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Thursday, 28 May 2009
Page: 4713


Mr RIPOLL (10:53 AM) —I note once again, for people listening in today and for the Hansard record, the disgraceful behaviour of the opposition. For the member for Dunkley, on a really important bill such as the Car Dealership Financing Guarantee Appropriation Bill 2009, to disrupt the proper processes of the House is an abuse of the standing orders. The way they are abusing this place, abusing the standing orders of this place and trying to prevent members speaking on what is a really important bill is completely disgraceful behaviour.

This bill is about making sure that the Australian economy continues to function properly and efficiently, and it is about ensuring that car dealers actually have a business. This is from a mob who claim to be the great supporters of small business. We are here trying to actually pass legislation to support small businesses and car dealerships. I am sure that they are going to be very thankful to the member for Dunkley and the opposition—the Liberal and National parties—when all that the opposition is interested in is disrupting the debate and disrupting the passage of this bill.


Mr Baldwin —Why don’t you get on with it, then?


Mr RIPOLL —I have got plenty of time to get on with it, and I will, but the member for Dunkley and the member for Paterson are more interested in disrupting this debate and not letting us get on with it. Car dealers—

And here we go again with the member for Paterson abusing the standing orders of this place.


Mr Baldwin —Mr Speaker, on a point of order: the member has misrepresented me—I have not disrupted the House, but seeing as he wishes me to do so, I—


The DEPUTY SPEAKER (Mr PD Secker)—There is no point of order. The member for Paterson will resume his seat.

(Quorum formed)


Mr RIPOLL —Mr Deputy Speaker, I commend you on your correct ruling that there was no point of order. I also thank my colleagues for coming in here and spending the time to hear me speak on this very important bill.

The reality is that the opposition is interested only in disrupting a really important debate on supporting what should be a core constituency for them: small businesses and car dealerships, and supporting them not just in the big cities but in the remote and rural communities across Australia, in places such as Ipswich in my electorate. Whether they be in Brisbane, Victoria, Queensland or wherever, these are fair dinkum small businesses that are operating under very, very tough conditions—conditions which are no fault of their own. They have been left in a perilous position, not just by the global financial crisis but by what I think is the unscrupulous behaviour of a number of financiers worldwide and in this country who have refused to continue to provide the sort of liquidity that car dealerships need to continue their business.

We are not talking about failing businesses. We are talking about businesses that are going concerns, that have had long histories and balance sheets in good standing, that have been more than capable and more than able to meet all of their liabilities and that continue to do so. I find the behaviour of companies such as GE Money and GMAC towards some of their clients—some of whom have been their clients for more than 20 years—completely outrageous.

It left this government in a position where we had to act to fill that gap and that void, and that is what this bill is about. The OzCar SPV, the special purpose vehicle, is designed specifically to provide critical wholesale floor plan finance to eligible car dealerships to ensure that the departures of GE Money Motor Solutions and GMAC—and the liquidity challenges that also confront Ford Credit—do not result in the closure of hundreds of otherwise viable car dealers across Australia, which would in turn result in thousands of job losses.

What has taken place in the past six to 12 months has put an enormous amount of pressure on car dealerships—small businesses in a whole range of communities. It has put a great deal of strain on their businesses. For some, if action had not been taken early, it could have meant the closing of those businesses, putting at risk many, many jobs. The SPV initiative will protect jobs. It is part of a broader government strategy of supporting the economy, supporting the community and supporting small business in this country. We are determined to meet all of those challenges. We accept the responsibilities we inherit as government in terms of where we find ourselves economically, given the global financial crisis. You have to act and you have to act locally. You have to support and maintain jobs by providing the sorts of economic stimuluses people need to ensure that they can continue on with their lives. You also have to provide mechanisms for small businesses, medium enterprises and large businesses through industry support to make sure that they can continue to do what they do, in turn supporting jobs. This is exactly what this Car Dealership Financing Guarantee Appropriation Bill is all about—it is about underpinning a vital sector of our economy.

