Friday 5 August 2011

Productivity Commission - Boring Name, Important Function

The Productivity Commission was set up to review the retail industry following complaints by big retailers (Harvey Norman etc.) about the unfairness of  the GST threshold. Retailer said GST free overseas purchases were a significant reason for Australia’s retail industry decline but the government decided to review all aspects of retailing in the process. Before your eyes glaze over, we urge you to read on. This is important and we will try and keep it simple.
The commission’s  initial report has come out this week and they have agreed there are significant restrictions on Australian retailing but the GST threshold is not one of those. Instead, the Productivity Commission says planning, zoning and trading hours laws are the main culprit because they restrict competitiveness in retailing. Basically they are saying that rather than protect Australian retailers with more taxes they should remove the restrictions that prevent us from competing with overseas suppliers.
The restrictions they are talking about include planning and zoning laws at all levels of government plus restrictive work practices (in things like hours of work  and multi-tasking) that make it difficult for Australian retailers to adjust to changing consumer preferences.
This is a draft report and there is a lot of discussion in front of us over coming weeks and months. To get the ball rolling let’s quote Assistant Treasurer Bill Shorten today who said retailers have been “put on notice” over high prices and need to become more innovative amid growing online competition. Basically they must embrace new technologies and accept that online shopping is here to stay. Opposition Treasury Spokesperson, Joe Hockey, said today that shops should be allowed to trade whenever they want. “If they want to open at three o'clock in the morning and they think they can make a buck, then that's fine.”
What can we say? We are in for some interesting times.