Centrepay to be used to prioritise repayments for what is effectively high-cost credit is an obvious shortcoming.

‘The report recognises the need for an improved accreditation and auditing process, as well as strong consumer protection standards for businesses that are able to use Centrepay. It also suggests that payments should be prioritised so that an electricity bill is paid before a discretionary purchase. These are simple, common sense suggestions that we think all members of parliament will see merit in,’ said Mr Brody.

END

Media contact: Dan Simpson – 0413 299 567

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