Archives: Dealer Bulletins

The Victorian State Government has announced a support package for businesses to provide assistance as the state moves through the various steps outlined in the roadmap to reopening.

Full details and eligibility criteria for the package are yet to be revealed, however some of the relevant details for Dealers are:

• In total the package is valued at $3 billion, available to businesses the worst affected by the current COVID restrictions, delivered through cash grants, tax relief and cashflow support.
• Under the third round of the Businesses Support Fund, businesses with payrolls up to $10 million may be eligible to receive grants of $10,000, $15,000 or $20,000, depending on their size.
• For the 2020-21 financial year, businesses with payrolls up to $10 million may receive a deferral of payroll tax.

 

Eligibility for the third round of the Support Fund is based on a set of criteria which includes businesses having a payroll of less than $10 million in 2019-20 and operating in sectors that are closed, restricted or heavily restricted.

There are also waivers and deferrals available to assist cashflow and provide tax relief. Those relevant to Dealers include $1.7 billion in payroll tax deferrals for the full 2020-21 financial year and $41 million to bring forward the 50 per cent stamp duty discount for commercial and industrial property for all of regional Victoria.

Further details of the package are available on the Business Victoria website.

The AADA will keep you informed as further developments occur and more information is available.

 

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The Victorian State Premier has today released the Victorian Roadmap for Reopening Victoria, designed to provide a plan for reducing restrictions and allow the gradual return of business activity. The Roadmap does not ease restrictions as the businesses community had hoped, with the State Government advising that the risk of further outbreaks requires at least a two-week extension of the Stage 4 restrictions in Greater Melbourne.

The Roadmap includes a five-step plan for the eventual return to COVID Normal. Retail operations in Metropolitan Melbourne are able to commence, under restrictions, in Step 3 of the plan, scheduled to be introduced on 26 October. Regional Victoria can operate more freely in Step 2 of the plan, which is scheduled for introduction on 13 September. Repairs and maintenance in metropolitan Melbourne are only able to be performed in emergency situations, until the introduction of Step 3. In regional areas, repairs and maintenance can occur with a COVID Safe plan. There are special allowances for listed Permitted Work Premises and this does include an allowance for motor vehicle parts for emergency repairs.

The Government have also developed a Traffic Light System for further guidance and businesses will be classified into one of the following four categories:

Red – Business must be closed
Amber – Business activities heavily restricted
Yellow – Business activity restricted
Green – Businesses can open with a COVID safe plan

The AADA is disappointed that the Victorian Premier has not provided more relief from restrictions, especially for those Dealers in Melbourne. We have been working with the VACC in consultations with the Victorian Government to demonstrate that franchised new car Dealers can operate safely and responsibly under COVID-Safe plans with very little risk. Dealers run sophisticated, disciplined businesses well versed in adherence to regulatory procedures. In our view, Dealers should qualify under the green classification at the end of Stage 4.

We will continue to work with other industry associations and strive to convince the government task force that Dealers can operate safely.

The Premier has indicated that consultation with industry will continue over coming weeks and the AADA will be participating in these discussions.

 

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The AADA have submitted a response to ASIC on its most recent draft of the Product Intervention Order (PIO) on add-on insurance and mechanical risk products.

The AADA submission was prepared with the assistance of a Dealer F&I working group and outlines our serious concerns with the PIO, cautioning ASIC to be mindful of the facts surrounding the current trading conditions being at historically low levels. We have called on ASIC to defer the introduction of regulatory change by at least 18 months, as Dealers are simply not in a position to be able to manage the training and compliance tasks that will inevitably flow from the new requirements if they are introduced.

We have also expressed concerns about the reduction in competition that will occur if the changes are introduced. Since ASIC initially began its inquiries into the add-on products market, many suppliers have withdrawn, leaving a concentrated market. Reducing competition and the availability of these products, which provide important protections for consumers, is detrimental to both Dealers and their customers.

In its commentary regarding the automotive add-on market, ASIC makes reference to products that offer poor consumer value. However, since the commencement of the ASIC consultations more than three years ago, responsible suppliers in the market have substantially altered their products and services to provide greater transparency and improved cover. Our view is that if there are products in the market that ASIC regards as being unsuitable, then they should intervene and take action directly with the suppliers concerned.

