The February announcement by the Minister for Major Projects, Territories and Local Government, the Hon Paul Fletcher MP, that planned changes to the Motor Vehicle Standards Act 1989 will provide more choice for car buyers and less red tape for the car industry has attracted a lot of media attention.
AADA does not support the policy change as evidence has been submitted to the Minister’s Department that Australians have a greater choice of vehicles than the UK or US where the markets are significantly larger. The Australian new car market is one of the most competitive in the world. For a relatively small market, comprising only 1.5 per cent of global production, Australia has around 67 brands and more than 400 models competing for more than 1.1 million sales. Australia has more brands offered for sale than the UK, the USA or Canada, in turn delivering value to Australian motorists, value driven by strong competition.
The private companies that ship cars out of Japan and New Zealand have a nickname for Australia. It’s ‘Treasure Island’. The reference is not just to the size of the country’s car industry, but also the fact that, for this well organised group of buccaneers, Australia is ripe for the plundering.
The personal importation of motor vehicles is at odds with the Government policy of profit shifting. Profits from the sale of these vehicles will go offshore as the multi-national car importers will not have a permanent resident in Australia as defined under the Tax Act. As the collection agency will not be the Australian Taxation Office, concerns have been raised about invoice-splitting to escape any luxury tax (LCT). It will also provide windfall gains for opportunistic economic rent seekers who have no investment in Australia, potentially resulting in a loss of employment.
Even the ACCC has stepped into the debate, stating that:
“New Zealand’s economy has benefited from allowing the personal importation of vehicles: consumers have access to a greater range and, in some cases, cheaper cars; new businesses have emerged to assist consumers with the importation process, and existing business have grown.
“We would expect to see similar benefits here in Australia.
“The proposed laws will only have a negative effect on established Australian dealerships if their prices are not competitive or if consumers cannot purchase the specifications of vehicles they want.”
AADA does not agree with the Commissioner’s statement that we would expect to see similar benefits in Australia and respectfully suggest he carefully reads the submissions made to the review of the Motor Vehicle Standard Act 1989.
In this regard, the CEO of the Federal Chamber of Automotive Industries (FCAI), Tony Weber, stated:
“The ACCC displays a lack of consistency and technical knowledge in its statements about this issue, and pity the poor consumers out there who are looking to their taxpayer funded watchdog for any clear advice on this matter.”
The FCAI alludes to a situation where a Government agency such as the ACCC makes Government policy.
“On its own website, the ACCC warns consumers about the perils of parallel imports and how limited protection is offered in these transactions.* Now it has not only backflipped on this advice but foreshadowed a situation in which businesses can import vehicles – in complete contradiction to the Minister’s stated position.”
*“If the seller is based overseas, there may be practical and legal difficulties in enforcing your consumer guarantee rights against an overseas business”
AADA refers the ACCC Commissioner to the Rural and Regional Affairs and Transport Legislation Committee ‘Estimates’, Thursday, 5 May 2016, pp 118-119. An extract – an uncorrected proof – is reproduced below:
Mr Mrdak: Surface Transport Policy Division are here.
Senator STERLE: I will be quick. I want to talk about the Motor Vehicle Standards Act review and the economic modelling. Did the department or the modeller consider the impact on individual dealerships or brands?
Mr M James: I cannot answer that at the moment. I do not know. I would have to check.
Senator STERLE: Because you do not know?
Mr M James: Yes, because I do not know.
Senator STERLE: Not because you do not want to?
Mr M James: Not because I do not want to.
Senator STERLE: All right. That is fine. How long before you can get the nod on that.
Mr Mrdak: We will try to find that very quickly for you. I think there was modelling done of the likelihood of personal imports, but I do not think it was comprehensive economic modelling on impact to dealerships. There were estimates made of the likelihood of the numbers and volumes involved. I think there was an estimate of an upper volume of around 30,000 vehicles that would be likely to access personal imports.
Mr M James: That is correct.
Mr Mrdak: But no economic analysis of the impact on dealerships has been undertaken.
Senator STERLE: Or brands?
Mr Mrdak: No. I will check that while we are progressing tonight.
CHAIR: What is the number you know?
Mr Mrdak: Currently a bit over one million new vehicles enter the Australian market.
Senator XENOPHON: What about the ones that are personal imports? How many are coming in now?
Mr Mrdak: There are completely different schemes at the moment. We have schemes for specialists, enthusiast vehicles and the like. So they are not like for like at the moment, but I will get you the volumes of how many are coming in on special permits.
Senator XENOPHON: Thank you.
It is interesting that no modelling on the impact on Dealers was carried out. AADA encourages you to emphasise with your local Member the impact on your business of the Government’s proposal. We encourage you to make your voice heard in this debate during the election process.
1Featherston 2016, Competition and consumer issues for a changing industry, viewed 25 April 2016, < https://www.accc.gov.au/speech/competition-and-consumer-issues-for-a-changing-industry>.
2Federal Chamber of Automotive Industries 2016, Confusion reigns around parallel car imports, viewed 21 April 2016, < https://www.accc.gov.au/speech/competition and-consumer-issues-for-a-changing-industry>.