Centrelink continues cosying up to rent-to-buy loan-sharks

Article published 14 April 2021

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CENTREPAY is a useful way to make sure that regular, essential things such as rent and utility bills get paid before anything else by setting them up as direct debits from social security payments.

Centrepay is run by Centrelink. It’s free. It’s voluntary, so you decide if you want to use Centrepay, unlike the compulsory Cashless Welfare Card.

Late last year, the federal Opposition put up draft legislation to ban rent-to-buy products from the Centrepay register of goods and services.

Rent-to-buy goods can be household appliances, computers and such. You rent these while you pay them off, paying up to nine times the retail price.

The question is: Should Centrelink really get involved with these (legal) loan-sharking operations through Centrepay?

The federal Opposition obviously doesn’t think so, but the Government sees it differently. Senator Amanda Stoker in Parliament:

The Government doesn’t support this Bill and, I would suggest, with good reason. …. we face the important value that is the right of individuals to choose what they do with their money and to do so without governments telling them what they are and aren’t entitled to spend their money on. They are entitled to the opportunity to learn from participation and from experience how to, and whether they wish to, interact with all the different types of items for sale …”

Rent-to-buy operations can be assumed to warmly agree with the Government’s sentiment, because Centrepay guarantees that social security recipients will pay instalments on the dot at the due date.

Rent-to-buy operations might not be so keen to trade with social security recipients if repayments weren’t secured by way of Centrepay.

But Centrelink’s cosy relationship with rent-to-buy operators doesn’t end there.

Even though Centrepay is set up to allow individual choice, it does ban certain legal goods and services: gift cards, payment plans, alcohol, cigarettes, pornography, gambling and firearms. These are very much the same restrictions as are placed on the use of the Cashless Welfare Card.

Conversely, does this mean that people put on the Cashless Welfare card could use the Cashless Welfare Card for rent-to-buy products?

CPSA rang the Cashless Debit Card Hotline to find out, and the answer was: yep, not a problem.

Now, there’s freedom of choice for you if you’re on the Cashless Welfare Card: you can be robbed under Centrepay or under the Cashless Welfare Card!

Robbed? Yes, but don’t take our word for it.

This is what an Australian Securities and Investments Commission report said in September 2015 about rent-to-buy schemes, five years before the current Government refused to take it off Centrepay:

ASIC has continuing concerns about the conduct of [rent-to-buy operators], despite multiple enforcement actions by ASIC [..]. Misconduct by [rent-to-buy operators] identified by ASIC has included targeting financially vulnerable consumers with limited access to alternative forms of finance (e.g. consumers in regional communities). We are concerned about the risk of this conduct continuing to occur, given high usage of leases by financially vulnerable consumers, such as those in receipt of Centrelink payments.


Social Security (Administration) Amendment (Protecting Consumers from Predatory Leasing Practices) Bill 2020

Call to Cashless Debit Card Hotline on 1800 252 604. Paul; 14.15, 24 March 2021. Spoke to Josh, who explained how to use MyGov to upload documents to set it up.


For more information please email our media contact at media@cpsa.org.au

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