Chapter 1

Introduction

Conduct of the Inquiry

1.1        On 16 June 2009, the Senate referred the Car Dealership Financing Guarantee Appropriation Bill 2009 to the Economics Legislation Committee for inquiry and report by Tuesday, 23 June 2009.

1.2        The Senate specified that 'in undertaking its inquiry, the committee hear evidence from relevant bodies and individuals, including the Department of Treasury, about the operation and management of the proposed OzCar scheme'.[1]

1.3        The committee invited written submissions by 19 June 2009. Details of the inquiry were placed on the committee's website and the committee also wrote to a number of organisations inviting written submissions. The committee thanks the Motor Trades Association of Australia for its submission.

1.4        A public hearing was held in Canberra on Friday 19 June 2009. A list of witnesses appearing at the hearing is in Appendix 2.

1.5        In addition to questions regarding the bill, a number of questions were asked in relation to actions taken on behalf of individual car dealers. There was extensive questioning of Treasury officers regarding representations from Members of Parliament. These questions related to which Members of Parliament made representations and what actions were taken as a result. They dealt with procedure rather than the substance of the Bill.

1.6        The committee thanks those who participated in this inquiry.

Outline of the bill

1.7        On 5 December 2009, the Treasurer, the Hon Wayne Swan MP, announced that a Special Purpose Vehicle (SPV), also known as 'OzCar', would be established to provide liquidity to car dealers and financiers who have encountered financial difficulties as a result of the global financial crisis.

1.8        The SPV will be funded by loans provided by the four major banks. The government will provide a guarantee for notes issued by the SPV Trustee and subscribed to by the banks which are given a less than AAA credit rating.

1.9        The bill establishes a standing appropriation in order to allow any claims to be paid under this guarantee. The appropriation is not subject to a specific monetary limit.

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