The Australian Equipment Lessors Association (AELA) is the national association for the equipment leasing and finance industry. Our website provides an overview of the market and regulatory framework in which equipment financiers operate. AELA’s membership is not institutionally based, but consists of the myriad of entities that provide leasing and equipment finance in Australia, and includes domestic and international banks, captive financiers, finance companies, rental companies, and service providers to the Industry such as law firms and systems providers.
As the equipment finance association, it is AELA’s role to ensure that the regulatory framework allows members to provide a dynamic range of financing products for the acquisition and utilisation of capital equipment. A wide spread of funding options provides a spectrum of choice, enabling clients to select the level of risk and service they require; at one end of the spectrum the client can assume the asset risk and operating costs associated with the equipment, whilst at the other end the risks and administration can be assumed by the equipment financier. In between, the client can select the combination of risk, service and ownership structure that suits their particular needs.
Regulation of activity, whether of a corporate or personal nature, is intrinsic to any society. AELA’s specific task is to appreciate the objectives of government regulation of the equipment finance sector, and to work with governments to achieve optimal outcomes. Regulatory reforms can benefit all stakeholders. Legislation imposing stamp duties on equipment finance has now largely been abolished, a good outcome for users of equipment finance and financiers, and for governments the substitution of a more stable revenue mechanism. The Personal Property Securities (PPS) regime introduced one piece of regulation to replace more than twenty existing statutes. GST reforms for hire purchase reduce the risks and costs, with no impact on government revenue. More regulation is not inevitable, and better regulation can be achieved.
It is therefore very pleasing to be able to catalogue, in the body of this review, substantial regulatory initiatives which will support AELA members in offering innovative and dynamic funding solutions to their customers. In many instances these initiatives represent significant microeconomic reform, which also support Australia’s long term productivity and economic growth.
In the coming period, AELA faces some important challenges. The international accounting bodies are developing a new lease accounting standard, and we are joining with the overseas leasing bodies in coordinating a global industry response. The Personal Property Securities regime has been a significant reform, and AELA continues to work with members in ensuring this regime operates effectively. Within Phase Two of the Commonwealth credit reform process, regulation of credit to SMEs has been deferred. Income tax and GST issues impacting on equipment finance are a constant. The Financial System Inquiry report was handed down in December 2014, and the Government’s response is awaited. The tax reform process commenced in late March 2015, with the release of the Tax Discussion Paper.
AELA also conducts a range of courses/events to assist members with education and training of staff. These include credit skills courses, a workshop on the financial computations underpinning equipment finance, and an equipment finance MasterClass. Our premier event is the AELA Leasing and Equipment Finance Conference, with leading international and local speakers addressing current topical issues, held each year in November.
Economic conditions continue to be challenging. As a consequence of the global financial crisis a number of equipment financiers have vacated the Australian market, and there are few new entrants. New business volumes have recovered somewhat, but businesses remain cautious in acquiring new capital equipment. As a mark of the resilience of Australia’s business community, bad debts have not appreciably increased. However, new business volumes remain subdued, with little or no receivables growth, consistent with the trend for business credit aggregates.
AELA has a strong capacity to meet the challenges ahead. It is a strong and cohesive association, well-supported by its members. The AELA Directorate is skilled and experienced, with the recent achievements underlying the Directorate’s ability to assist members in a practical manner. The AELA Council, the guiding body of the association, consists of experienced and knowledgeable equipment financiers. This combination will continue to serve AELA well.