You have heard the previous speaker, the member for Makin, talk about the broader industry support we have given to the automobile industry—the key strategies of the $6.2 billion car plan and the green car initiative that we have put into place—along with our stimulus packages, what we have done for pensioners across the country and what we have done in terms of investing in schools, jobs, communities, manufacturing, and education and training.

There was one group of individuals that has been particularly impacted by the global financial crisis which was not really covered off in any other area, and that was the car dealers. They fall into a special category. Car dealers may appear on the surface to people looking from the outside to be wealthy or large businesses that involve massive turnover and make a lot of money for the owners. In some cases, that is the case, but generally speaking car dealers are small businesses. They are a franchise business. I have had some involvement now over a period of time in franchising and understand some of the difficulties that franchisees face in their day-to-day operations. I continue to be out there advocating for franchisees and a fairer go for all people involved in franchising. Car dealers fall exactly into that category. Car dealers are often held to ransom by the large auto groups. They are compelled to spend millions of dollars for showrooms—a fancy glass chrome showroom, which is the expectation—and have massive sunken costs. They find they have either little recourse in terms of a long-term contract or little opportunity to expand or diversify their business.

One of the problems they face is that not only are they limited in their potential to diversify but they are also tied in through their financing of their floor plan, often through the specific dealership group that they are involved in or through one particular financing organisation, such as GE Money Motor Solutions, GMAC and, as is relevant to this debate, Ford Credit. Car dealerships really were left hanging in the air for a period of time until we put forward our plan, the OzCar SPV, the special purpose vehicle, to ensure that car dealers actually had access to some finance at reasonable rates and that it was possible for them to continue in their business.

The government has been working with the four leading Australian banks—the ANZ, the Commonwealth, the National Australia Bank and Westpac—as well as other financiers to put in place an arrangement that can provide that critical wholesale floor plan finance to those eligible car dealers that were left stranded by the exodus—I would say the unprovoked exodus—from the Australian market of GE Money and GMAC.

The facility that we will be putting in place will be used to provide liquidity support for 12 months to almost 200 Ford car dealerships as a result of the liquidity pressure facing Ford Credit. Car dealerships generally cannot remain in business without a viable floor plan financing arrangement. That is the bottom line. I do not know if people actually understand how that works—and we are talking about new car floor plans here. The way it works is that the dealership is compelled to purchase the cars to put them on the floor. They have already outlaid the money. They do it through a financing plan. It means that they carry a lot of costs, not only sunken costs in terms of their infrastructure expense—the showroom, the dealership itself—and the continuing costs of maintenance and staff, which are very high numbers, but also the initial full purchase of the vehicle. They may sit on the lot for months—hopefully not years. But, given the current troubles that the car manufacturing industry is facing globally, there are some serious issues with the turnover of vehicles in those particular car dealerships.

I have had the good fortune of knowing a number of car dealers, being friends with them and having some understanding of their business—not as well as they do, obviously—and how they operate and the tough economic and cyclical circumstances they find themselves in. While it is true to say that in some good years they did do quite well and they grew their businesses, they also grew a lot of jobs and provided a substantial economic base for small communities, particularly if we start talking about country and rural areas. Sometimes one of the big employers in a small town will be the car dealership. You do not get too much choice. If you travel around this country and go to some more remote and rural parts, you find that there may be just one—if you are lucky, maybe two—brands or dealers in a particular town. So trying to support them, providing the mechanisms to support their survival, making sure they have access to finance and making sure they continue on with their business is critical. It is critical to those local economies as well.

The government have been responsive to the needs of that particular segment of small business, as we have in a whole range of other areas. We have been responsive in how we have dealt with housing across the country. The Minister for Housing is here and I put on the record my appreciation of the good work she has been doing and that her department has been doing in dealing with one of the toughest problems we have across this country of trying to get people into a home and public housing. We have been making some real investments for the first time in a very long time with the Commonwealth’s decision that it was part of our responsibility to front up and do these things.

