Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

Last night when I was speaking on the Car Dealership Financing Guarantee Appropriation Bill 2009, just prior to the adjournment, I was referring to my understanding that several Mitsubishi dealers around Australia had been provided with temporary financing arrangements by Mitsubishi Motors Australia Ltd. Those arrangements expire on 30 June this year, so it is important that this bill be passed and thereby provide those dealers with another financing option. The car dealership financing guarantee is just one of a number of measures that the Rudd government is taking to support the automotive industry. Another measure has been the small business tax break, which provides a 50 per cent tax concession for eligible asset purchases, and the extension of that concession until December 2009. That concession provides a substantial incentive for small business owners to purchase a new vehicle for their business. In fact, following the recent budget, the Chief Executive of the Federal Chamber of Automotive Industries, Andrew McKellar, said:

… the tax break will help stimulate the new vehicle market and support jobs in the industry. Every plumber, every painter, every electrician—in fact every small business owner—is encouraged to take advantage of this offer … I encourage small business to bring forward purchasing decisions …

It is not only tradespeople who will benefit. All small businesses, including farmers, farm contractors and suppliers, can benefit and at the same time support their local auto dealer by taking advantage of the 50 per cent tax concession.

I would like to speak briefly about General Motors Holden Ltd, who have their manufacturing plant in Elizabeth, adjacent to my electorate of Makin. Many of the people who work at General Motors Holden live in the electorate of Makin. I personally know many of them and I have visited the plant on several occasions. I understand how important it is to them to ensure that General Motors Holden remain viable. Obviously, to remain viable they need to sell cars. I also understand that General Motors Holden have announced that they will be building a four-cylinder car as a part of their response to changes in the market. That announcement has certainly brought a great deal more confidence and security to those families who depend very much on the production of the company’s cars.

But the General Motors Holden plant at Elizabeth is important for another reason. In the northern suburbs of Adelaide 25 per cent of the economy is based on manufacturing. That manufacturing base is heavily dependent on General Motors Holden being there, not simply because firms in northern Adelaide are direct suppliers to General Motors Holden. In many cases operations there are not direct suppliers, but having General Motors Holden in the region indirectly underpins many of those manufacturing industries. So for the benefit of the entire region and the state it is important that we do what we can to ensure that the automotive industry remains viable in South Australia.

In respect of that I welcome the $6.2 billion announcement that the Rudd government made last year in support of the automotive industry around Australia and, in particular, in providing an allowance and support for the greener cars that will be made in the future. In fact last year, when the Minister for Innovation, Industry, Science and Research, Senator Kim Carr, visited the GMH plant to talk about the $6.2 billion new car plan for Australia, I accompanied him, as did the member for Wakefield, and we had discussions with employers, the heads of GMH, as well as a number of employees who were on the shopfloor. It was clear to me that the employees very much appreciated the support that this government was giving to ensure that their jobs were going to be supported in whatever way was possible. I was also at the plant last year when the Prime Minister and Minister Carr again went to it to announce $149 million worth of support for the new four-cylinder car that will be manufactured at the Elizabeth plant.

The Australian automotive industry employs around 63,000 people directly and it is estimated that a further number of people, probably more than 100,000, depend on the industry for their employment. In fact, industries associated with the automotive industry, such as the steel, plastics and glass industries and other industries, are heavily dependent in many cases on that industry. It is important to our national economy. The Rudd government understands that and for that reason has introduced a number of measures to support the automotive industry since coming to office. The establishment of the car dealership financing guarantee special purpose vehicle is another example of the Rudd government understanding the importance of the automotive industry and supporting that industry in Australia.

(Quorum formed)

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

I note once again, for people listening in today and for the Hansard record, the disgraceful behaviour of the opposition. For the member for Dunkley, on a really important bill such as the Car Dealership Financing Guarantee Appropriation Bill 2009, to disrupt the proper processes of the House is an abuse of the standing orders. The way they are abusing this place, abusing the standing orders of this place and trying to prevent members speaking on what is a really important bill is completely disgraceful behaviour.

