Retail Online shopping spree sparks call for tax rethink
The Bureau of Statistics figures - released as part of Australia's trade balance data for August - showed the total value of low-value threshold imports from overseas retailers totalled $7.61 billion, helping to push the trade deficit further into the red.
About 88 per cent to 95 per cent of the spending was estimated to be for consumer goods, the bureau added.
"It tells us that the consumer has been spending more than we thought, but all that spending has been leaking to the rest of the world," JP Morgan economist Ben Jarman said, describing the new figures as helping to fill a "black hole" in data collection on online shopping.
The new figures were larger than projected, Australian Retailers Association executive director Russell Zimmerman said.
"The concern isn't that people are spending money online - either locally or overseas. The concern is that it's not a level playing field," Mr Zimmerman said.
"We believe that online [shopping] generally will grow, and as that figure grows, there will be a bigger loss of income to the states and territories if they don't do something about the low-value threshold."
Australian retailers have struggled with subdued retail spending and consumer confidence in recent years, with some of the industry's leaders blaming tough trading conditions and online shopping for their weak results.
However, Barclays' chief economist Kieran Davies said while offshore online buying had grown by 15 per cent over the past year, such purchases made up only 3 per cent of domestic retail sales. Total retail sales are estimated to be about $260 billion.
"Adding this to domestic retail sales does not change the picture of sluggish spending on retail goods in recent years as it only lifts annual growth from 2 per cent to 2.3 per cent," Mr Davies said.
"Consequently, clamping down on foreign competition is unlikely to be the panacea imagined by domestic retailers."
Australians have been spending more on overseas internet purchases, citing lower prices, greater range of goods and services available, the strength of the Australian dollar and the speed of delivery as some of the central reasons.
Harvey Norman chief executive Gerry Harvey said the new calculations gave credence to his warnings several years ago that internet shopping was changing the retail environment, especially for fashion outlets and smaller businesses.
Frequently Asked Questions about this Article…
Bureau of Statistics data showed Australians spent about $7.61 billion on low‑value imports from overseas online retailers in 2012–13. For everyday investors, that highlights a meaningful shift of consumer spending offshore that can pressure domestic retail revenues and influence the outlook for local retail stocks and state tax income.
The $1,000 GST‑free threshold lets many low‑value overseas purchases enter Australia without GST. Retail groups say removing it would level the playing field for local shops, help prevent revenue leakage to foreign online stores, and protect state and territory income — concerns investors should watch as any policy change could affect retail sector earnings.
Yes — the Bureau figures suggest the $7.61 billion of low‑value imports pushed the trade deficit further into the red. Economists say these numbers also fill a previous ‘black hole’ in tracking online purchases, which matters for assessing the true external position and retail sector pressures that investors monitor.
Barclays’ chief economist Kieran Davies estimated offshore online buying grew about 15% year‑on‑year but still only made up roughly 3% of domestic retail sales (against total retail sales around $260 billion). That suggests overseas online buying is growing fast, but remains a relatively small share of total retail sales for now.
The Bureau estimated that about 88% to 95% of the spending on low‑value imports was for consumer goods. For investors, this indicates consumer-facing categories — especially discretionary items — are where domestic retailers may be most exposed to offshore competition.
The article cites several consumer reasons: lower prices, a wider range of goods and services, the relatively strong Australian dollar, and fast delivery. These factors help explain why some spending is moving offshore and why domestic retailers face competitive pressure.
According to Barclays’ Kieran Davies, limiting foreign competition is unlikely to be a cure‑all. Even when offshore purchases are added to domestic sales, annual retail growth only moves modestly (from about 2% to 2.3% in the analysis), so structural issues in consumer spending and confidence also matter for retail earnings.
Industry leaders such as Harvey Norman’s Gerry Harvey have warned that internet shopping is reshaping the retail environment, with fashion outlets and smaller businesses particularly vulnerable. The Australian Retailers Association has also raised concerns about unfair competition and lost state revenue — points investors should consider when assessing sector risks.
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