We expect ASIC to continue further consultations with us in the coming months, as they seek to refine the PIO further and consider an implementation date.

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Download Submission

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Minister for Small Business, Michaelia Cash, has written to the AADA advising us of the Government’s response to the Fairness in Franchising Report published in March 2019. She has also requested that we distribute her letter to the AADA members.

In its response, the Government makes it clear that there is an understanding of the importance of the franchising sector and the need to improve “fairness and transparency for franchisees”. The AADA acknowledges that the Government response, along with the addition of the recently released automotive schedule to the Franchising Code, seeks to provide franchisees with greater protections and correct the power imbalance that so unfairly benefits franchisors. However, we are of the firm view that these protections do not go far enough and simply will not have the effect of changing the behaviour of OEMs in Australia.

The bar for proving breaches of the Franchising Code continues to be too high for Dealers in dispute with offshore, multinational corporations. The increased penalties of just over $130,000 for a breach will do little to deter bad behaviour by franchisors, particularly for an automotive Manufacturer. Equally, the response details a dispute resolution process that now includes binding arbitration, however, it is a voluntary process and nothing in it compels the OEMs to participate, which is essentially the status quo. We are also disappointed that the Government did not adopt a recommendation in its earlier regulatory impact statement which would have placed obligations on a franchisor seeking an investment from a franchisee to provide an agreement term of sufficient length to recover that investment.

The recent example of General Motors Holden refusing to respond a call by Minister Cash to enter into arbitration in its dispute with Holden Dealers should be used as a measure of the effectiveness of the key actions announced by the Government in its response. We question whether anything contained in the response would give cause to creating a different outcome than that which occurred in the Holden case. While we are still working to understand the full implications of the Government response, it is unfortunate that appears nothing in it would be sufficient to compel General Motors to respond any differently than it did. All OEMs watched the GM Holden case carefully and the lack of action sets a dangerous precedent.

The AADA will be making representations to Government on our disappointment of these reforms and will continue to push for further protections for our industry through the process being led by the Industry Department.

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The Australian Tax Office has announced changes to the JobKeeper eligibility rules. The changes introduce a new assessment date for employees, which has now changed to 1 July 2020. Furthermore, employees can now be nominated by a new employer if their previous employment ended before this date.

We have also received further information from the ACCI regarding JobKeeper changes. This advice is repeated below:

Members are advised that a JobKeeper employer who does not identify newly eligible employees, provide them with a nomination notice by 21 August 2020 and make any necessary ‘top-up’ payments by 31 August 2020 will be in breach of the JobKeeper rules and may face penalties.

Following ACCI’s circular on 11 August 2020 regarding the announced changes to employee eligibility under JobKeeper including the extension of the employment reference date to 1 July 2020, the legislative instrument with respect to such changes has now been registered (see Coronavirus Economic Response Package (Payments and Benefits) Amendment Rules (No. 7) 2020).

The changes to the reference date have retrospective application and take effect from the JobKeeper fortnights commencing 3 August 2020. The extension of the employment reference date means that an existing JobKeeper employer will need to review their employee records to identify any ‘newly eligible’ employees. Newly eligible employees are in essence, employees who did not satisfy the basic employee eligibility criteria on 1 March 2020 but do satisfy the criteria as amended under the changed rules (including re-qualifying and re-nominating employees).

The explanatory statement to the legislative instrument is clear – the one-in all-in principle applies and employers currently enrolled in JobKeeper do not have a choice as to whether they extend the JobKeeper Payment to newly eligible employees or not. A JobKeeper employer who does not identify newly eligible employees, provide them with a nomination notice by 21 August 2020 and make any necessary ‘top-up’ payments by 31 August 2020 will be in breach of the JobKeeper rules and may face penalties.

The changes, whilst simple in theory, are complex to apply from an administrative perspective and will require careful consideration and application by employers and their advisers.

Below we have provided the updated version of the ACCI Employer Guide to JobKeeper, Edition 9 which has been updated to include these changes in both track (in red), as well as a clean copy.

