Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Hansard source

Thank you; I accept your admonishment, Mr President. The government is certainly aware of the difficulties that finance companies, including automotive finance companies, have been facing this year as a result of the financial crisis. That is why Treasury and regulators are examining, in consultation with the industry, the impact of the financial crisis on finance companies and will provide advice on what actions might be appropriate to support this sector of the economy. Treasury has established task forces dealing with each category of market linked investment institution in what is a complex sector involving highly diverse and risk differentiated investment products. As I said yesterday, in addition, the government has asked Mr David Murray to explore options to help facilitate larger and more liquid institutions, providing liquidity support to various market linked investment vehicles. So, as I said, the government is aware. APRA has also been given power and money to fast-track applications by finance companies seeking to attain the status of a prudentially regulated APRA institution. The government has provided additional funds to facilitate this. In total, the government has provided an additional $84 million over four years to ensure that our regulators continue to have the resources they need to maintain the strength of Australia’s financial system during the global financial crisis. The RBA has widened further the range of securities eligible for its repurchase operations to include high-quality commercial paper to add to liquidity in this market. On top of that, the government has also provided a $10.4 billion Economic Security Strategy to stimulate economic activity and protect vulnerable groups in our society.

This week we have also announced, as Senator Carr has mentioned on a number occasions already, a $6.2 billion plan for the automotive industry. The wholesale car loan market is estimated at around $6 billion to $8 billion, covering 1,500 dealers on 4,500 sites. About 30 per cent of the wholesale market is covered by GE and GMAC, with GE being about twice the size of GMAC. GE and GMAC collectively finance about $2 billion in this market. Forward credit, which has about $500 million of funding, is currently coming under pressure due to difficulties in accessing funding. On 24 October 2008, General Motors’ finance arm, GMAC, announced that it was closing its Australian and New Zealand companies and withdrawing from—