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Wednesday, 27 May 2009
Page: 4554

Mr HAYES (5:59 PM) —The Australian automotive industry plays a critical role in the Australian economy. It provides many thousands of jobs and generates a great deal of income from exports. It is a major investor in R&D, and its activities have extensive linkages to other sectors of the community. It is for these reasons that I rise today to support the Car Dealership Financing Guarantee Appropriation Bill 2009.

The OzCar special purpose vehicle initiative is designed to provide crucial wholesale floor plan finance to eligible car dealerships to ensure that the departure of GE Money Motor Solutions and GMAC and the liquidity challenges Ford Credit currently faces do not result in the closure of hundreds of otherwise viable car dealers across the nation, which would result in the loss of many thousands of jobs. This initiative was put in place by this government to stabilise that part of the industry.

The special purpose vehicle initiative will protect jobs across the Australian car industry, and it will certainly have an impact in local communities in these very challenging times—and earlier in the debate we heard the member for Corio speak about the experience in his electorate, which is centred on Geelong. As I said, vibrant and viable car dealerships are critical to this industry. The measures put forward in this bill are essential to minimise the adverse impact on the car industry and many regional communities as a result of the serious liquidity pressures confronting various finance providers, which has resulted in the exit of the two largest financiers in the motor vehicle finance industry. We know that car dealerships generally cannot remain in business without a viable floor plan financing arrangement. This is not a plan for retail businesses; this is not some form of guarantee that allows people to expand their businesses. This plan allows car dealers to guarantee their floor plan in terms of the wholesaling of vehicles to ensure that they are in a position to locally market vehicles and distribute them to customers.

Today I have taken the opportunity to talk to a number of the vehicle dealerships in my area—as I am sure a lot of the members participating in the discussion on this bill will have done. I have spoken to small, medium and large dealers, some of whom have been in my area for 20 years or more. These include Clintons, the Paul Wakeling Motor Group, McGraths at Liverpool and Peter Warren at Liverpool, which also owns Macarthur Ford. These are all significant businesses in Campbelltown and Liverpool. These local dealerships across my electorate employ many hundreds of local people, if not more, in their workshops and as salespeople and as marketing people. They also contribute a lot to my community. On many occasions I have spoken in this place about what a number of these people contribute to organisations such as Lifeline, Kids for Macarthur and Macarthur Disability Services—and others have contributed to the local football club, Wests Tigers, of which we are truly proud.

These car dealerships have a central focus on the areas that they service. They are not just the people you go to every time you are fortunate enough to be in a position to get a new vehicle; they are people you see contributing positively to the community they serve. These people help us to change and improve the lives of many people in our community, some of whom have been dealt a not very positive hand in life. The people who work for and own these dealerships have made significant contributions and continue to do so.

On a personal note, I value the contribution that vehicle dealerships make to my community—and, like many members on this side of the House, I have taken the time to speak about their contributions. In my discussions with dealers today, I found them very optimistic about the actions taken by this government in relation to securing the viability of the Australian automotive industry. Some of them are potentially exposed to risk following the withdrawal of the two largest automotive financiers. The government has been working with the four leading Australian banks—ANZ Bank, Commonwealth Bank, National Australia Bank and Westpac—as well as various other financiers to put in place an arrangement that can provide critical wholesale floor plan finance to those eligible car dealers who have been left stranded as a result of the exit from the Australian market of GE Money Motor Solutions and GMAC.

Although the market has responded very positively since January 2009, with a very large proportion of former GE and GMAC sponsored dealerships securing finance through other providers, there are still some dealerships that will need to rely on the special purpose vehicle—including those from Ford Credit—over the next 12 months to remain in business. A key role of the Australian government is to provide a Commonwealth guarantee on certain securities issued by the special purpose vehicle that were initially risk rated at below AAA. The Commonwealth’s guarantee will ensure that those securities are rated AAA, thereby allowing the four participating banks to buy them and contribute liquidity to the special purpose vehicle, which will then be lent to eligible car dealers.

The eligible car dealerships under this scheme are those which have been financed by GE Money Motor Solutions and GMAC or which are currently funded by Ford Credit. The OzCar SPV is a short-term arrangement, designed to reach fruition in 12 months. It is designed to address the critical market failures now. If left unaddressed, those failures have the very real potential to cripple our industry. I want to make it abundantly clear that the special purpose vehicle will only provide finance to wholesale floor plans. As I said a little earlier, it is not there to provide liquidity for retail lending.

I mentioned earlier the positive comments from the local dealers I had the opportunity of telephoning today. They are also echoed by the Executive Director of the Motor Trades Association of Australia. The media statement issued by Michael Delaney, the head of the association, on 5 December 2008 thanks the Australian government on the announcement of establishing this special purpose vehicle and states:

Absent these measures we believed and were able to document to Government that Australia would have lost five hundred car dealers from its near to 1,500 new car franchised dealers, with 3,500 outlets, would have lost up to 75,000 jobs and would have seen most all of the present stock of motor vehicles fire-saled through liquidations at anything up to below 50 percent of the list price. That would have wiped-out the valuations of all new and used cars, for all persons and parties holding a motor vehicle as an asset and in many cases could have caused a cascading call for more security from the financiers of those parties.

That is certainly an endorsement from the Motor Trades Association of Australia. This guarantee that the Australian government has made will hopefully not be called upon. Hopefully people are able to continue their trade. But they can now do so in the confidence that this vehicle is there to assist in that regard. As I indicated, whilst I may not have a motor vehicle manufacturer in my area, as has the member for Corio or my colleagues from South Australia who are also more than well aware of the significance of the manufacturing of motor vehicles in their state, I certainly see and value the contribution that the motor vehicle dealerships have made to my local community in Werriwa. I see and value the amount of time, effort and money they put into the training and development of staff and the overall contributions they make through being good corporate citizens throughout many of our regions. I commend the bill to the House.