Assistant Treasurer Bill Shorten has spoken about the Productivity Commission (PC) draft report into the future of the retail industry released last week, declaring the review makes it clear the Australian retail sector has a bright future but needs to continue to innovate and change.
Flanked by the Minister for Small Business Nick Sherry, Shorten told a press conference that his Government believes challenges faced by the retail sector are national challenges, but also provide opportunities for the industry.
“We need to be crystal clear here though. We think for the retail sector to flourish and continue to grow in Australia, the challenges are not just those for Government to resolve.”
The PC’s draft report highlights the need for the retail sector to continue to innovate and adapt to changing consumer demands, Shorten said, as well as changes to the global environment. He stressed the Government would not rule on any of the draft propositions, citing the likelihood that upcoming public consultations and discussions would impact the final report, due to be released at the end of the year.
Despite his unwillingness to comment on the Government’s likely rulings, Shorten did delve into the PC’s findings about the costs of abolishing the GST exemption on goods bought for less than $1000 from international websites.
“The Productivity Commission says this would cost the Australian taxpayer $1.6 billion, to collect the tax that would raise approximately $500 million. So, for every dollar of tax raised, at this stage with the current technology in place, it would cost the taxpayer three times as much to collect GST on items below $1000.”
“The Productivity Commission has also made clear in its report that it says further work should be done to see if the cost of collecting could be reduced. We will be liaising with Government agencies to see if this is possible,” he added.
Shorten said the PC found a number of reasons why shoppers look to international e-tailers, with price being just one consideration.
“Many of the price differentials are far greater, so the savings you make from shopping online are far greater than the cost of putting the 10 per cent GST back on the item. In addition, what has been identified is that Australian consumers are looking for better service, a better range of products and price differentials that cannot simply be explained by a lack of GST on these items.”
The most significant conclusion in the PC draft, according to Shorten, is that the future is bright for Australian retail, but the industry must continue to innovate and evolve.
“It is no longer good enough for bricks and mortar department stores to say ‘here we are – you the customer come to us’ … It will have to continue to go to the customer and not simply expect the customer to come to them.”