The Australian government will resist pressure from retailers to act more quickly in tackling the threat to businesses from goods sold by offshore websites, Assistant Treasurer Bill Shorten said.
“We will not be stampeded into making rash decisions because of a vocal minority, especially when the majority of the sector and consumer groups support our sensible, measured approach,” Shorten told Bloomberg News in an interview yesterday. “We respect the fact that large retailers have ongoing concerns.”
Harvey Norman Holdings Ltd. (HVN), Australia’s largest furniture and electrical retailer, and Premier Investments Ltd. (PMV), whose chairman, Solomon Lew, was a former executive chairman of Coles Myer Ltd., are among retailers who criticized a government inquiry into the future of retailing announced at the weekend. They say the probe will be too slow to tackle the danger from the growth in online purchases from abroad.
Prime Minister Julia Gillard’s administration announced the inquiry into the impact of globalization on domestic retailers, saying the Productivity Commission will report its findings in 2011 as the government seeks to safeguard the future of an A$242 billion ($239 billion) industry.
The Commission also plans to start a “compliance campaign” to ensure that sales taxes and customs duty concessions on imports aren’t being exploited, Minister for Home Affairs Brendan O’Connor said in the government statement.
The inquiry will be completed “too late” to stop some retailers going out of business shortly after Christmas, Harvey Norman’s executive chairman, Gerry Harvey, said in a telephone interview on Dec. 18.
The Australian National Retailers Association -- which represents companies including Woolworths Ltd. (WOW), Australia’s biggest retailer, as well as Harvey Norman and others -- and the Australian Retailers Association, whose members are smaller companies, yesterday backed the government’s approach.
“We’re all trying to achieve the same end here,” ARA’s Executive Director Russell Zimmerman said by telephone from Sydney. “The government has taken a very holistic approach to this review, and I think to try and force the government’s hand without knowledge of what the actual problem is means you may end up fixing it the wrong way.”
He said only about 3 percent of Australia’s retail market is currently affected by a problem that is nonetheless “growing exponentially.”
The government “has taken seriously the concerns of the retail sector in difficult economic conditions,” ANRA Chief Executive Margy Osmond said in an e-mailed statement.
The associations together represent the bulk of Australia’s retailing industry.
“You’ve got every second person in the country importing things from overseas, evading duty, not paying sales tax,” Harvey said. “It’s gaining momentum at a rapid rate. Rather than clip it in the bud, they’ll end up doing something about it, but it will be too late.”
Premier Investments’ Lew, who has also been a Reserve Bank of Australia board member, yesterday echoed Harvey’s sentiments.
“What we all agree on is that the Australian retail sector is hurting and the government appears to be on the side of the overseas retailers,” he said in an e-mail.
He called on the government to immediately abolish the sales tax for all purchases under the present A$1,000 threshold, rather than only in the case of offshore purchases.
‘All we’re asking for is an even playing field,” Lew said. “Then consumers really will see savings.” Premier is Australia’s largest specialty-clothing retailer.
The threat to retailers has been exacerbated by a strengthening currency, which has increased the spending power of consumers shopping overseas. The Australian dollar has advanced 18 percent since the end of June, the most of 16 major currencies tracked by Bloomberg, reaching parity with the greenback in October for the first time since July 1982.
“There is no denying that retailers are doing it tough,” Shorten said yesterday. He said bigger issues for them were the high Australian dollar, aftershocks from the global financial crisis, and the fact that Australians are spending less this holiday season.
Harvey said an alliance of retailers has been formed to press the case. The group includes Westfield Group (WDC), the world’s largest owner of shopping centers, and Myers Holdings Ltd. (MYR), Australia’s biggest department store chain, the Weekend Australian newspaper reported.
The report said the alliance is planning newspaper and television advertisements similar to those used by the mining industry against a resources tax, which played a part in toppling former Labor Prime Minister Kevin Rudd.
A separate article in the Weekend Australian said mining companies are planning new advertisements against the government, believing they were misled over the so-called mineral resources rent tax.
“All certain people are doing at the moment is joining together to try and figure out what to do,” Harvey said. “If that means mounting an advertising campaign at the same time as the miners are going to do theirs, if the government’s faced with a double onslaught like that and the slightest little thing happens out there, see you later government.”
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