It is very much the same principle that applies to car dealers. I am very proud when I go and talk to my community about the programs we have put in place, about the sort of legislation and mechanisms that we are providing to ensure that we do not just talk about small business and medium enterprise but actually support them with real funding, real programs and real strategies. We support them with real things that will make a difference to their survival so that they can get over this tough period. We will get over this tough period. We will come out of it at some point soon—hopefully sooner rather than later. But we will come out of it at some point and we need to prepare our economy for when that actually takes place. That is what the government are doing.

I was listening to some debate yesterday from members of the opposition and I heard about the so-called plan that they had, which sounded to me like a wish list. I particularly refer to the member for Paterson, who is here. He talked about a plan: world peace in essence, goodwill to all men. There was this grand plan, but to me it just sounded like the sorts of things you might say if you attended an international beauty pageant and they said, ‘What do you want to achieve in your life?’ and the answer was, ‘I want world peace and to travel the world.’ I think people are pretty familiar with it. But to me it just did not sound like a plan—it did not have a roadmap. It did not have a path or a strategy.


Mr Baldwin —Your only plan is debt—deficit and debt.


Mr RIPOLL —It did not have a mechanism or some sort of vehicle to actually get there. We all want world peace, but you need a strategy and a plan to get there. You cannot just say, ‘My plan is world peace.’


Mr Baldwin —Mr Deputy Speaker, I rise on a point of order and ask you to bring the speaker back to the actual bill in question. He has no idea what he is talking about but I think he should restrain his remarks to the bill.


The DEPUTY SPEAKER (Mr PD Secker)—Thank you, Member for Paterson. I will listen very carefully.


Mr RIPOLL —Thank you for the interruption and the debate, which was out of order, from the member for Paterson.


The DEPUTY SPEAKER —Order! The member for Oxley must not reflect upon the chair.


Mr RIPOLL —Mr Deputy Speaker, I am certainly not reflecting on the chair.


The DEPUTY SPEAKER —You certainly were.


Mr RIPOLL —I can assure you I was not, Mr Deputy Speaker, but I will accept whatever your ruling is.


Ms Plibersek —Mr Deputy Speaker, the member for Oxley was referring to the shadow minister opposite, I am sure, rather than to you. I am sure he would never intend to reflect on the chair. Mr Deputy Speaker, I would urge you, while calling the member for Oxley to speak on the legislation, to take account of the constant interjection that is happening from the other side of the chamber and call the interjectors to order.


The DEPUTY SPEAKER —Order! The minister needs to be a bit careful as well.


Ms Plibersek —I am sorry, Mr Deputy Speaker. I do not understand your comment.


The DEPUTY SPEAKER —You were reflecting on me.


Ms Plibersek —Mr Deputy Speaker, it was certainly not my intention to reflect on you and I would offer you an apology if you understood it in that way. I am asking, Mr Deputy Speaker—


The DEPUTY SPEAKER —Order! The minister will resume her seat.


Mr RIPOLL —Thank you, Mr Deputy Speaker. The financial impact of the bill that is before us is important to note in this debate. The overall contingent liability for the Australian government is estimated to be around $550 million, comprising around 45 per cent of the remaining GE and GMAC loan books and about 85 per cent of the Ford Credit loan book, and it is important to note this. We do not expect that that will necessarily be the case but it is estimated to be around that amount.

The SPV will only be able to advance funds if it is satisfied that the dealership is a viable business. I think that is a fair proposition in terms of the government providing that security, that guarantee, and making sure we can use the good credit rating that the government has in providing assistance and liquidity to car dealerships across the country. The terms of any alliance must also be consistent with the usual commercial lending criteria of recognised finance providers. At that point I particularly mention the good work that Perpetual and also Credit Suisse will be doing in being the managers of this special purpose vehicle.

In all, this is really good legislation and really good policy. While we are debating the Car Dealership Financing Guarantee Appropriation Bill 2009 today, it is probably also worth noting that we actually did move on this matter quite quickly. On 23 December 2008 we moved to bring in the package and earlier this year provided the mechanisms for that to happen. This is more evidence of a government that is in touch and responsive to the needs of small and medium enterprises in this country. It is part of a national suite of measures to ensure that the economy continues to grow and that people have an opportunity to do the best they can. My view has always been, as is the view of many people, business ought to get on with doing— (Time expired)