Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 27 May 2009
Page: 4569

Mrs MARKUS (7:09 PM) —I rise to speak on the Car Dealership Financing Guarantee Appropriation Bill 2009, its impact on new car dealerships, the importance of those dealerships to local economies and concerns that the Rudd Labor government has not moved quickly enough to help new car dealerships have access to floor plan financing to stay in business. Why has it taken almost six months to throw a lifeline to these businesses?

The car sales industry in Australia is, or certainly has been, a vibrant, diverse, seven-days-a-week activity offering the widest possible choice with the best possible prices. That is competition in action, and competition works best when there are many outlets to choose from.

But car dealerships are not just about selling cars; they also have an economic ripple effect on local economies because they require a range of products and services supplied by local and regional business. It is about jobs. By the same measure, when a car dealership closes, that ripple effect is felt by all those local and regional businesses. For their own survival, businesses have had to put people off. People have lost their jobs and, of course, when that happens, families suffer. The simple conclusion is that we need to keep car dealerships operating during these challenging financial times. That is why the coalition will not oppose this bill.

There is no doubt about the downturn in new car sales in the past 12 months. New car sales figures released by the Federal Chamber of Automotive Industries for the month of April 2009 show a fall of 23.9 per cent compared with the same month in 2008. This was confirmed by senior executives of local car dealerships in my electorate of Greenway. I have spoken to a number of local car dealerships in my electorate and they have all reported a significant downturn. I am told that one in four businesses have reduced their stock levels or have let their stock levels run down. This is part of managing cash flow, but reducing the cost of holding goods also reduces their competitive edge by limiting choice.

 I am extremely concerned about the slow progress of this bill and I encourage my parliamentary colleagues to ensure that the bill is fast-tracked through the House so that eligible car dealership businesses can get the help they need without further delay. This help was announced in December 2008. It is now the end of May 2009, close to six months later. There is the parliamentary process for the bill and then the bank lending process once a business has met the criteria and lodged an application for financing under the guarantee, so there is still some time to go before these businesses that are doing it tough and are on the edge will be relieved of the stress that they are now under. How long are they expected to hold on? And why did it take so long for the government to put this bill before the parliament?

Some questions need to be asked about the eligibility criteria for dealerships to access floor plan financing. Approximately one-quarter of new car dealerships obtained their finance through GE Money Motor Solutions and GMAC Australia, both of whom are exiting the market. This leaves a large number of new car dealerships without finance facilities. I am concerned that dealerships who do not meet the bank eligibility criteria and who cannot find alternative financing will exit the industry, thus reducing competition and impacting on local economies.

I urge the banks to ensure a fair go for businesses in establishing the criteria. I also urge the banks to consider the implications of any extra interest charges that may be applied for providing the guarantee. I have been advised by my local car dealerships that recent media speculation reports that banks are looking at imposing an additional two per cent interest rate on top of the current bank bill rate. Competition is great for consumers, but, to maintain a competitive edge, businesses often work on narrow margins. Even though the bank bill rate, like all interest rates, has gone down compared to previous years, it is still above three per cent for the big banks that will be providing the guarantee. If the floor plan financing request is for something like $5 million, then two per cent interest above the current bank bill rate will be a huge impost and in the end prove to be unsustainable for many eligible businesses. I would appreciate from the government some clarification of and focus on this very important issue.

I am concerned that this bill has a sunset clause of 30 June 2010, a mere 13 months away. We have already seen a delay in the implementation of this support and assistance. There are concerns from within the community that Australia has not yet felt the full effect of the recession. While the new car sales industry has been thrown a temporary lifeline, what will happen after 30 June 2010 if challenging times worsen?

The Rudd Labor government does not have a plan for recovery. They have put forward unrealistic and unbelievable estimates of when Australia will emerge from the huge debt and deficit created by this reckless government. In a short time, the Rudd Labor government has spent the substantial surplus left by the coalition and has gone on a reckless spending spree that has resulted in the worst debt and deficit since World War II. It means that every man, woman and child in Australia will have to pay back $9,000. With 10 per cent unemployment being forecast, how will families be able afford to buy a new car?

The coalition will not be opposing this bill. It is a lifeline for eligible new car dealerships. I will be watching very closely to see the impact. My hope is that it will work but again there are some questions about the adequacy of the bill in assisting car dealerships and whether all the detail has been thought through. I commend the bill to the House.