This bill is about making sure that the Australian economy continues to function properly and efficiently, and it is about ensuring that car dealers actually have a business. This is from a mob who claims to be the great supporters of small business. We are here trying to actually pass legislation to support small businesses and car dealerships. I am sure that they are going to be very thankful to the member for Dunkley and the opposition—the Liberal and National parties—when all that the opposition is interested in is disrupting the debate and disrupting the passage of this bill.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

Why don’t you get on with it, then?

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

I have got plenty of time to get on with it, and I will, but the member for Dunkley and the member for Paterson are more interested in disrupting this debate and not letting us get on with it. Car dealers—

And here we go again with the member for Paterson abusing the standing orders of this place.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

Mr Speaker, on a point of order: the member has misrepresented me—I have not disrupted the House, but seeing he wishes me to do so, I—

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

There is no point of order. The member for Paterson will resume his seat.

(Quorum formed)

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to 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.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

Your only plan is debt—deficit and debt.

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

It did not have a mechanism or some sort of vehicle to actually get there. We all want world peace, but you need a strategy and a plan to get there. You cannot just say, ‘My plan is world peace.’

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order and ask you to bring the speaker back to the actual bill in question. He has no idea what he is talking about but I think he should restrain his remarks to the bill.

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

Thank you, Member for Paterson. I will listen very carefully.

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

Thank you for the interruption and the debate, which was out of order, from the member for Paterson.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The member for Oxley must not reflect upon the chair.

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

Mr Deputy Speaker, I am certainly not reflecting on the chair.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

You certainly were.

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

I can assure you I was not, Mr Deputy Speaker, but I will accept whatever your ruling is.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Housing) Share this | Link to this | Hansard source

Mr Deputy Speaker, the member for Oxley was referring to the shadow minister opposite, I am sure, rather than to you. I am sure he would never intend to reflect on the chair. Mr Deputy Speaker, I would urge you, while calling the member for Oxley to speak on the legislation, to take account of the constant interjection that is happening from the other side of the chamber and call the interjectors to order.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The minister needs to be a bit careful as well.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Housing) Share this | Link to this | Hansard source

I am sorry, Mr Deputy Speaker. I do not understand your comment.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

You were reflecting on me.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Housing) Share this | Link to this | Hansard source

Mr Deputy Speaker, it was certainly not my intention to reflect on you and I would offer you an apology if you understood it in that way. I am asking, Mr Deputy Speaker—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The minister will resume her seat.

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

Thank you, Mr Deputy Speaker. The financial impact of the bill that is before us is important to note in this debate. The overall contingent liability for the Australian government is estimated to be around $550 million, comprising around 45 per cent of the remaining GE and GMAC loan books and about 85 per cent of the Ford Credit loan book, and it is important to note this. We do not expect that that will necessarily be the case but it is estimated to be around that amount.

The SPV will only be able to advance funds if it is satisfied that the dealership is a viable business. I think that is a fair proposition in terms of the government providing that security, that guarantee, and making sure we can use the good credit rating that the government has in providing assistance and liquidity to car dealerships across the country. The terms of any alliance must also be consistent with the usual commercial lending criteria of recognised finance providers. At that point I particularly mention the good work that Perpetual and also Credit Suisse will be doing in being the managers of this special purpose vehicle.

