Finance, Legal, Management

Government inquiry into retail sector slammed

StartupSmart /

A Federal Government’s decision to hold an inquiry into the impact of overseas online sales on Australian stores has been attacked by the retail industry.

 

The government has ordered a Productivity Commission inquiry into the impact of globalisation on the retail sector, including the growth of online sales, with the report due for completion in 2011.

 

The commission will also conduct a compliance campaign to ensure GST and customs duty concessions for imports worth $1,000 or less are not being abused or exploited.

 

Retail giants have attacked the move, labelling it as a further sign of the government’s inaction as traditional retailers struggle to spark sales amid the burgeoning online retail sector.

 

Harvey Norman boss Gerry Harvey and Premier Investments chairman Solomon Lew, which owns clothing brands Just Jeans and Dotti, have revealed they are mounting a campaign against the government over what they describe as an “uneven playing field”.

 

Lew has said he is extremely disappointed the government has referred the issue to the Productivity Commission rather than taking action by lowering the GST tax threshold.

 

“Retailers have already been lobbying the government on this issue for over nine months. By the time the government finally completes its nine-month review, that’s 18 months [of] government inaction,” Lew said.

 

According to Harvey, any policy changes recommended out of the government’s inquiry will come too late for many businesses, stating many retailers will be broke after Christmas.

 

Earlier this year, Harvey followed in the footsteps of Myer when he announced his plan to set up overseas websites to avoid paying domestic taxes.

 

“The problem is, we’ll spend the money putting it all together and by the time we’ve done it, the government will close us down,” he said.

 

Despite the heavy criticism from some retailers over the inquiry, the government has the support of the newly-formed Fair Imports Alliance and the Australian Retailers Association.

 

The Fair Imports Alliance was formed in response to retailers’ moves to lower the GST tax threshold on imported goods.

 

For several months, the FIA has been calling for a government review of the current regulatory environment in relation to low value imported goods.

 

FIA joint spokesperson and ARA executive director Russell Zimmerman says retailers are pleased about the government inquiry rather than having a “stab in the dark” as to what might be an appropriate GST threshold for imported goods.

 

“The government [is] committed to looking at a full scope of issues, including individuals and businesses who may be manipulating the current system and the impact on local businesses and jobs,” Zimmerman says.

 

Peter Anderson, chief of the Australian Chamber of Commerce and Industry, welcomes the review because “there are real changes occurring in some parts of the industry that warrant consideration.”

 

Council of Small Businesses of Australia chief executive Peter Strong also acknowledges the rapid change occurring within in the industry and would therefore “like to see the timeline for this sped up a little”.

 

Strong says the ultimate goal is to see all online purchases charged with GST, but the ACCI says there is no simple solution.

 

In his weekly economic note, Treasurer Wayne Swan defended the inquiry, saying the government is “determined to ensure Aussie consumers and small businesses are getting a fair go in the retail sector”.

 

According to a new ARA survey of more than 1,000 retailers and wholesalers, 45% have dismissed staff due to trade lost to overseas online retailers.

 

The survey also reveals more than two thirds of respondents are planning job cuts as a result of lost trade, with individual businesses estimating lost trade to be in the vicinity of $51,000 and $500,000.

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