Milton Dick (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes that:

(a) there are approximately 1,500 new car dealers in Australia that operate 3,500 new vehicle outlets;

(b) 85 per cent of new car dealers are private or family owned businesses; and

(c) the Australian Automotive Dealer Association is the peak industry body exclusively representing franchised new car dealers in Australia;

(2) recognises that:

(a) the economic impact of the new vehicle retailing sector to Australia is significant, contributing $14.91 billion dollars to the national economy and employing almost 70,000 Australians;

(b) vehicle manufacturers in Australia are increasingly behaving in a way that makes it very challenging for new car dealers to run a viable business;

(c) relations between manufacturers and dealers is currently governed by the Franchising Code of Conduct; and

(d) this code has failed to protect dealers as it does not account for the highly technical nature of the automotive industry and the scale of both dealers and manufacturers relative to regular franchisees and franchisors; and

(3) calls on the Government to support Labor's plan to implement an industry-specific auto dealership code that will deliver clear ground rules for manufacturers and dealerships, including obligations under the Australian Consumer Law and consumer complaints, warranty and repair processes, dealership agreements and the ability to make variations to them, and termination notices.

The Australian car industry has seen a shift and change faster than perhaps any other industry in Australia. It wasn't long ago that you could bet your bottom dollar that Holden and Ford would be battling it out at the top of the sales chart. It was one of Australia's longest rivalries and it was between two of the greatest cars our country has ever produced. But, as we know, sadly, those days are long gone. An influx of imported models and the need to adapt to constant change has meant that the pressure placed on dealerships continues to grow. This is not helped by the uneven playing field, which is tipped heavily in favour of the multinational manufacturers whilst local family-owned dealerships do it tough.

Earlier this year I sat down with the CEO of the Australian Automotive Dealer Association, David Blackhall, and communications and policy director James Voortman here in Parliament House. They told me about the struggles that dealers across the country are facing. We spoke about the association's submission to the Parliamentary Joint Committee on Corporations and Financial Services' inquiry into the operation and effectiveness of the Franchising Code of Conduct and the huge impact that this has on dealers. This inquiry is currently in its final stages, with a report due in about 10 days time, on 6 December. I, like many of my Labor colleagues, will be keeping a close eye on the government report and response.

We also spoke about the power imbalance in the automotive industry between car manufacturers and franchised new-car dealers and how this disadvantages both dealership businesses and consumers who purchase new vehicles from dealers, and we spoke about how the Franchising Code of Conduct offers very limited protection for dealers. I'm delighted to say that a future Shorten Labor government, if privileged to be elected, will implement an industry-specific, auto dealership code to better support new car dealers. I'm really proud to have worked closely with members of the opposition including the member for Fenner on this important issue, and I thank him, particularly for his leadership and determination to see a better deal for franchise car dealers through an industry code, a code that will deliver clear ground rules for manufacturers and dealerships including obligations under the Australian Consumer Law and consumer complaints, warranty and repair processes; and dealership agreements, the ability to make variations to them and termination notices.

The huge contribution that new car dealers make simply cannot be underestimated. I want to bring the attention of the House what this means. In my electorate, this means over $400 million worth of sales, 420 direct employees and a further $100 million contribution to the local economy alone. Nationwide, this means $65 billion in sales, 70,000 direct employees, and a contribution to the economy of more than half a billion dollars. This is a serious industry. I'm delighted that my colleagues will be speaking on this issue today, and I am shocked that members of the government could not even be bothered to speak about this.

