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Cool response to Productivity Commission’s retail report

Category: News

The Productivity Commission’s report into the “Economic Structure and Performance of the Australian Retail Industry” has been cautiously welcomed by retailers, who like its call for further examination of the GST threshold’s impact on Australian retailers but have also called for more action.

The report (downloadable here), makes a large number of recommendations but the most keenly awaited was the Commission’s opinion about whether or not GST-free imports are hurting local retailers.

On that issue, the report says “The current level of the low value threshold (LVT) for exemption from GST and duty on imports of $1000 is judged to be a minor part of the competitive disadvantage faced by retailers.”

Elsewhere, the report says “The retail industry has met many competitive challenges in the past. Online retailing and the entry of new innovative global retailers are just the latest. The intensified competition is good for consumers, but is challenging for the industry which, as a whole, does not compare favourably in terms of productivity with many overseas countries. And the productivity gap appears to have widened over time.”

Productivity issues, the report goes on to say, could be a result of “Workplace relations regulations [which] may not provide sufficient workplace flexibility to facilitate the adoption of best practice productivity measures in the retail industry.”

The report also called for revision of planning and zoning regulations, which it deemed “complex, excessively prescriptive, and often anticompetitive” and deregulation of trading hours in all states and territories to “compete with online competitors and provide the convenience that consumers want.”

The Federal Government’s response to the report (available here) included a promise to “establish a Low Value Parcel Processing Taskforce to investigate new approaches to the processing of low value parcels, particularly in the international mail stream.” That taskforce has been given six months to report back.

The government also announced it would establish a “Retail Council of Australia” to advise it on policy matters. Four appointments to the council have already been made, namely:

Reaction

Industry reaction to the report quickly honed in on the GST issue, with Australian Retailers Association Executive Director Russell Zimmerman saying he welcomes the new retail council but wants a three month turnaround for the Parcel Processing Taskforce. National Retailers Association (NRA) Executive Director Gary Black has criticised the taskforce as a delaying tactic and has already lobbied for changes to workplace relations laws to assist the retail industry. ANRA CEO Margy Osmond has been reported as welcoming the new Council’s formation but also disagreed with the report’s findings about the impact of GST-free imports.

Retail consultant Nancy Georges of Magnolia Solutions supported the review of industrial relations and opening hours arrangements, but said “I think that trading hours cannot be addressed / extended until overtime is eliminated – it is not profitable to open more hours and have a slight increase in the number of customers and massive increase in expenses (wages being the largest expense for a retailer).

On the GST issue, she said the cost of freight in Australia is a major issue, as high prices mean local retailers cannot compete with offshore e-tailers.

“Australia Post charges are simply highway robbery! $12 to send a 525 g parcel from Sydney to Sydney is ridiculous,” she wrote to My Business. “It is cheaper for an international business to ship something to an Australian customer that it is for an Australian business. I don’t understand why Australia Post do not recognise that if they had affordable prices – more people would use the service and develop customer delivery as a service – even offline.”

But Georges also said Australian retailers suffer because they don’t know enough about online retail. “Most retailers ‘bought themselves a job’ and are ill-equipped to be the business people retailers must be to survive in this day and age,” she wrote.

Georges also feels “BAS is a joke. Most people are just not equipped in keeping records and/or reporting. This makes me wonder how much taxes are not being collected, how many hours are wasted in admin and there must be a better way!”


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