Media Release: New Retail Council to advise Government of future of sector

09 December 2011

As part of its commitment to the retail industry, the Gillard Government will establish the Retail Council of Australia to advise the Government on the future of the sector, Assistant Treasurer Bill Shorten announced today.

The Council will work closely with the Council of Australian Governments and provide a valuable opportunity for industry to collectively raise their concerns with the Government. The Council will be chaired by the Assistant Treasurer and will include business, industry associations, unions and consumer representatives.

Foundation members of the Retail Council include:

  • Margy Osmond (ANRA)

  • Russell Zimmerman (ARA)

  • Peter Strong (COSBOA)

  • Christopher Zinn (CHOICE)

Assistant Treasurer, Bill Shorten, said "I look forward to initially chairing the Council and will make an announcement about additional members in early 2012. It will include thought leaders from the retail sector."

The Retail Council is one of a number of announcements following the release today of the Productivity Commission's final report into the Economic Structure and Performance of the Australian Retail Industry. The full Government response to the report is available on the Treasury website.

"The Government appreciates the current pressures being felt by retailers and the long-term challenges facing the industry, which plays a vital role in providing employment and economic growth in Australia."

The retail industry is one of Australia's largest employers, with 1.2 million people working in the sector, or 10.9 per cent of the total working population in 2010-11. The retail industry makes a significant contribution to economic output, contributing $60 billion or over four per cent of GDP in 2010-11.

"The inquiry has been undertaken to better understand these challenges and help the retail sector prosper."

The Commission's report makes clear the low value threshold for GST and duty on imported goods is not the main factor affecting the international competitiveness of Australian retailers. The Commission found there are in-principle grounds to reduce the low value threshold, but that it is currently not cost-effective to do so.

It calculated that lowering the threshold to $100, for example, could collect around $500 million in revenue, but at a cost of $1.2 billion in administration and compliance costs.

However, if significant improvements were made to the cost of processing international parcels, the Government would be in a position to reassess the threshold.

The Government will establish of a Taskforce to investigate options to improve the efficiency of processing low value imported parcels. The Taskforce will be chaired by Dr Bruce Cohen, supported by Mr Jim Marshall and Professor Caroline Chan, and will provide an interim report in three months and a final report to the Government no later than July 2012.

The Taskforce will consult the views of expert stakeholders, including the Australian Customs and Border Protection Service, the Australian Quarantine and Inspection Service; Australia Post; the Conference of Asia Pacific Express Carriers; and other stakeholders, including consumers, small business and representatives groups such as the Fair Imports Alliance.

Terms of reference will be released in January 2012.

The Commission's report also highlights that the changing nature of retailing in Australia is part of a global structural adjustment. This offers new opportunities for traditional bricks and mortar retailers to also expand and innovate through online retailing. It also suggests that traditional business models may need to evolve in response to these challenges.

The report shows that there are many pressures on retailers, including changing consumer sentiment, changes in saving and spending patterns and differences in underlying cost structures across retailers, such as rental costs.

"The Government is keen to help retail businesses adjust to changes in the environment," Mr Shorten said.

"It is not only retailers that will benefit from the Government's focus on the retail sector, but the broader Australian community, who is increasingly embracing online retailing for the greater choice, convenience and pricing it offers."

"We would like to thank again Commissioner Philip Weickhardt and his team for their work on this inquiry. We would also like to thank all the businesses, consumers and other interested parties who contributed to the discussion."

"In providing an insightful picture of the future of the retail industry, this inquiry can offer hope to the retail industry and inspire businesses to not only adjust to structural change, but to also respond to the new opportunities arising from this change. The Gillard Government is committed to helping the retail sector."

The inquiry has generated considerable public interest, with 240 submissions being received by the Commission and close to 30 participants in public hearings.

9 December 2011