Red tape, rather than the GST-free threshold for imports, is the biggest threat to Australian retail businesses, according to the Productivity Commission.
In a draft report released on Thursday, the Productivity Commission recommended the Federal Government reduce the $1,000 GST-free threshold.
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The call was quickly dismissed by the Government, with Assistant Treasurer Bill Shorten saying lowering the threshold would be “crazy”.
However, there are other recommendations detailed in the report that received a lot less attention, even though the Commission claims they are more important than the tax issue.
The Commission is proposing that state and local governments reform regulations that hamper the ability of retailers to respond to changing consumer preferences, including planning and zoning regulation, and restrictions on retail trading hours.
It also recommends the Federal Government investigate how to streamline handling of imported packages. The proposals have received a mixed response from industry groups.
Planning and zoning
The Australian Retailers Association says the draft report touches on many issues highlighted in its submission, including the imbalance of power between landlords and retailers.
“The ARA welcomes the PC’s acknowledgement that planning and zoning restrictions are propagating the power imbalance between landlords and retailers,” executive director Russell Zimmerman says.
“The ARA also supports recommendations for a harmonisation of lease information and nationally-consistent model legislation, as well as [a] voluntary national code of conduct for shopping centre leases that is enforceable by the ACCC.”
Meanwhile, property development group Urban Taskforce is equally pleased that town planning laws were identified as one of the regulatory regimes reducing retailers’ competitiveness.
“The Commission has unambiguously stated that governments should not consider the viability of existing businesses at any stage of the planning, rezoning or development assessment processes,” chief executive Aaron Gadiel says.
Gadiel says the Government needs to urgently act on this issue and enlist state government in a major effort to reform outdated planning laws.
Trading hours restrictions
The Productivity Commission has called for “open slather” retail trading, claiming retailers need to meet changing social patterns and cater for the 24-hour demands of time-poor consumers.
The report found consumers place a higher value on convenience, and the internet allows them to make purchases at any time of the day.
“Forcing shoppers online because of restrictions on trading hours does not maximise consumer welfare… It also handicaps bricks-and-mortar retailers in responding to consumer preferences,” the report says.
Margy Osmond, chief executive of the Australian National Retailers Association, says retailers welcome the focus on trading hours de-regulation.
“ANRA has been calling for trading hours changes for some time. The ACT and the Northern Territory have unrestricted trading and that model should be applied across the country,” she says.
Parcel processing inefficiencies
The ARA welcomes the recommendation to improve Customs and parcel processing inefficiencies from the “multi-step, clunky process between Australia Post and Customs” to a more streamlined method.
“We call on the Government to make the necessary changes as quickly as possible,” Zimmerman says.
But the Fair Imports Alliance is concerned that the reason the threshold cannot be reduced is because of the inefficiency of parcel-handing processes and the operations of Customs.
“We’re not surprised Customs has come under fire for its inefficiency. However, retailers shouldn’t be punished because the bureaucracy is inefficient,” FIA spokesperson Brad Kitschke says.
“The PC’s draft report has made it clear that inefficient parcel processing through Customs must be improved as it is the sticking point to allow for the low-value importation threshold to be changed. This must happen as soon as possible.”