Monday, January 17, 2011

Retailers need therapy

From the SMH today:
The Retail Coalition is preparing to hand in documents to the securities regulator to officially incorporate its activities, enabling it to hire staff and ramp up its calls for urgent tax reform.

The documents will detail plans to establish a new independent company with a constitution, board of directors, company secretary, employees and hands-on chief executive. At a national dial-in set for 10am today representatives of each company in the Retail Coalition will further discuss their battle plans, BusinessDay can reveal.

Those plans include the transformation from an informal gathering into a company under the Australian Securities and Investments Commission, providing a crucial foundation to r tchet up the lobbying campaign.

The conference call is part of a commitment to talk to one another twice a week, with chief executives personally dialling in on most occasions. It is the clearest signal since the debate erupted after Christmas that the big retailers that make up the coalition are far from backing off or intimidated by the wave of public abuse provoked by their case, and will push ahead with their public policy concerns. But it will also bring a more professional pitch to their campaign, which to date has been dismissed as the complaints of a few billionaires threatened by competition and drowned out by the howls of shoppers who feel they are trying to cut their access to overseas bargains.

Gosh, the retailers really did go off half-cocked didn't they? Whatever happened to research, plan and execute? Perhaps they felt the campaign couldn't wait until after Christmas.

Shifting the campaign to a more professional approach, however, is hardly going to convince the body politic of the need for protection. Especially when it involves supposedly competing CEOs getting together weekly to discuss how to prevent competition.

In short, nothing has changed since this blogger wrote in the lead up to Christmas:
The first point to make about this is that the campaign is up against it in winning over the public. Anti-RSPT miners had three advantages that the retailers do not. The tax was distant and complex, making it a PR-makers dream to combat. All it needed was a million conflicting 'facts' and the population gets lost, the policy ceases to make sense and, in the confusion, the clear message of risk shines through.

The retailers on the other hand are attempting to increase the price on sub $1000 household goods. For consumers it is a personal and very clear affront.

Second, the RSPT debacle unfolded in a very different political economy. The combination of an election and a post-GFC moment in which mining was at least one part of saving the nation made the anti-RSPT message stick.

The retailers face an environment of higher interest rates and one in which although the economic recovery is reasonable, it is patchy.

Moreover, just about every official and private economist everywhere has been selling the nation the idea that we need to shift economic resources to the resources sector so it's moment in the sun is not dimmed by labour or infrastructure bottlenecks.

Other sectors need to give it up, according to this chorus.

Another difference to the anti-RSPT campaign is that its goal was to prevent a new government policy. The retailers want to create new government policy that will fly in the face of RBA objectives and rhetoric.

On the last point, this blogger will observe that the retailer's demands can be seen as a gift to a government with no productivity agenda and no reform credentials. It can just sit on its hands and boost both by looking tough on rent-seeking. And with the populace against the billionaires, it's all politically risk-free benefit.

The retailers are wasting their shareholders' money.


Torchwood1979 said...

You know it's interesting times when Gerry Harvey resembles a damp squib.

The Lorax said...

Precisely. The retailers won't lose this battle because their arguments are flawed, but because it will be politically unpopular. I mean seriously, how can you argue the a product bought locally should attract GST, but not if it was bought from an overseas online vendor?

What's desperately sad is that Australians can't even make a buck importing Chinese goods and marking it up anymore. At least that employed a few pimply teenage geeks at the local JB HiFi, DSE or HN.

David Llewellyn-Smith said...

Well, actually, I think their arguments are flawed. Shifting employment from spending sectors to savings sectors is ok with me. I get upset when we shift people from non-tradable savings sectors to tradable.

But fret not. We agree on just about everything else!

Daniel said...

My objection to trying to apply GST to online orders has nothing to do with price.
A lot of specialty goods and strange things or rare books etc are simply not available at all via local retail. If Australia makes it hard to supply products to a small market like Australia the larger online companies will adapt but the smaller ones will simply not ship to Aus anymore.
I grew up in a time when it was simply impossible to get a lot of things here. When books, movies, and other products might arrive years after the rest of the world or never.
I really really don't want to go back there again.

Anonymous said...

I think the GST is a bad tax anyway. I remember when it was being proposed someone, on Lateline I think, said that was already an out of date idea and that what the government should be looking at is a financial transaction tax instead. Which, when he explained it, seemed like a good idea to me. And now, after the GFC and learning about banker behaviour it seems like an even better idea.

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