In all, this is really good legislation and really good policy. While we are debating the Car Dealership Financing Guarantee Appropriation Bill 2009 today, it is probably also worthy to note that we actually did move on this matter quite quickly. On 23 December 2008 we moved to bring in the package and earlier this year provided the mechanisms for that to happen. This is more evidence of a government that is in touch and responsive to the needs of small and medium enterprises in this country. It is part of a national suite of measures to ensure that the economy continues to grow and that people have an opportunity to do the best they can. My view has always been, as is the view of many people, business ought to get on with doing—(Time expired)

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

I rise today to speak on the Car Dealership Financing Guarantee Appropriation Bill 2009. I am going to spend a couple of moments reflecting on comments from the member for Oxley in his contribution to this debate. The member stated how expeditiously this government had acted on this matter. Well, it is true that this package was introduced on 1 January this year but it is now 28 May. What we have had is—let us be very sure about this—the government guarantee of taxpayers’ money to industry, and yet they have had five months to bring this legislation to the House. That means that this legislation and the actions of this minister have been very, very tardy indeed.

There is no doubt that, with the falling volume of sales, some financial institutions have got very nervous about the motor vehicle market, in particular the withdrawal of GE Money Motor Solutions—a subsidiary of GE Money, which is a division of GE Capital—and GMAC Australia from the automotive and motorcycle finance business of Australia. It created a huge problem. But this problem was exacerbated by this government. This came about directly because of the actions of the Rudd Labor government. When they rushed in and provided that unlimited deposit guarantee, a lot of money was stripped from financial institutions and locked into the banks. So we have seen not market driven per se but government driven readily available finance shifted into the banking sector because people wanted this ironclad, gold plated guarantee by the government—and by that I mean now the taxpayers—through the banks.

This special purpose funding vehicle was initially set at $2 billion, and the current estimates are that the exposure will be more in the vicinity of $550 million, and will operate for about 12 months. It is funded by the big four banks but it is guaranteed by the Commonwealth to provide finance to dealers unable to secure commercial finance. I should clarify at this point that this finance is not for consumers to buy motor vehicles. This finance is purely restricted to the financing of floor stock. I have had discussions with motor vehicle dealers in my area and, without going into individual names, a most interesting comment came from one of the dealers who said, ‘We are paying far too high an interest rate, which means we are making very little profit.’ This guaranteed finance is two per cent above the market rate. He said, ‘If we do not sell the car within 30 to 40 days, the interest starts to rack up significantly at a rate we cannot afford.’ As such, this year they have taken to having no new stock on the floor and to only ordering it in when there is a direct request from customers to purchase a vehicle. I am talking about a motor vehicle dealer in a regional and rural area. This is not the magic mile of motors where you have an endless stream of motor vehicle dealers and lots of floor stock; this is a small country area with a relatively small turnover in motor vehicles and where the cost of providing floor stock for display can be very expensive. Make no bones about it: these motor vehicle dealers need to be extra competitive in their pricing because of the deals that are offered by the magic miles of motors in the major cities.

It is important, though, that this funding was put into place; otherwise, we would have had a collapse of the motor vehicle industry. I will look at some of the figures for motor vehicle sales from the Federal Chamber of Automotive Industries. The new vehicle sales figures for April 2009, released on 5 May 2009, showed that 63,965 passenger motor vehicles, SUVs and commercial vehicles were sold in April 2009—a fall of 23.9 per cent when compared with the same month in 2008. The year-to-date total is 276,935 new vehicles sold—a fall of 20.3 per cent compared with the same period last year—suggesting annual sales of 840,000 in 2009 compared with 1,012,164 in 2008. So not only are sales dropping but also it means the floor stock is sitting on the dealers’ floors for much longer and that, in turn, means greater cost to the dealers. This has occurred, as I said, in part because of the government’s mismanagement of the economy by rushing in to provide unlimited deposit guarantees to the banks. We have already heard that some of the financial institutions, not GE Money or GMAC necessarily but some of the smaller financial institutions, have actually locked up their capital and are not allowing people to withdraw or shift their money to the banks because they would face a severe liquidity problem.