To the members in the chamber today, I say to you: these are mum-and-dad dealers in your electorates. This is small-business heartland that the Liberal Party should be taking an interest in. I know people have been lobbying ministers and members of the government, only to be dismissed—to be told to go away. When I addressed the national conference on the Gold Coast, you could hear the frustration in dealers. These aren't big businesses. These are mum-and-dad operators, employing mechanics, employing after-sales services, and employing admin staff—and yet not one member of the Morrison government will give their voice to those businesses in Australia. They couldn't be bothered to rise and use their voice in this debate today. I'm the son of a small-business owner, and I've seen firsthand the impact of what the big players mean, when come in and change the landscape and disrupt. And, as we see is the case now, the little guy is left to fend for themselves while the big players muscle in. The local dealer is known to the community; that's who people rely on to provide them with fair value and a safe car of choice. These are the businesses that support the football clubs, the netball organisations and the community outreach, and provide the vehicles to Meals on Wheels.

Even considering all of this overwhelming data, we know that the dealers need more support to fix the power imbalance. I'm really pleased that, if privileged to be elected, a future Shorten Labor government will give them certainty. I'm proud to stand shoulder to shoulder with dealers, and will continue to work towards fixing this so that more dealers are given the protections that they need and the support they need.

John McVeigh (Groom, Liberal Party) Share this | Link to this | Hansard source

Is the motion seconded?

Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I second the motion. It is one of those things in sport: you at least expect the other side to take the playing field. But today we are seeing the coalition abandon the playing field. If you look at the speaking lists for the main chamber and for the Federation Chamber, it's like they've just given up and gone home, putting their tail between their legs. In the Federation Chamber today we're looking at a list with something in the order of 20 Labor or independent speakers and just a handful of coalition speakers.

Milton Dick (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

And they've given up governing.

Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

And they have given up governing, as the member of Oxley so aptly puts it. It is particularly striking that the coalition has given up governing on an issue such as protecting auto dealers, because the coalition so often like to say they are the party of small business. The fact is that Labor has the stronger claim to that. At the next election, both parties will go into the election offering the same headline rate of company tax, but, on top, Labor will offer the Australian Investment Guarantee, allowing more-rapid depreciation of investments in excess of $20,000. At the next election, the coalition will go to the Australian people without an energy policy, meaning that small businesses are going to face massive uncertainty on the prices of one of their key inputs. Labor will go into the next election with a carefully constructed energy policy which has been commended by the sector. And Labor will go to the next election with a plan to boost wages. We know that retail spending is in the doldrums. One of the reasons for that is that workers haven't had a real pay rise since 2012. Don't just take my word for this. This was Philip Lowe, Reserve Bank Governor, speaking last week about the fact that wages are barely advancing ahead of inflation. So, at the next election it will be Labor that has the more powerful offering for small business.

This brings me to the matter of this important private member's motion. It is the hard work of the member for Oxley that brings us here today, because it is his strong advocacy which has led Labor to make the significant step of saying that under a Shorten Labor government auto dealers will get a better deal. There will be an industry-specific code governing the relationship between auto dealers and manufacturers. We don't take this step lightly. Industry-specific codes are rare. We have them in areas with major market power imbalances, such as the horticulture industry and the fuel-retailing industry. Through our shadow agriculture spokesman, Joel Fitzgibbon, Labor has called for such a code to be implemented in the dairy industry. We've got 6,000 dairy farmers selling to a handful of milk processors and retailers.

We're calling for it in the area of auto dealers because of a report from the Australian Competition and Consumer Commission, which had examples such as the multinational car manufacturer who told 25 car dealers that their franchise agreements wouldn't be renewed, despite the fact that they hadn't broken their agreements and in many cases had been profitable. There are about 3,500 new vehicle outlets, mostly owned by individual operators or family groups. Indeed, car selling is one of the few industries in our economy where the top four firms account for less than one-fifth of the market. But the Australian Competition and Consumer Commission has acknowledged, as they put it:

Commercial arrangements between manufacturers and dealers can constrain and adversely influence the behaviour of dealers in responding to complaints.

