Retail magnate Gerry Harvey has taken aim at Australia Post for encouraging Australian shoppers to avoid paying GST via its ShopMate goods-forwarding service – and he is not the only Australian retailer upset about the initiative.
Australia Post unveiled ShopMate, a service that allows Australian consumers to buy goods from US retailers who do not ship to Australia, at the end of October. By using ShopMate, consumers can have their purchases shipped directly to Australia Post centres and then forwarded to their home address.
Australia Post says the service will grant Australian consumers greater access to international brands and products, but Harvey spoke out this week claiming the service will only encourage more Australians to avoid paying GST, which is currently not levied on goods purchased online from overseas retailers under the value of $1000.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
“When you keep promoting something, and it is a good deal for a lot of people, let’s face it – they’re going to get used to doing it now year in, year out,” Harvey told Fairfax.
“I can’t understand why anyone would think that it was morally OK to dodge GST by buying stuff overseas – that that was fine.”
“And to be aided and abetted by a government agency, [that] just defies any logic. It’s just bloody strange. The whole thing is bloody strange.”
Harvey is not alone in his criticism, with Jon Page, general manager of Pages & Pages Booksellers in Sydney, telling SmartCompany this morning he agrees with the Harvey Norman boss.
“I was very disappointed to learn of Australia Post’s new initiative,” says Page.
“For a company who is already suffering because of the lack of a first class mail rate in Australia and the increasing volume of parcels they have to deliver at their own costs without any remuneration to actively encourage more online shopping from overseas-based companies is another shot in the foot for Australian businesses.”
But Australia Post managing director and group chief executive Ahmed Fahour told SmartCompany in a statement “it is completely wrong to say this is about the avoidance of GST”.
“It’s about the inability of some overseas retailers to deliver what Australian shoppers want to buy or access.”
Fahour says Australia Post’s focus remains on the Australian market and it currently receives more than 90% of its online shopping revenue and 100% of its profits from the domestic market.
But he says there are some consumers who want to shop internationally and “one of our jobs is to help Australians who do want to shop around the world to get access to these goods”.
“Some sellers in the United States, and other countries, don’t have the ability or infrastructure to get their product to Australia,” says Fahour.
“Our job, in a commercial way, is to help Australians connect with the rest of the world and create a facility that enables them to access products and services they can’t get without our help. ShopMate is designed to give Australians the ability to do that.”
However, Page says the high cost of postage in Australia already places Australian retailers at a disadvantage and Australia Post should be doing more to encourage online shopping from Australian retailers.
“As a bookshop, it is currently cheaper to post a book from London to Sydney than it is to post the same book from Mosman to Parramatta,” he says.
Page says as online overseas shopping continues to grow in Australia, the revenue Australian governments receive from the GST and other taxes will only decline.
“This will lead to the GST being expanded to cover food, health services and other currently exempt products and services,” he says. “It could even lead to the 10% GST rate being increased.”
“As a government-owned service, Australia Post should be helping grow the Australian economy, not shrinking it.”