Monday, 2 December 2013

Crabby Australian Retailers and an Incompetent Government

Australia! Known for it's vast landscapes of natural beauty and a world-leading public health care system (cost of basic health insurance is more expensive than the other 16 leading countries), Australians actually pay top dollar for beer, cigarettes, iPhones (any apple product), luxury items, apparel, movie tickets, flowers and pretty much everything you can think of! Being a high-wage country is also an insufficient trade-off given the insanely high cost of living. Australia ranks third as the most expensive country to live in, after France and Singapore. In any case, high wages are a cost to businesses that must be passed on to customers as higher prices. Businesses in Australia also pay high commercial rents thanks to planning restrictions and the high cost of land/real-estate. The tyranny of distance has not gone away being from 'a land downunder' (we are only 7 hours and 44 minutes from the South Pole). It is also ridiculously more expensive to ship goods to Australia and then further transport to specific states/suburbs. So at a time when our budget is at an irretrievable deficit (surplus is not forecasted until >2018), the Federal Government has all too willingly sided with the National Retail Association to lowering the GST threshold on online purchases which was originally $1,000 to almost zero. Lowering the GST threshold will not alleviate the immense financial pressures facing an increasingly struggling industry that would not greatly benefit from the implementation of such a regime anyway. What the industry fails to see is the cost associated in administering such a change which outweigh any forseeable benefit that would lead to retention of employment for Australian retail workers. How does the government anticipate on financing the labour to open each individual parcel from Amazon and e-Bay to assess the GST applicability. Any smart online shopper would know that even purchasing an item that falls within the <$1k threshold would still prove to be cheaper than purchasing the same item from a major Australian retailer who would price the item at a ridiculous 700% mark-up. The ambitious forecaste of a $1B yield from implementation of this proposal will do little to the industry and for the states that currently hold a AA rating. Basically, I would still buy a pair of Nike kicks online for $150 as opposed to in store at DJ's for $300. It will take much more than a 10% price increase to change the mindsets of a generation of online consumers.

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