So, a Shorten Labor government will implement that industry-specific auto dealership code—an announcement which has already been welcomed. I draw the attention of the chamber to the comments by the CEO of the Australian Automotive Dealer Association, David Blackall:

We believe an industry specific code regulating behaviour between new car Dealers and offshore vehicle manufacturers is necessary to protect consumers, dealerships and their employees. Currently new car Dealers are locked into one-sided agreements with vehicle manufacturers which restrict our ability to run a profitable business and protect our consumers.

It's backed by the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, who said:

The power imbalance between vehicle manufacturers and car dealerships is a major issue that is consistently raised with us, in both our dispute support area and our policy work. Manufacturers continue to use their market power to constrain car retailers, which in turn disadvantages customers.

The CEO of the Franchise Council of Australia, Mary Aldred, has said:

The Franchise Council of Australia has welcomed the announcement by the Federal Opposition that if elected it would introduce a separate automotive industry code of conduct.

Putting fairness back into the system lies at the heart of the Labor mission. Australia has too many monopolists and too few start-ups, and that's why Labor is committed to this industry-specific code.

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to speak on this very important private member's motion that's been raised by the member for Oxley. I want to congratulate him for doing this, and I want to add my support to Labor's plan to implement an industry-specific auto dealership code that will finally deliver clear ground rules for manufacturers and dealerships. It aims to make the industry fairer and to be of benefit to local businesses and consumers in general.

In 2017, the Australian Competition and Consumer Commission handed down a report on the new car retail industry which estimated that there were 1,500 new car dealers, 3,500 new car retail outlets and around 1.1 million cars sold in the year 2016-17 alone. One of the biggest purchases for families will be a new car. As the ACCC estimated, buying a car and its ongoing maintenance accounts for around five per cent of average annual household expenditure. The car retailing industry reportedly earned an estimated $64 billion in revenue during the same financial year of 2016-17. In Calwell alone, the electorate I represent, we had a turnover of nearly $558 million. However, the report also highlighted some serious issues regarding the imbalance of power in favour of the big manufacturers, which leaves the dealers and repairs powerless in assisting the consumers in the way that they would want to. This is a situation that also imperils the viability and the future of local car repairers and car dealers.

This year, I did get the opportunity to meet with many of the local dealers and car repairers in my electorate. In particular, I want to talk about Damien and Debbie Theuma of Active Motor Repairs in Craigieburn. They and other local business owners detailed to me the difficulties they were facing with the advent of car dealerships monopolising the repair and warranty market. The lack of data sharing, in particular, has affected their businesses and highlighted the importance of legislating a mandatory code for data sharing. Business owners like Damien and Debbie feel that the ACCC's report should be adopted in its entirety. This report concluded that vehicle manufacturers that sell into the Australian market limit access to service and repair information for independent repairers. The report also found that the 'predatory behaviour'—that is how Debbie described it—of the manufacturers created an artificial monopoly and allowed manufacturers to inflate the mark-ups on servicing and repairs. This was creating a problem for their business locally.

The ACCC's report also further concluded that independent repairers were experiencing issues in gaining access to the technical information needed to repair and service new cars. Access to technical information held by car manufacturers was becoming increasingly important as repairing and servicing new cars relies on access to electronic information and data produced by car manufacturers. If those local businesses don't have access to that information, they can't then do the business that they are set up for. That creates a whole series of other issues for them. Car manufacturers had previously committed to providing independent repairers with the same access to technical information as the manufacturers' authorised dealers on commercially fair and reasonable terms. However, the ACCC discovered problems with the level of detail that was being provided and timeliness of the technical information given, which further disadvantaged the smaller car repairers and dealers locally.

The ACCC considered that independent repairers having access to this technical information was important—and my local constituents have emphasised that—to ensure competition and, ultimately, to benefit consumers. The ACCC proposed a mandatory scheme for car manufacturers to share technical information. It is this mandatory code recommendation that is supported by Labor and all of the independent repairer associations; the consumer bodies; the auto associations, such as the NRMA and the RACQ; the insurance industry; the Australian Automotive Dealer Association; and all of the major auto repair chains, including Kmart Tyre and Auto Service, Repco Authorised Service and Bridgestone.

