Radio Rentals hugely benefits from people on welfare

Radio Rentals is a handy option for those who cannot afford to buy appliances outright but is it a system that is being exploited by those on welfare?

According to the ABC, almost half of Radio Rentals’ revenue last financial year came from Centrelink payments – $90 million to be exact. The money comes from the Department of Human Services’ direct debit Centrepay system, though it is a system typically used to help welfare recipients budget money for food and necessities. So is it fair that these people are using tax payers’ money to purchase white goods?

The Radio Rentals ad is a familiar one – you know it from its catchy jingle and promise to give everyone a fair go. ABC reports that they found out that Centrelink customers can sign up to lease household goods, smart phones and flat screen TVs, and it is just taken out of their payment. Should this be banned?

Years ago, people were up in arms about the baby bonus and how a lump sum payment was too tempting for some new mothers, who spent the money on things they wanted, instead of things they needed for their baby. It was later changed to a fortnightly payment.

In the ABC report, consumer affairs reporter Josie Taylor spoke to CEO of the Consumer Action Law Centre, Gerard Brody. He said, “I really question the ethics of a business model that relies on welfare payments in this way. Welfare payments are designed to assist people have a basic standard of living, rent, food, utilities, not much more than that to be honest and this business is charging high cost credit arrangements. Often the costs are three to five times the value of the goods that are being rented over a period of a couple of years”.

Is this another disappointing loophole in the system? There are probably a lot of people of welfare who are renting a fridge or washing machine and have a legitimate need for this product. But what is sad is that they can end up paying three times what the product is worth by the end of the term – so is it really that good of a deal overall?

We want to know what you think today: should Centrelink payments be used to pay for appliances, white goods and electronics? Or should it be for necessities? Have you ever rented from Radio Rentals or a similar business?