Retailers to redirect wrath to Canberra

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This was published 13 years ago

Retailers to redirect wrath to Canberra

Bashing internet shoppers is hardly the way to gain their support.

By Ian McIlwraith

RETAILERS are not stitching up consumers - the government is. At least, that is what the soon-to-be-incorporated Retail Coalition is arguing. Having been nuked this week in the backlash from thousands who should be their happy customers, but clearly are not, the retailing triumvirate (Solomon Lew, Gerry Harvey and Myer's Bernie Brookes) are now busily trying to find a smaller-business talking head to move the battle on.

Do not be surprised if that head is David Mendels, who runs the Sydney-based International Fashion Group. He has railed against the uneven competition of offshore retailers for a couple of years and was at Harvey's shoulder this week at a news conference on the issue.

Mendels has been trying to get traction with his argument about the combined impact of GST and import duties, not to mention customs clearance charges, on small retailers who face competition from international sites like Top Shop in Britain.

In early November, before the chain stores' current campaign, Mendels was writing to anyone who would listen: ''In Germany they have introduced a flat 50 per cent tax on all online retail outside the EU.

''In the USA you have to pay 22 per cent duty and the various state taxes.

''In the UK you have to pay 12 per cent and 20 per cent VAT (as of 1st November). If all of these countries can protect their citizens' business, why can't ours?''

Having made a massive blunder in their tactics this week, something those inside the campaign now readily acknowledge, expect the tone of the Retail Coalition's message to focus heavily on why the situation is the fault of government.

Clearly Assistant Treasurer Bill Shorten realised that political vulnerability earlier this week when, in a radio interview, he took an ''it's all about me'' approach by describing the campaign as an attack on the government. That enabled him to nimbly avoid having the discussion about why successive governments have dismantled trade barriers and extolled the virtues of free trade agreements, but still insist on taxing goods with import duties of up to 50 per cent - thereby increasing the cost to consumers/voters.

Most Australians, however, seem to have viewed the retailers' campaign as an attack on their right to shop for a bargain wherever they like. Oddly enough, that is a remarkably similar argument to the one run by transnational companies (even those based here), which says that allocation of capital is decided not on loyalty to a flag but to their shareholders.

Yet retailers like Harvey have this week, bizarrely, elected to bash their customers for not being bright enough to understand the arguments for supporting local enterprises. Do they seriously expect a groundswell of support for a campaign that will mean people end up paying more? Surely they do not believe that the government would even contemplate dropping GST on domestic purchases of less than $1000 to level the playing field?

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Then again, Harvey might be a great grassroots retailer, but his grasp of macro issues has never been that strong. Three years ago he was calling the global financial crisis a US issue that should not concern us here.

There is truth in the retailers' argument that Australia has one of the highest exemptions on applying GST-style taxes. In Britain, residents can spend only £18 ($A28) on overseas purchases before the Chancellor of the Exchequer has a hand out. In the US, it is a slightly more liberal $US200. Presumably if those countries have found a way of enforcing those charges, it is achievable here - despite Shorten's protests about the cost of employing more people to police it.

His real concern is more likely the political cost of taking something away from an electorate that already declined to re-elect his government at last year's election. When you govern at the whim of a handful of independents, you are not going to take political risks.

CONSPIRACY theorists might like to take note of some remarkable coincidences in the way the retail campaign has evolved. One of the first things to get the debate rolling was a phone interview with Gerry Harvey on 2GB, the night of his annual meeting in late November, when he warned that he had been checking around ''the last few days'' and that ''there are a whole heap of retailers out there who are going to go broke'' because of the GST differential and the high Australian dollar.

He told host Ross Greenwood that small retailers doing it tough should contact him, Greenwood, which Greenwood agreed to, saying that ''it may be the start of a campaign to get something changed''. As it turned out, Greenwood's listeners were more anti-Harvey, than pro.

This week, Greenwood popped up in a Channel Nine ad telling viewers that with the high Australian dollar and retailers offering hot deals there's never been a better time to shop so ''let's shop''. The ad was apparently not driven by retailers but by Channel Nine's direct sales manager, Ian Sheppard.

Some are now joining the dots between Nine's close relationship with Harvey and the fact that 2GB is part of John Singleton's Macquarie Radio network. Singleton and Harvey are partners in the Magic Millions racehorse auction.

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The other ''parallel universe'' occurrence is that global bank Morgan Stanley produced a report around the same time talking about how vulnerable local retailers are to the boom in internet shopping.

There is little doubt that Morgan's work is independent, given the author is based in Sydney, but the investment bank's Melbourne office just happens to be on the same floor as Retail Coalition backer Solomon Lew at 101 Collins Street.

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