These are the issues we have to deal with, but this is no different from Ruddbank. The Ruddbank was set up for failed overseas financial institutions. The Ruddbank was set up to hold finance for toxic assets—in other words, huge office blocks and facilities in major cities—but it was not available to small to medium enterprises. This was put together with the banks with a government contribution—and, again, that government contribution comes from the taxpayers of Australia. Do those small to medium enterprises that pay their tax and fund the Ruddbank and fund OzCar—this special purpose financing vehicle—have this sort of money? Let me tell you what is happening right now out in the business community. One sector of the building and construction industry is flying along brilliantly because of the first home owner grants—and I think that is a worthy contribution. But it is one sector. Many builders cannot access the capital to actually enter into that market. What is happening is that you are getting a narrowing confine of people able to actually work in the construction industry because of the lack of access to capital and finance. So where is this government’s guarantee of finance to that sector of the industry? The other thing that the First Home Owner Grant scheme has done is to inflate the market in the first home owners finance sector.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Housing) Share this | Link to this | Hansard source

Mr Deputy Speaker, a point of order on relevance: I noted earlier that you asked the member for Oxley to focus on the content of the legislation before the House. I wonder if you would do the same here.

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

I will listen very carefully, Minister.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

Mr Deputy Speaker Secker, I am directly correlating taxpayers’ guarantee of financial institutions and the fact that this government has cherry-picked industries but not broadly supported capital requirements, and I am providing the comparative analysis. Indeed, if the minister had been listening she would have understood that. I think she would have—

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

You’d better vote for ABIP if that’s your concern.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

understood that all industries need support, not just some industries.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

So you’re going to vote for ABIP.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The Assistant Treasurer!

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

The Assistant Treasurer should know better, because this is part and parcel of his problem. He was one of the people who led the charge to make sure that there were unlimited guarantees for the banks, which created a lot of this financial problem.

The development and building industry is suffering. Their loan facilities are being called in and they are not being refinanced. That is the equivalent of their floor stock as they deal with people in providing developments, including schools, houses and industrial lots, and job opportunities, particularly in regional and rural areas. Where is their guarantee of finance? Where is their taxpayer guarantee, funded through the four banks? It is not there. These people pay their taxes too, and when the Labor government provides these guarantees to other industries it is with their money. They just ask for a little bit of equity.

I am not against the motor vehicle industry being supported but I would also like you to consider the marine industry, which has just had its boat show on the Gold Coast. It has the same problem: it has stock that it needs to put on the floor and it needs finance. Where are its guarantees? They are not there.

It is no different in the tourism industry, which wants to embark on new ventures or buy new equipment. This government introduced the 30 per cent accelerated depreciation for investment allowance and extended it to 50 per cent for small business, but the problem is that people cannot get the capital. You can have all the incentives you want, but if you cannot get the capital you cannot commit with it. One reason they cannot get the capital is that the banks want more and more guarantees.

Constituents of mine say to me that if it is good enough for this government to use taxpayers’ money to guarantee the finances of one industry then why not do it for them? Why do they have to wait until they are on their knees? This government talks about how it is being proactive and decisive, but being proactive and decisive, when you are spending money collected from all taxpayers, means supporting all taxpayers in their industry and development. Clearly, this government does not understand where it is going in what it is providing here.

It is also no different for engineers and manufacturers. What about the support industries in the motor vehicle industry—the people who provide the wiring looms, the seats, the panels, the accessories? Why aren’t their capital requirements being guaranteed by the government? When you cherry-pick sectors you change the structural integrity of the market, and if you prop up one side of the market but not the other you create a massive imbalance. It is like being pregnant, to use an analogy. You cannot be a little bit pregnant. You have to be in either for the whole shot or not at all. I say to you that, in financing, the problem is that the government has created this imbalance.

The coalition have said that we will support this bill because it is important that we find a way through this economic crisis. The one key measure that has been left out in the way in which the government has dealt with financing is that it has done absolutely nothing to instil in our community confidence in our economy, because the confidence in the leadership of this nation is rapidly diminishing. The government can spend all the money it wants. It can create all the guarantees it wants at the expense of the taxpayer. But, unless this government drives confidence in the marketplace, confidence in the community so that they can invest and confidence in finance companies, we will get into a situation where finance companies and banks keep tightening up because of risk profiles. They will tighten up to the extent that the government will have to step in and provide more guarantees.

