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Wednesday, 27 May 2009
Page: 4559

Mr PERRETT (6:28 PM) —The Rudd government has real cred when it comes to supporting Australian small businesses in these most difficult of economic times. Every right-minded MP in this House would support our budget initiatives to bolster business, support the economy and protect jobs—measures like the 50 per cent tax break for eligible assets, $10 million to help small business go online, R&D tax credits for small- and mid-sized businesses, changes to PAYG instalments to ensure better cash-flow for small business, and, of course, the stimulus payments we delivered to millions of Australians which then flowed directly to the retail and service sectors. These are practical initiatives that are helping sustain Australian businesses and support Australian jobs.

It is in this same spirit that I rise to support the Car Dealership Financing Guarantee Appropriation Bill 2009, Mr Deputy Speaker Andrews, and I do so knowing your background. It is a bit strange for me, a lawyer turned politician, to be talking about used car dealers. I think of when they do those rankings of professions in terms of how people are trusted. If we look at politicians, lawyers and car dealers, I think that is about the rolled gold trifecta at the bottom. Perhaps if I threw in a journalist it would be a slam misere.

Leaving that aside, obviously the Australian motor vehicle industry is a very important industry. It employs around 66,000 Australians. It generates billions of dollars in exports and is a crucial partner for many other industries. I see it nearly every day when I go home and I drive past the facade of motor vehicle retailers at the Moorooka Magic Mile. I look beyond all of them and I see all of these other industries—a plethora of motor vehicle support businesses. Where I live is just around the corner from the Moorooka Magic Mile of motors. This iconic strip of car sales businesses on Ipswich Road is well known in Brisbane, and perhaps all over Queensland and even Northern New South Wales. I would suggest that the Moorooka Magic Mile is Australia’s most famous car sales precinct and the best.

If you ask any of the retailers along that strip they will tell you it is home to Australia’s largest range of new and used vehicles—businesses like Brisbane Proton, Barton’s Holden, Just Nice Cars, Moorooka Nissan and Hyundai, Motorama Auto Superstore, Motorama Mitsubishi, Motorama Toyota, QLD 4WD Sales, Salters of Moorooka, Westpoint Autos, Rod’s Public Wholesale, XCarz and Kar King, to name but a few. And then there are all those other car support companies that I mentioned earlier. All of these motor vehicle businesses—some big, some small—help stimulate jobs and trade in my electorate.

Unfortunately, as some of the earlier speakers have mentioned, Australian car dealerships have suffered collateral damage due to the global economic crisis. The pressure on global credit markets—and consequently our own domestic credit markets—has seen two motor finance companies, GE Money Motor Solutions and GMAC, leave the market and another, Ford Credit, endure extreme pressure. Without finance to get vehicles on the showroom floor, most car dealerships simply cannot remain in business.

The latest sale figures give us a grim picture of the impact of the global downturn on our local car industry. The Federal Chamber of Automotive Industries reported 64,000 new car sales in April 2009, down from 84,000 in April 2008. That is a slump of 23.8 per cent. The impact is even more severe for luxury cars, which saw a 40 per cent drop in sales in April, year on year.

This morning I spoke to Alex Salter from Salters of Moorooka. Salters of Moorooka is a well-known used car dealer that has been selling used cars on the magic mile for 34 years. Alex is a very experienced and well-respected operator, and he said that his profits are down around 40 per cent. He only sells used cars and uses his own stock, so he has not been as affected as much as the dealers that sell new cars that have had some of the finance problems. But he did assure me that the global recession has seriously affected a lot of other dealers that he is in communication with. Thankfully, for me, there is still a lot of magic left in my magic mile, but there are other MPs who could not say the same thing.

This morning I also spoke to someone that you might know, Deputy Speaker, Ross Tait, who runs not only Ballina Toyota but also Ross Tait Toyota out in St George. I have known him for a long time and, as this legislation will benefit all of the electorates in Australia, I thought it would be appropriate to seek some background from a regional retailer, not just someone blessed enough to be on the Moorooka Magic Mile or in my electorate. I cannot really speak for Ballina because I do not know that part of the world, but I do know the bush around St George very well and it is probably the same as many other National Party electorates—or even Labor Party electorates like Leichhardt, Flynn, Capricornia or maybe even Blair.

Ross Tait, from Ross Tait Toyota, told me that most of the dealers he knows have been really struggling for the last 12 months. However, he also said—and this is very important—that sales have doubled since the Rudd government’s economic stimulus strategy came into play. Prior to our economic stimulus strategy, which many people in the House voted against, Ross had not had to lay anybody off. Unlike the example given the previous speaker, he has been able to keep everybody because he said they were too hard to get in the bush and so he was trying to hold onto them. However, such tough decisions were on the horizon until things started to change a few weeks ago. He said the last six weeks had been particularly positive and he wanted me to thank Kevin Rudd personally on his behalf. So thank you, Prime Minister.

Today when I was talking to Ross Tait I had to interrupt the phone call to run down here to the chamber because some people in the House were playing silly buggers with quorums. In the time that I was away from that phone call, which was only about 15 minutes, Ross Tait made a vehicle sale to a small business man. It was to a bloke called Peter Haslem of Haslem Agriculture, which I understand is a bug-checking business. Peter Haslem told Ross that he wanted me to know that he would not have bought the vehicle but for the Rudd government’s tax breaks for small businesses. So thank you, Treasurer, and thank you, Prime Minister. The people from the bush thank you.

When the market fails that is what good government does. Responsible governments step in. And that is what the Rudd government is doing. Obviously, the last thing we want to see is the closure of otherwise viable car dealerships. It would not only be bad for those businesses and their employees; it is also bad for consumers and would impact on other areas of the economy—especially in rural communities, as the previous speaker noted. This bill before the House will breathe life back into Australian car dealerships by ensuring there is finance available for those who need it.

At the end of 2008, the Treasurer announced the creation of the OzCar special purpose vehicle to provide finance to eligible car dealerships. For those people that have just begun listening, I should clarify that the OzCar special purpose vehicle is not some sort of Aston Martin that Q supplies to James Bond. It is not that sort of vehicle. It is obviously a financial vehicle. The SPV will raise funds by selling securities to the four major banks, which will then lend those funds to car dealerships. These funds will be available to dealerships that had been financed by GE Money Motor Solutions or GMAC or who are currently financed by Ford Credit.

This bill introduces a guarantee to ensure that securities issued by the SPV that would be rated below AAA are in fact rated AAA. In other words, the Commonwealth government will take on the credit risk to ensure that car dealers can access finance to keep cars in their showrooms and car yards. OzCar will provide loans up until 30 June 2010.

This is not a free-for-all; it is a sensible response to the market failure. SPV finance is available for the wholesale purchase of vehicles. It is not available as finance for retail lending as there are many other lending options still available to consumers. Dealerships will need to prove that they have a viable business case and an ability to repay the loan—that is of course prudent as we are talking about a possible call on the public purse—and I understand that auditors will monitor stock management of dealers accessing SPV finance.

There will be no fee for the guarantee as we do not want to see extra costs passed on to consumers. The guarantee is there to stimulate liquidity in the market but of course, ideally, the guarantee will never be called upon. Nevertheless, this is good policy.

As I said from the outset, this bill is about providing a buffer for businesses and jobs and ensuring that our car industry can ride out the credit crunch and the economic slowdown. We need to ensure that there is still sparkle and magic at the ‘Moorooka magic mile’ and all similar places. I commend the bill to the House.