Also included is the ACCI Information Sheet which provides a high-level summary of the changes with suggested actions to be taken by businesses to make sure they meet a number of upcoming deadlines and do not fall foul of the JobKeeper rules and face penalties.

Employer Guide to JobKeeper – Edition 9 (CLEAN)

Employer Guide to JobKeeper – Edition 9 (TRACKED)

ACCI Information Sheet

 

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The NSW Government is currently reviewing the Motor Dealers and Repairers Act 2013 (the Act). The AADA is urging the Government to strengthen Part 6 of the act which grants protections to Dealers against unfair contract terms and unjust conduct in their relations with Manufacturers.

The AADA has lodged a submission with the NSW Government and we are calling for protections similar to those offered to Dealers in the United States. There have been growing instances of NSW Dealers suffering unconscionable behaviour from car Manufacturers in the years since Part 6 was introduced. The most public of these cases has been the treatment by General Motors of Holden Dealers.

To raise awareness for the issue, we encourage all NSW Dealers to make representations to their local member of the NSW Parliament. The AADA secretariat is here to assist and will develop letters for any members on request.

The AADA has developed supporting materials with useful information you can include in your correspondence:

• PDF Dealerships per state electorate: Listing the number of Dealers and Holden Dealers in each state electorate. We recommend selecting and using the numbers for your electorate.
• Infographic Dealerships in NSW
• Infographic Holden Dealerships in NSW
• AADA DealerNomics website:
  You can search for your federal electorate or state and download a PDF of the economic contribution, annual turnover/sales, the number of Dealer employees, Dealer apprentices and more.
• Useful links:
  • List for Members and Ministers
  • List with Electorate Office contacts
  • Motor Dealers Act Part 6
  • Statutory Review Discussion Paper

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On Monday 3 August, the Senate Committee conducting the Inquiry into General Motors’ Holden Operations in Australia held its public hearings. AADA CEO James Voortman was the first witness to give public evidence and used the opportunity to push for stronger protections for franchised new car Dealers. The AADA informed the Committee about the existing power imbalance between OEMs and warned about the dangerous precedent that the Holden example sets for the rest of the industry. The AADA also explained that key elements required to level the playing include mandatory and binding arbitration as well as the need to provide adequate compensation.

In its appearance, the ACCC confirmed it was following up Dealer allegations against General Motors. Other witnesses included Holden Dealer Mark Palmer, who said he believed Holden had planned to leave Australia for some period before the announcement, two Government Departments, the interim CEO of Holden, MTAA, ACCC, AAAA and the FCAI representing the OEMs.

The Senate Inquiry is scheduled to deliver its report into Holden on 12 November, 2020.

A Hansard transcript of the hearings is available on the Parliament House website.

Recordings of the below witnesses can be accessed via AADA’s YouTube channel:

1. Australian Automotive Dealer Association (AADA), Mr James Voortman
2. Department of Industry, Science, Energy and Resources and Department of Education, Skills and Employment and Department of Infrastructure, Transport, Regional Development and Communications
3. GM Holden
4. Mr John Crennan and Mr Mark Palmer, private capacity
5. Motor Trades Association of Australia (MTAA)
6. Australian Competition and Consumer Commission (ACCC)
7. Australian Automotive Aftermarket Association (AAAA)
8. Federal Chamber of Automotive Industries (FCAI)

A full list of media on the Holden Senate Inquiry:

04 August 2020 – Holden dealer relationships broke in 2005, By Neil Dowling, Go Auto News
04 August 2020 – GM’s treatment of Holden dealers ‘incredibly reckless’, inquiry told, by David Bonnici,