What the government has started here is an avalanche of underwriting capital requirements in Australia. Mark my words: we will be coming back here over the next few months with another industry on its knees because it cannot get finance and this government will say: ‘Let’s underwrite this; let’s guarantee this; let’s provide vehicles.’ And that will continue to distort the market. The initial step taken by this government, when it rushed in, did not consult with the coalition and did not sit down and get consensus opinion—it did not even listen to the people at the 2020 Summit, despite the great fanfare about listening to the greatest minds in Australia—is now having a downstream avalanche effect on the finance industry. So we will be back here regularly. There will be many bills providing financial guarantees for many industries, and I think that is the issue that we need to address.

I say to the government: you are going down this track but how are you going to explain to all those other industries that you are not prepared at this stage to underwrite them? What are you going to say to them? What are you going to say to all those people who become unemployed because you started an avalanche that they are now paying for? Always remember, as you go down this path of guarantees and cash handouts, that it is not your money in total; it is the money of the taxpayers of Australia and of the kids up in the gallery. It is their money and money that will be theirs in the future that you are handing out and playing with, and they expect nothing less than for you to be responsible in the administration of their finances. We have said we will support the bill and we will do so, but you need to think long and hard about the direction in which you are taking the finances of this country.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Paterson would be well advised not to use the term ‘you’ so often.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

I am sorry I reflected on ‘you’ through the chair, Mr Deputy Speaker. I obviously meant the Labor government.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

in reply—I thank all honourable members for their contribution in the debate on this bill. I must, however, start with the rather bizarre and confused contribution we have just heard from the member for Paterson, who said: ‘We support this bill, which affects car dealerships, but what is the government doing about the commercial property sector? What is the government doing about other sectors having trouble getting finance? Why won’t the government do something about those sectors?’ He said, ‘It’s not your money; it’s theirs.’ I have a response for the member for Paterson: it’s not your job; it’s theirs! It is the people in the commercial construction industry who are looking for government action. They are also looking for opposition action and opposition support for a bill in the House called the Australian Business Investment Partnership Bill, which the opposition is opposing all the way. (Quorum formed)

I was in the process of pointing out the confused and bizarre contribution from the member for Paterson when the quorum was called. The member for Paterson said the opposition supports the special vehicle for car financing but asks: ‘What else is the government doing? Where else is the government support for the commercial property industry?’ This is from a member of the party who has opposed to the bitter end the Australian Business Investment Partnership, which is designed to do just that. Talk about inconsistency. The member for Paterson must not have been present at the party room meeting that decided to oppose the Australian Business Investment Partnership, a partnership which has been called for by business across this country for months. The opposition of the Liberal Party is something that business just cannot understand. They cannot understand the reason why the so-called pro-business party in this country would oppose such a sensible measure.

I thought the member for Paterson laid out quite a good case for the Australian Business Investment Partnership. I thought he made quite a compelling argument to vote for it. And yet this is a man who voted against it and whose colleagues in the other place are threatening it. They are trying to derail it and they may very well be successful in derailing the Australian Business Investment Partnership through their opposition. If a member of the opposition is going to come in here and say, ‘We’ll support this: it’s good as far as it goes. It’s fine inasmuch as it achieves, but the government needs to be doing more,’ it would be helpful if he put his vote where his money is and supported the government’s actions by supporting the Australia Business Investment Partnership. So it was a particularly bizarre contribution from the member for Paterson.

