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Legislative Assembly for the ACT: 2001 Week 3 Hansard (6 March) . . Page.. 567 ..

MR STEFANIAK (continuing):

legislation. Mr Rugendyke, I would say you could actually do both because this would complement what I detect to be the thrust of what you are trying to do. It would not necessarily be exclusive to what you might be trying to do.

Essentially this amendment will allow age to be used as a factor where there is objective evidence based on statistical or actuarial data that a person's age puts him or her in a higher or lower credit risk category than any other person. Alternatively, if there is no such data, a credit provider may rely on other data on which it is reasonable to rely. The criteria for refusal of credit or the terms imposed under the credit contract must be reasonable having regard to the data and to other relevant factors, and the sources of the data and other factors relied on must be disclosed to the Discrimination Commissioner and the Discrimination Tribunal if so requested.

There obviously are concerns around this house that the proposed legislation could prevent credit providers to discriminate against applicants on the grounds of age alone. What the government is saying, Mr Speaker, is that this is not the case. As Mr Humphries explained to Mr Stanhope in correspondence late last year, I think, while age is certainly a relevant factor in assessing credit risk, it does not necessarily work adversely against the applicant.

I will give a simple example by applying a basic credit scoring system to demonstrate that. Let us assume that there are two applicants applying for credit approval. The first is a 21-year-old woman who lives with her parents. She does not have any economic dependants or financial liabilities. She has started her first job and she wants to buy her first car. She is on a good wage and she has a reasonable amount of savings.

The second applicant is a 45-year-old married man who has two teenage children. He wants to build a home extension. He has job stability. Let us say he has been in his job for 10 years. He has a good income but he does have substantial financial liabilities and substantial expenses.

It is assumed here that 25 points are required for credit approval based on three factors. In reality, Mr Speaker, I think the number of factors and the number of points required would be greater, but let us assume there are three factors. The first applicant might score five points for age, zero points for job stability, but 20 points for debt to income ratio. Remember, she has a good job, does not have any debt, lives at home with her parents and has no economic dependants. She totals 25 points. That is sufficient for the credit approval subject to income.

The second applicant, the 45-year-old man with the two teenage kids, with some debt but good job stability, gets 10 points for age, 10 points for job stability but only 5 points for debt to income ratio. Again that totals 25 points, meaning that his credit application will be approved, again subject to income.

That is a simplistic example but it does illustrate how a low score in one category can be offset by a good score in another category, and that is something that happens all the time. It also shows that age does not necessarily contribute a large portion of the total credit score.

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