Bernie Ripoll (Oxley, Australian Labor Party) Share this | Hansard source

Mr Deputy Speaker, I commend you on your correct ruling that there was no point of order. I also thank my colleagues for coming in here and spending the time to hear me speak on this very important bill.

The reality is that the opposition is interested only in disrupting a really important debate on supporting what should be a core constituency for them: small businesses and car dealerships, and supporting them not just in the big cities but in the remote and rural communities across Australia, in places such as Ipswich in my electorate. Whether they be in Brisbane, Victoria, Queensland or wherever, these are fair dinkum small businesses that are operating under very, very tough conditions—conditions which are no fault of their own. They have been left in a perilous position, not just by the global financial crisis but by what I think is the unscrupulous behaviour of a number of financiers worldwide and in this country who have refused to continue to provide the sort of liquidity that car dealerships need to continue their business.

We are not talking about failing businesses. We are talking about businesses that are going concerns, that have had long histories and balance sheets in good standing, that have been more than capable and more than able to meet all of their liabilities and that continue to do so. I find the behaviour of companies such as GE Money and GMAC towards some of their clients—some of whom have been their clients for more than 20 years—completely outrageous.

It left this government in a position where we had to act to fill that gap and that void, and that is what this bill is about. The OzCar SPV, the special purpose vehicle, is designed specifically to provide critical wholesale floor plan finance to eligible car dealerships to ensure that the departures of GE Money Motor Solutions and GMAC—and the liquidity challenges that also confront Ford Credit—do not result in the closure of hundreds of otherwise viable car dealers across Australia, which would in turn result in thousands of job losses.

What has taken place in the past six to 12 months has put an enormous amount of pressure on car dealerships—small businesses in a whole range of communities. It has put a great deal of strain on their businesses. For some, if action had not been taken early, it could have meant the closing of those businesses, putting at risk many, many jobs. The SPV initiative will protect jobs. It is part of a broader government strategy of supporting the economy, supporting the community and supporting small business in this country. We are determined to meet all of those challenges. We accept the responsibilities we inherit as government in terms of where we find ourselves economically, given the global financial crisis. You have to act and you have to act locally. You have to support and maintain jobs by providing the sorts of economic stimuluses people need to ensure that they can continue on with their lives. You also have to provide mechanisms for small businesses, medium enterprises and large businesses through industry support to make sure that they can continue to do what they do, in turn supporting jobs. This is exactly and what this Car Dealership Financing Guarantee Appropriation Bill is all about—it is about underpinning a vital sector of our economy.

You have heard the previous speaker, the member for Makin, talk about the broader industry support we have given to the automobile industry—the key strategies of the $6.2 billion car plan and the green car initiative that we have put into place—along with our stimulus packages, what we have done for pensioners across the country and what we have done in terms of investing in schools, jobs, communities, manufacturing, and education and training.

There was one group of individuals that has been particularly impacted by the global financial crisis which was not really covered off in any other area, and that was the car dealers. They fall into a special category. Car dealers may appear on the surface to people looking from the outside to be wealthy or large businesses that involve massive turnover and make a lot of money for the owners. In some cases, that is the case, but generally speaking car dealers are small businesses. They are a franchise business. I have had some involvement now over a period of time in terms of franchising and understand some of the difficulties that franchisees face in their day-to-day operations. I continue to be out there advocating for franchisees and a fairer go for all people involved in franchising. Car dealers fall exactly into that category. Car dealers are often held to ransom by the large auto groups. They are compelled to spend millions of dollars for showrooms—a fancy glass chrome showroom, which is the expectation—and have massive sunken costs. They find they have either little recourse in terms of a long-term contract or little opportunity to expand or diversify their business.

One of the problems they face is that not only are they limited in their potential to diversify but they are also tied in through their financing of their floor plan, often through the specific dealership group that they are involved in or through one particular financing organisation, such as GE Money Motor Solutions, GMAC and, as is relevant to this debate, Ford Credit. Car dealerships really were left hanging in the air for a period of time until we put forward our plan, the OzCar SPV, the special purpose vehicle, to ensure that car dealers actually had access to some finance at reasonable rates and that it was possible for them to continue in their business.

The government has been working with the four leading Australian banks—the ANZ, the Commonwealth, the National Australia Bank and Westpac—as well as other financiers to put in place an arrangement that can provide that critical wholesale floor plan finance to those eligible car dealers that were left stranded by the exodus—I would say the unprovoked exodus—from the Australian market of GE Money and GMAC.

The facility that we will be putting in place will be used to provide liquidity support for 12 months to almost 200 Ford car dealerships as a result of the liquidity pressure facing Ford Credit. Car dealerships generally cannot remain in business without a viable floor plan financing arrangement. That is the bottom line. I do not know if people actually understand how that works—and we are talking about new car floor plans here. The way it works is that the dealership is compelled to purchase the cars to put them on the floor. They have already outlaid the money. They do it through a financing plan. It means that they carry a lot of costs, not only sunken costs in terms of their infrastructure expense—the showroom, the dealership itself—and the continuing costs of maintenance and staff, which are very high numbers, but also the initial full purchase of the vehicle. They may sit on the lot for months—hopefully not years. But, given the current troubles that the car manufacturing industry is facing globally, there are some serious issues with the turnover of vehicles in those particular car dealerships.

I have had the good fortune of knowing a number of car dealers, being friends with them and having some understanding of their business—not as well as they do, obviously—and how they operate and the tough economic and cyclical circumstances they find themselves in. While it is true to say that in some good years they did do quite well and they grew their businesses, they also grew a lot of jobs and provided a substantial economic base for small communities, particularly if we start talking about country and rural areas. Sometimes one of the big employers in a small town will be the car dealership. You do not get too much choice. If you travel around this country and go to some more remote and rural parts, you find that there may be just one—if you are lucky, maybe two—brands or dealers in a particular town. So trying to support them, providing the mechanisms to support their survival, making sure they have access to finance and making sure they continue on with their business is critical. It is critical to those local economies as well.

The government have been responsive to the needs of that particular segment of small business, as we have in a whole range of other areas. We have been responsive in how we have dealt with housing across the country. The Minister for Housing is here and I put on the record my appreciation of the good work she has been doing and that her department has been doing in dealing with one of the toughest problems we have across this country of trying to get people into a home and public housing. We have been making some real investments for the first time in a very long time with the Commonwealth’s decision that it was part of our responsibility to front up and do these things.

It is very much the same principle that applies to car dealers. I am very proud when I go and talk to my community about the programs we have put in place, about the sort of legislation and mechanisms that we are providing to ensure that we do not just talk about small business and medium enterprise but actually support them with real funding, real programs and real strategies. We support them with real things that will make a difference to their survival so that they can get over this tough period. We will get over this tough period. We will come out of it at some point soon—hopefully sooner rather than later. But we will come out of it at some point and we need to prepare our economy for when that actually takes place. That is what the government are doing.

I was listening to some debate yesterday from members of the opposition and I heard about the so-called plan that they had, which sounded to me like a wish list. I particularly refer to the member for Paterson, who is here. He talked about a plan: world peace in essence, goodwill to all men. There was this grand plan, but to me it just sounded like the sorts of things you might do if you attended an international beauty pageant and they said, ‘What do you want to achieve in your life?’ and the answer was, ‘I want world peace and to travel the world.’ I think people are pretty familiar with it. But to me it just did not sound like a plan—it did not have a roadmap. It did not have a path or a strategy.

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