I want to take this opportunity to also respond to another opposition member. This time the contribution was not bizarre; it was a contribution that was quite passionate by the member for Riverina. The member for Riverina spoke on this debate last night and I watched her contribution. She clearly is very interested in this topic and she clearly feels very strongly about this topic, and I welcome her contribution. The member for Riverina, if I understood her argument correctly, was concerned that the criteria of the special vehicle may restrict some of her car dealers from applying, but that is certainly not the case. It is the case that this special vehicle will not be operational until the bill has passed both houses of parliament, and certainly we join with the opposition and the member for Riverina in wanting that to happen urgently.

If I interpreted the member for Riverina’s concerns correctly, she was concerned that there may be criteria in this bill which would require a turnover of half a million dollars a month for the car dealer to have access. That is certainly not the case. That is a requirement from some of the private sector providers in place at the moment, but it is certainly not the case for this special vehicle. There are some former GE or GMAC finance dealers who have not been able to secure new financing arrangements, particularly in rural and regional Australia, which the member for Riverina referred to. Most of these dealerships have now been issued final notices. That is the reason the government has embarked on this process and would like to see the bill passed swiftly. I think it is correct to say that the member for Riverina has been in contact with the Treasurer’s office, and I certainly encourage her to continue that dialogue and we will certainly do everything we can to facilitate matters with her constituents who have raised those issues.

So while it is very pleasing that it has not been necessary to activate the OzCar facility in the last six months since it was launched because of the success of many former GE and GMAC finance car dealers in securing the wholesale floor plan financing from alternative providers, it has now become necessary to activate the facility. The OzCar SPV facility is critical in ensuring that one of the largest providers of the wholesale floor plan financing in Australia, Ford Credit, is able to remain in Australia to continue to support its network of around 230 car dealers, about 140 of which are in regional centres.

There is little doubt that, if Ford Credit is not able to secure liquidity from the OzCar SPV over the next 12 months, a large number of Ford Credit’s current dealers in regional New South Wales, Queensland, Victoria and South Australia will fail, resulting in hundreds of job losses in many vulnerable communities. The OzCar SPV is also critical in providing liquidity support to the small number of former GE and GMAC dealers who have not yet secured alternatives sources of wholesale floor plan financing.

It is often forgotten that the vast majority of car dealerships are small family businesses. These businesses have often been developed over many years involving generations of the same family. This bill will therefore allow a large number of small family businesses to continue to develop and grow during a very difficult and challenging economic period. The Car Dealership Financing Guarantee Appropriation Bill 2009 simply seeks to enact a standing appropriation to support the Commonwealth guarantee that will apply to around $550 million of securities issued by the OzCar facility. The Commonwealth guarantee is necessary to provide the four major Australian banks with the legal certainty they need to purchase their respective equal share of OzCar securities. OzCar will raise funds by selling securities to the four major Australian banks. At a time when the debt securitisation market has dried up as a result of the global financial crisis, we welcome the willingness of the four major Australian banks to support this initiative by agreeing to purchase OzCar securities.

The overall size of the OzCar facility will not exceed $850 million; it is likely to be much smaller. The contingent liability risks to the Australian government are small. Treasury has entered into a contractual arrangement with Credit Suisse, the OzCar program manager, and a range of service providers on the operation and administration of the OzCar SPV facility. The Treasury will be providing the Treasurer with regular reports on the operation performance of the OzCar facility and will prepare quarterly reports on the operation of the SPV that will be made available to parliament. The OzCar SPV is designed to wind down by 30 June 2010. The standing appropriation that this bill puts in place will then wind down.

There is no doubt that the Australian car industry is facing some very serious challenges. The next 12 months are expected to be more challenging than the 12 months that have just passed for that sector. Throughout the global financial crisis, the government is acting decisively and responsibly to support Australian jobs. Initiatives such as the OzCar SPV are absolutely critical in providing not only real material support to many car dealers but also critical confidence to the entire car industry at this time, when it needs it most. Again, I thank honourable members who have contributed. I welcome the opposition’s support—despite the bizarre contribution from the member for Paterson, who I thought, at one stage, had announced the opposition’s support for the Australian Business Investment Partnership because he made a very cogent argument for it. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.