There is a large network of dealers and repairers who are crying out for this code. I'm very pleased to be supporting the member for Oxley today in this private member's motion and in highlighting the need for the government to move on this issue. I have written to the Treasurer, and I still await a commitment.

Susan Templeman (Macquarie, Australian Labor Party) Share this | Link to this | Hansard source

When you walk into a car dealership in Hawkesbury or the Blue Mountains, you are generally walking into a small business that has been in the area for quite a long time. Someone's parents might have bought their car from it; their son or daughter might be buying their car from it. Everyone who works there is part of the community that they live in, because these are small businesses who are employing locals. Aside from a house and any building related purchases, this car that you bought is probably the single biggest purchase that you will make in your local community.

As I rise to support the motion of the member for Oxley, I am struck by the challenges that these small businesses face. As the Australian Automotive Dealer Association, which represents these businesses, says:

There is a Power Imbalance in the Automotive Industry. [There is a] structural power imbalance between car Manufacturers (franchisors) and franchised new car Dealers (franchisees) [that] disadvantages both dealership businesses and consumers who purchase new vehicles from Dealers.

Many Dealers enjoy good relations with their respective Manufacturers and work in a mutually beneficial partnership, but there remain many instances where Dealers are subjected to treatment resembling a master/servant relationship.

Any small business knows that it's not healthy to have a dynamic like that for their business. It doesn't just impact on you and your business. As a small business owner for 25 years, I absolutely understand the power imbalances that small businesses face in all sorts of ways. This one is peculiar to the major car manufacturers.

At the core of the issue is the terms of dealer agreements: the basic contract between the manufacturer and the authorised dealer that establishes the obligation for each side of the transaction in relation to sales, parts or service facilities. Every one of those things is set by the manufacturer. They are the big guy in this relationship. It means that dealers can face pressure about the terms of the dealer agreement. The dealer risks huge costs if the manufacturer decides not to renew the agreement. This is a business with a high cost of entry. It is not something you just suddenly decide overnight to do. They have huge investment in their sites.

The manufacturers set the rules of engagement and exert a high degree of control over how dealers resolve consumer complaints. It can often be the case that the manufacturer's policies don't include claim handling processes that specifically address or even comply with responsibilities under Australian consumer law. This is something that impacts not just the business but also their customers. The manufacturers can impose complex and onerous warranty claim processes. Prior approval from the manufacturers may be required before repairs can be undertaken, which leads to delays for consumers. Those are issues we could actually help deal with so that these businesses have an easier way of doing business. I notice that those opposite or all for getting rid of red tape and regulation. Here is a place where we can actually help make a difference.

What is our proposal? A Shorten Labor government would implement an industry-specific auto dealership code. This goes to the issue of the Franchising Code of Conduct, which works in this area. We have the view that this has been absolutely unsuccessful in protecting franchised new car dealers or dealing with the industry-specific issues that this sector faces. An auto dealership code will deliver clear ground rules for manufacturers and dealerships, including obligations under the Australian Consumer Law on consumer complaints; warranty and repair processes; dealership agreements, including the ability to make variations to them; and termination notices. An independent code will create a set of rules that both the manufacturers and the dealers must be mindful of when establishing expectations around dealer conduct. Ultimately the consumer will benefit once dealerships are able to conduct negotiations with manufacturers in the context of a clear set of overarching rules. That's really all small business ever asks for: clear rules and some sort of level playing field, an even playing field, even with the big guys.

When we are talking about cars, this code really will be drafted parallel to Labor's your car, your choice policy, which is all about allowing independent car mechanics access to the technical data they need to deliver the best service to their consumers. All in all we are very focused on allowing small businesses to get on with what they do best, and that is running a business with as few constraints as possible.

John McVeigh (Groom, Liberal Party) Share this | Link to this | Hansard source

There being no further speakers, the debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.