whichcar.com.au
04 August 2020 – GM treated dealers recklessly, inquiry told, by Lachlan Moffat Gray, The Australian
04 August 2020 – Holden rejects exit ‘conspiracy theory’, by Cara Waters, Sydney Morning Herald
04 August 2020 – GM was ‘reckless’ with its dealers, by Lachlan Moffat Gray, Adelaide Advertiser
03 August 2020 – Dealers warn car makers are abusing their power, by Andrew Tillett, Australian Financial Review
03 August 2020 – General Motors ‘exploited’ Holden dealers in Australia, inquiry told, AAP
03 August 2020 – AADA opening statement to Senate inquiry, by Robert Barry, AutoTalk
03 August 2020 – GM lashed over Holden dealer treatment, by Tim Dornin, Augusta Margaret River Mail
03 August 2020 – Dealers question Holden closure plans, Canberra Times
02 August 2020 – Holden dealers ‘in deep freeze’, by Greg Brown, The Australian
02 August 2020 – Key submissions to Holden closure inquiry, by Tim Dornin, Australian Associated Press
02 August 2020 – Senate inquiry to hear ‘GM misled Holden dealers’, by Bruce Newton, motoring.com.au
02 August 2020 – Dealers question timing of Holden closure, by Tim Dornin, Augusta Margaret River Mail

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The Morrison Government has today announced changes to the JobKeeper scheme designed
to expand the eligibility criteria to capture more businesses seeking support. This is welcome
news, particularly for our Victorian members, and is a sign that the Government has been
listening to our calls to take into consideration the effect of strong June results that would have
resulted in nearly all Dealers losing access to JobKeeper after 27 September 2020.

This is also positive news for Dealers across the country as the impacts of the Victorian
lockdowns are already having an effect on supply and operations nationally.

Download Revised JobKeeper Details

The most important details for Dealers are:

• The JobKeeper payment that was scheduled to run until 27 September 2020 will now
  continue through to 28 March 2021;
• To be eligible from 28 September, businesses will have to demonstrate a decline in
  turnover using actual GST turnover rather than projected GST turnover;
• From 28 September, eligibility will be determined by assessing actual GST turnover in
  the September quarter, 2020 only;
• From 4 January 2021, eligibility will be determined by assessing actual GST turnover in
  the December quarter, 2020 only;
• From 3 August, the relevant date of employment moves from 1 March to 1 July 2020,
  increasing employee eligibility for the existing scheme and the extension;
• From 28 September, the JobKeeper rate has been reduced from $1,500 a fortnight to
  $1,200;
• From 4 January 2021 the rate drops from $1,200 to $1,000 a fortnight;
• The eligibility thresholds for reduction in turnover remain as before at 50% for
  businesses with turnover of more than $1 billion and 30% for businesses with turnover of
  $1 billion or less.

 

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In October 2019, ASIC initiated a consultation period on its draft Product Intervention Order (PIO) for Financial Risk Products. The intention of the PIO was to put in place protections for consumers acquiring add-on insurance and warranty products provided through new and used car Dealers. The AADA responded to this consultation, a copy of that submission is available here.

Following this consultation, ASIC has made amendments to the draft PIO which it is now seeking feedback on. To assist with this process, ASIC have provided a summary of the changes and compared them to the original draft provisions.

The AADA will be working with a group of Dealers to prepare a response to these changes. We would encourage Dealers wishing to comment, to do so through the AADA. If you have any comments or concerns, please email them to Brian Savage by COB Monday 17 August.

Submissions to ASIC are due on Wednesday 19 August.

Any Dealers wanting to contribute submissions of their own can do so before this deadline. Submissions should be sent to: product.regulation@asic.gov.au.

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The Victorian State Government have released detailed information about the Stage 4 business restrictions which commence in metropolitan Melbourne from midnight Wednesday 5 August and are scheduled to extend for six weeks.

Under the restrictions, the onsite (from the Dealership) retailing of motor vehicles and motor vehicle parts is prohibited. Online retailing can continue and retailers can work onsite for the purposes of fulfilling online orders.

Motor vehicle servicing from Dealership premises can continue when the work is providing support for a defined permitted service or when it is required to maintain the health and safety of Victorians at home or work.

For areas outside of metropolitan Melbourne, Stage 3 restrictions will apply. Under these restrictions, Dealers can continue to trade as normal, providing they adhere to the minimum distance and sanitisation requirements.

The distribution of essential goods can continue by road, rail and air transport freight services.

Download Full Details Of Restrictions

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