Judith Troeth (Victoria, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Conroy. Given that the deadline for the withdrawal of finance from car dealers is less than a month away, when will the government act to address the critical funding issues facing Australia’s car dealers, caused by the government’s bungled unlimited deposit guarantee legislation?

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

It is clear that the auto industry’s problems stem from well before the introduction of the government guarantee and are largely the result of the global financial crisis. Those opposite may want to laugh but, as is well known, two of the major financiers had announced prior to the guarantee that they were pulling out. So those opposite may want to laugh, but that is why the Rudd government is working to address the liquidity concerns that have seen a number of investment funds freeze redemptions over recent months.

Treasury task forces are dealing with each category of market linked investment institutions. David Murray is facilitating larger and more liquid institutions, providing liquidity to various market linked investment vehicles. APRA is fast-tracking applications by mortgage funds and financial institutions seeking to attain the status of a prudentially regulated APRA institution, with $84 million of additional funding. And the RBA has widened repurchase operations to include high-quality commercial paper, to add further liquidity to this market. So let’s be clear: we have been taking action and we continue to be in discussions and negotiations.

It is only a week or two ago that Senator Fifield claimed the talks had collapsed. Yet here you are today, from your own mouths, suggesting they are still going on. The government is certainly aware of the difficulties that the automotive finance companies have been facing due to this crisis. Their primary challenge is that they raise funds from wholesale markets— (Time expired)

Judith Troeth (Victoria, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Minister, you may be aware of them but you have certainly not acted. You have stated the intention to do so but failed to act. Doesn’t that mean that new lenders are holding off from entering the market and isn’t it a fact that the government’s procrastination is actually making the problem worse?

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

Could I reject the basic premise that is contained in that question. It is simply an assertion, not a fact. The primary challenge that the car finance companies face is raising funds from wholesale markets and using debentures and unsecured notes from retail investors. Due to the global financial crisis, they are having difficulty raising funds in wholesale markets and households are seeking to withdraw funds from investments when they mature. Car finance companies, just like other market linked investments, rely on investors rolling over their investments. The Leader of the Opposition claims that it is the government’s guarantee that is to blame for investors not rolling over their investments. But his actions tell a different story. He admitted that he and other people were withdrawing their funds because of declining values caused by the global financial crisis. So what we have is walking on one side of the street and acting on the other side. (Time expired)

Judith Troeth (Victoria, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. I am sure that Senator Conroy, as a Victorian senator, has read of the recent closure of Mollison Motors in Kyneton, a 60-year-old company, which had its sad end yesterday when its 55 new cars were auctioned off by receivers in Melbourne yesterday as a result of the company losing finance. Such car auctions are another blow to Australia’s new car sales, which collapsed by 22 per cent in the last month. How many more car dealers will have to close and how many more jobs, which you and your government profess to be so interested in, will be lost before the government acts?

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

I am not absolutely sure that that was completely relevant to the primary question, but I am more than happy to deal with it. As I mentioned, the government regrets the announcement by GMAC and GE Money that they will be closing their automotive financing businesses. We are working with the automotive industry and the banking industry to evaluate practical solutions. My department—the department—has facilitated meetings between the industry and Treasury and the Department of the Prime Minister and Cabinet concerning this issue. The Treasury currently has task forces dealing with a whole category of market linked investments.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Your department?

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

I said ‘the Treasury’; I corrected that. The government has announced the most comprehensive plan ever developed for the automotive industry. A New Car Plan for a Greener Future will provide— (Time expired)