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Monday, 10 November 2008
Page: 33

Senator ABETZ (3:45 PM) —There is now no doubt that Labor’s inept handling of the financial guarantee legislation is having greater reverberations every day. Prime Minister Rudd’s spin-over-substance approach is starting to have an impact. It is impacting negatively, and very negatively. The financial guarantee legislation, which we were willing to assist the government with on the assurance that Labor was levelling with us and the Australian people, has now been shown to be not what it was claimed to be at the time. It is now obvious that Labor’s package was ad hoc, on-the-run spin doctoring with a view to the news cycle rather than the financial markets.

The alternative Prime Minister, Mr Turnbull, talked about a guarantee on a Friday. We know that. Two days later, on the Sunday, Mr Rudd had to provide an assurance of a scheme that he said would be uncapped. It was announced two days later. Three days later it was possibly going to be with a cap. And of course, as Senate estimates revealed, the announcement of the cap, on the run in question time, by the Treasurer, Mr Swan, was done without the knowledge of the Secretary to the Treasury. In fact, Mr Swan had already made his announcement during question time when I again asked the Secretary to the Treasury whether or not the government had made its decision in relation to a cap on the financial guarantee legislation, and his answer came back: ‘no’. When I told him that it had been announced in the House of Representatives only a half-hour or so before, he was quite shocked that that had occurred. If ever we needed proof positive that this government is all about spin and not substance then that was a classic example of it.

The scheme—which, might I add, the banks did not ask for—has hugely impacted the financial market. We have now seen the flight of capital, all self-engineered by Labor, from companies like AXA, Challenger and others, which are now suffering the consequences. Consumers are suffering the consequences as well. And, of course, GMAC, GE and other financiers of the car industry are now suffering exactly the same consequences. With the announcement today of Labor’s lightweight car industry plan, with talk of the sector in 2020—that is, two five-year plans plus away—car dealers were also waiting for a package dealing with today’s problem of a lack of finance.

The Minister for Innovation, Industry, Science and Research, Senator Carr, tells us that the government is now working on the issue. I welcome that. But it appears to have occurred only after we as an opposition pursued this issue on behalf of car dealers. GMAC has announced its withdrawal from the Australian market by 31 December, with devastating consequences. GE is having real problems as well. We now know another company is struggling. What Labor does not seem to understand is that the viability of car dealerships is based not so much on the movement or sale of cars as on the sale of finance packages, and that the dealers rely on financiers for their stock holdings. The industry estimate that 40 per cent of dealers will be closed by Christmas is alarming. My own view is that that estimate may well be conservative. I hope it is not. The loss of literally tens of thousands of jobs will be devastating. Competition will be diminished. What is more, the sources of finance for consumers to purchase their cars will not be available either, and that will impact on car manufacturers and the jobs in that sector.

The flow-on consequences of Labor’s ill-considered financial guarantee legislation are now reverberating right around our economy, right through and into car dealerships and from there into car manufacturers. Labor’s inept handling of the guarantee legislation is adding to the hurt and difficulties being faced by the automotive sector. Whilst today’s package seeks to address some of the problems, I note that it says: ‘The engine that will drive all this is innovation.’ Of course it is; innovation is vital. But if that is the case, can Minister Carr and the Labor government explain to the Australian people why, in their very first budget, they slashed $707 million from the Commercial Ready program and $63 million from the CSIRO, which were the drivers of innovation in this country? In their very first budget, $763 million was axed from innovation and now, today—guess what?—innovation is the answer. If only they had known it in their May budget, they would not have axed the $763 million which we, the Howard coalition government, had ensured that these drivers of innovation would receive.

It is this ad hocery approach to policy, the on-again off-again, the yes-no, the stop-start—all dependent on news cycles—that is doing this untold damage to our economy, and unfortunately the car sector is not exempt. Labor hack innovation support and then they pretend to discover it. Labor fiddle with financial guarantee legislation and, because of their speed and lack of consultation, make the problem worse. Then they tell us how they are acting decisively to deal with the problems that they created.

It is a similar situation with the luxury car tax. I notice Senator Cameron opposite. He championed the increase in the luxury car tax, which has now seen a 17 per cent decrease in the sale of these vehicles. Every single one of Australia’s car manufacturers were opposed to this new luxury car tax. They said it would devastate them. So, with Labor having cut innovation and having increased taxation on the Australian car industry, today we get an announcement that they are going to somehow help and support the industry. It would have been a lot better to leave Commercial Ready in place, to leave the CSIRO funding in place, to not put an extra burden on the car industry in this country.

What we need is sound, steady economic management, where decisions are made after full consultation and announced when they are ready, not for the purpose of the news cycle. There was no excuse for delaying this announcement. As I understand it, it had been in the can for quite some time, ready for announcement, but deliberately delayed so it could be used for a particular purpose—such as today, when the parliament resumes and Mr Rudd is being hammered in the other place about the notorious phone call, or the alleged contents of the phone call, between himself and President Bush of the United States. He will not make the denials being sought of him, where the Prime Minister is now basically fingered as the author of those statements. So what do they do? They keep this package for a day on which they think they need something else to fill the news cycle rather than an expose on Mr Rudd. The car industry deserves better. The car industry needs better from this government.

What I can assure those involved in the Australian car industry is this: the coalition is committed to it; we support it. That is why under us, under ACIS between 2001 and 2007, it received some $3.8 billion. Today Senator Carr announces that they are going to spend $6 billion over 13 years and somehow that is better. Do the maths and you will know that the Howard coalition was the best friend the automotive sector had. (Time expired)