John Williams (NSW, National Party) Share this | Hansard source

I rise to talk on the car industry and my very real concerns about where it is going and the problems it faces. I believe the first nail in the industry’s coffin is the luxury car tax approved by the Senate. It will put more tax on our cars, especially vehicles such as the Holden Statesman and the top of the range Ford Territory—both, of course, manufactured in Australia. I have some real concerns about the future of our motor vehicle industry. Obviously, it will not be long before import tariffs will be reduced from 10 per cent to five per cent. I believe the government is planning on doing this in 2010. As I said in my maiden speech, we do not play on a level playing field when it comes to trade. The countries we are competing against have very cheap labour. I have been to factories in Thailand to see the manufacturing of parts and vehicles, and some of them pay workers $5 a day. This is what we are expected to compete against. It is virtually impossible.

The big problem I see for the industry is the one now facing dealerships, especially those in country areas. GMAC will withdraw from the financing of motor vehicle dealers by the end of the year. GMAC finances around 25 per cent of all motor dealers in Australia. Those dealers do not necessarily have to be Holden dealers; they have many other makes of vehicles. GMAC has said that about 185 staff from Australia and New Zealand will leave the company by the end of the year, with some staff to be retained to continue on with the leasing, hire purchase and financial agreements already in place.

There is also a problem with GE Money, who are set to leave the industry as well. They also finance around 25 per cent of the car dealerships in Australia. If we do not have dealers, who will sell the motor vehicles? Two financial institutions, GMAC and GE Money, finance around 50 per cent of the dealerships in our nation and both have said they are going. They are going for two reasons: the cost of money following the financial meltdown around the globe—and we are all familiar with that—and the lack of domestic investment in these companies. I would like to expand on that issue.

As I said in question time today, on 13 October I asked the question: what is the government doing about those financial institutions not covered under APRA, those that are in fact covered under ASIC? You do not have to have a college education or be a rocket scientist to realise what will happen if one group of financial institutions, which I will call group A, is underwritten by the government—banks, building societies, credit unions—while another group, group B, which includes debenture issuing companies, cash management trusts and other financial institutions, is not guaranteed by the government. What is the logical thing that will happen when people get nervous about their investments and about whether their money is safe? They will withdraw their money from group B and put it in group A. That is obvious, and the government has done nothing about it. We have seen the withdrawal of funds, and financial institutions are pulling out from financing dealerships. This is a huge problem facing our nation and it is a direct result of the actions of this government. After asking that question on 13 October, I did my best to work with the ministers to stay out of the media and not cause a run on these financial institutions but to instead forgo political gain and try to save many of these financial institutions that are now frozen.

It is frightening to get more calls today, only to find that more financial institutions have gone to the wall and are in receivership. I will comment on one institution that has frozen its funds. A farmer wanted to withdraw money to buy water for his citrus trees. He cannot get the money out of the institution. His trees will die and his livelihood will go. Another person requires his money next month, to pay the Australian Taxation Office, but cannot get the money out of the institution because it is frozen. What is the ATO going to do to this bloke whose money is frozen in this institution and who cannot pay them? These are just some of the problems coming up that we are about to face.

As I said earlier, 50 per cent of our car dealers are financed by GMAC and GE Money—and my colleague Senator Fisher pointed out that there are around 90,000 people employed by motor vehicle dealers. If this 50 per cent cannot refinance, what is going to happen? Are there 45,000 jobs at stake? The banks are very reluctant to finance motor vehicle dealers because the security is not real property; it is on wheels and it can be moved. Any bank will tell you why they will not do it. Other financial institutions are offering money at 20 per cent interest. How can a dealership survive paying 20 per cent interest rates?

We now have a real situation where we are facing the closure of many car dealerships. I will give you some examples. United Holden in Rockdale, Sydney, has pulled the pin and is shutting up soon. Seventy jobs will be gone. I know of one large car dealership that has seven franchises and requires $9 million to refinance. There are approximately 350 people employed in these seven franchises. What is going to happen to them? If they cannot refinance, the doors will close. So much for the working families—the people employed in motor vehicle dealerships—who will lose their jobs as a result of this government not listening when it came to underwriting the institutions. These are the huge problems we face now— (Time expired)