“We need to counter that,” she said of the payday lenders. “It’s just unfortunate that comparative to the other states that Queensland does not invest substantially into its NILS program.”
In the past eight months, the centre had helped more than 230 people into loans through the No Interest Loan Scheme and about 380 as a provider itself.
Funding for the NILS program comes from a national pool managed by microfinance group Good Shepherd and distributed throughout states and territories by a range of groups.
It offers people on low incomes access to no-interest and no-fee funds for expenses such as household goods, education, medical and transport needs.
Some other states and territories pour additional support into the program. Queensland does not, but does provide $1.1 million each year to Good Shepherd to operate two Good Money stores in Cairns and the Gold Coast.
Queensland Council of Social Service chief executive Aimee McVeigh said community organisations delivering the scheme to be funded so people did not find themselves in a “debt spiral” at an already tough time.
“Frontline organisations from across Queensland have been contacting us since March with stories of their clients being aggressively contacted by payday lenders and consumer lessors,” she said.
“Without adequate funding, organisations can’t afford to dedicate more than a few hours a week to providing NILS services and many organisations have reported having to turn away clients.”
More than 6000 NILS loans were handed out across the state in 2019. While a Consumer Action Law Centre report found Queensland residents entered into 300,000 payday loan agreements in the same period, with about 15 per cent of these people falling into serious debt.
Ms McVeigh said her organisation feared this number could “rise substantially” due to COVID-19, exposing people to fees equivalent to an interest rate of more than 800 per cent.
Along with an injection of $3 million each year from the state government — based on the NSW model — long-awaited federal regulations for small credit lenders were another solution, she said.
State Communities Minister Coralee O’Rourke said the government was working with community service groups and industry leaders to “address emerging challenges and consider service responses”.
A total 3400 loans had been now issued by the state’s two Good Money Stores since they launched in 2017, she said.
Assistant Federal Treasurer Michael Sukkar said the small credit reforms were still on the table if “required” after laws passed last year allowing the corporate watchdog to intervene if it considered consumers of a product to be at risk.
Financial counsellors have warned the twin crises of bushfires and COVID-19 this year could drive more vulnerable people to take out the predatory payday loans for access to quick cash.
In May, the head of the Australian Securities and Investment Commission told a federal COVID-19 select committee hearing that the rates offered by such lenders would be in the watchdog’s sights as federal pandemic support payments wound back.
Matt Dennien is a reporter with Brisbane Times.