A Level Playing Field

01 Dec 10 03:51PM EST
Post by Nick Stace
Online-christmas-shopping---istock

It’s not every day that Gerry Harvey of Harvey Norman fame gets on the blower to challenge my position on globalization and internet buying, but that’s what he did the other day. Gerry has set himself up as the lightning rod of discontent for local traders who are feeling the impact of a massive surge in offshore online sales. The issue has become pub talk with dollar parity, bargains and Christmas providing a perfect triage of temptation.

Internet shopping in Australia is still in its relative infancy, at around three per cent of total retail sales due to slower broadband connections and a complacent retail sector that failed to embrace internet shopping like their European counterparts. Two things have changed that: dollar parity and a new internet postal box solution to buying American goods (previously very difficult because you needed an American address). According to Australia Post, this has resulted in a 24 per cent increase in the number of packages they receive from abroad.

From a price and choice perspective this new wave of purchasing is manna from heaven for Australian consumers. Of course many businesses are crying foul but then in many ways Australian business has had it too good for too long, charging high prices and offering poor choice. The tables are starting to turn and Australians are enthusiastically exercising their new found power.  And let’s face it, healthy competition helps to raise the game for everyone; while some will lose out there will be more gainers than losers.

The counter argument  from Gerry and those that represent retailers is that competition is welcomed – but only when there is a level playing field. I have to say it’s not often you hear the level playing field argument from business, although I’m always calling for it in other sectors like groceries, banking and telcos. But Gerry’s argument is that offshore internet businesses manage to avoid GST, import duties and other Australian taxes and that’s not fair.

Gerry and I agreed that we would both try to encourage a healthy debate around these issues and in particular about whether the Government should intervene with an increase in taxation on imports. I have to say my starting point is that they shouldn’t tax more because the dollar will weaken over time and offshore internet sales will be less attractive again. In particular this provides an important moment for Australian retailers to raise their game, rather than crying foul. I would also add that it’s not just Australian consumers that benefit from a high dollar when importing, perhaps Australian businesses should have been passing on the benefits before now!

As part of the big debate about offshore online sales I would genuinely like to hear your views and your solutions to the level playing field dilemma. So come on, don’t hold back, what do you think?

 

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