Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Conroy. Will the minister confirm that talks between Australia’s banks, the government and car dealers aimed at fixing the credit crisis in that sector caused by the government’s bungled unlimited deposit guarantee have broken down?

Opposition Senators:

Opposition senators interjecting—

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I would not want to not give you the full benefit. I thank Senator Fifield for that question. I am very pleased to see they have finally given you a bowl, Senator Fifield. As senators are well aware, we are experiencing the most significant upheavals in global financial markets since the Great Depression. That is why this government has taken a number of steps to address the impact of the global financial crisis.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

You’ve got the wrong folder!

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Senator Ferguson, if you would only even listen to your own questions!

John Hogg (President) Share this | Link to this | Hansard source

Senator Conroy, address your comments to the chair.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Thank you; I accept your admonishment, Mr President. The government is certainly aware of the difficulties that finance companies, including automotive finance companies, have been facing this year as a result of the financial crisis. That is why Treasury and regulators are examining, in consultation with the industry, the impact of the financial crisis on finance companies and will provide advice on what actions might be appropriate to support this sector of the economy. Treasury has established task forces dealing with each category of market linked investment institution in what is a complex sector involving highly diverse and risk differentiated investment products. As I said yesterday, in addition, the government has asked Mr David Murray to explore options to help facilitate larger and more liquid institutions, providing liquidity support to various market linked investment vehicles. So, as I said, the government is aware. APRA has also been given power and money to fast-track applications by finance companies seeking to attain the status of a prudentially regulated APRA institution. The government has provided additional funds to facilitate this. In total, the government has provided an additional $84 million over four years to ensure that our regulators continue to have the resources they need to maintain the strength of Australia’s financial system during the global financial crisis. The RBA has widened further the range of securities eligible for its repurchase operations to include high-quality commercial paper to add to liquidity in this market. On top of that, the government has also provided a $10.4 billion Economic Security Strategy to stimulate economic activity and protect vulnerable groups in our society.

This week we have also announced, as Senator Carr has mentioned on a number occasions already, a $6.2 billion plan for the automotive industry. The wholesale car loan market is estimated at around $6 billion to $8 billion, covering 1,500 dealers on 4,500 sites. About 30 per cent of the wholesale market is covered by GE and GMAC, with GE being about twice the size of GMAC. GE and GMAC collectively finance about $2 billion in this market. Forward credit, which has about $500 million of funding, is currently coming under pressure due to difficulties in accessing funding. On 24 October 2008, General Motors’ finance arm, GMAC, announced that it was closing its Australian and New Zealand companies and withdrawing from—

Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

Mr President, I raise a point of order on relevance. I have been quite patient hoping that the minister would get there, but I think there are probably about 30 seconds left to go and he has not as yet addressed the specific question as to whether talks have broken down.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

On the point of order, Mr President, Senator Fifield is quite wrong in that accusation. The minister, Senator Conroy, is exactly on the issue which he was asked about—the negotiations and the events surrounding that industry—and I urge you to rule that there is no point of order.

John Hogg (President) Share this | Link to this | Hansard source

On the point of order, there is no point of order. As you know, I cannot direct a minister as to how to answer a question. I draw the minister’s attention to the question and advise the chamber that the minister has seven seconds in which to respond.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Thank you, Mr President. As I was saying, on 26 October 2008, GE Money announced that it was withdrawing— (Time expired)

Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. I hope the question as to whether the talks have broken down or not might be addressed, but my question is: will the minister confirm that, as a result of its bungled unlimited deposit guarantee, the government is itself considering underwriting the car finance market?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

As I was saying, and in response to Senator Fifield’s supplementary question, St George Bank and Esanda Finance have indicated that they are considering potentially extending their market share in the Australian car finance market following the withdrawal of GE and GMAC Australia. It is possible that $1 billion to $1.5 billion of the $2 billion shortfall could be picked up by Esanda and St George, although there is no commitment at this stage. There is a concern that regional areas may suffer disproportionately, as banks are expected to focus their lending on larger dealerships in urban areas. Treasury is continuing discussions with APRA about the possible conversion of finance companies, including automotive, into ADIs eligible for guarantee arrangements. Total new motor vehicle sales fell— (Time expired)