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Regulatory reforms needed for retail, Productivity Commission
Aug '11
Regulatory reforms are needed for the Australian retail industry to adapt successfully to the more globally competitive market in which it now operates, according to a draft report released by the Productivity Commission.

The draft report - Economic Structure and Performance of the Australian Retail Industry - examines the implications of globalisation for the retail industry and the appropriateness of current policy settings.

Commissioner Philip Weickhardt said, 'Intensified retail competition is a boon for consumers, but it is challenging for a retail industry which, overall, has lower levels of productivity when compared internationally and, in many cases, faces higher costs. However Government's role is not to shield the industry from competition but to remove constraints which restrict the industry in responding to this heightened level of competition.'

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 retail trading hours' restrictions. The Australian Government also needs to review any constraints imposed by workplace relations regulations which may impede retailers in improving their productivity and lifting customer service levels.

The current exemption from GST and duty for imports valued below $1000 (the low value threshold) is judged by the Commission to be only a minor contributing factor to online offshore purchases by consumers, which have grown rapidly but are still a small share of retail sales.

'Nonetheless, for reasons of tax neutrality, the level of the low value threshold should be reduced, but only once this can be done cost-effectively,' said Commissioner Weickhardt.

Under the existing processing systems for incoming parcels the costs to process the extra parcels would far exceed the additional revenue raised.

The Commission is proposing that the Australian Government establish a task force to investigate lower cost approaches to processing in both the mail and courier systems, with a reporting deadline in 2012.

Productivity Commission

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