Retailers' GST hopes will come to nothing

Bernie Brookes and other retailers can wish all they like for the government to start collecting GST on imported goods, but their case remains weak.

Smart Company

Bernie Brookes got a tiny little reward for his patience in the face of an ugly retail slump yesterday when Myer reported some positive comparable store sales growth for the first time in eight quarters.

Sales grew 0.3 per cent in the three months to July and were also up in the first six weeks of the new financial year. While Brookes ran a million miles from calling it a trend, when you’ve had the past few years that Myer has had you take what you can get.

Myer is a really interesting study of how retail is trying to transform itself in the face of structural change and more particularly the online threat. At the same time as Myer is desperately rushing to increase its online presence, it is increasing its investment in customer-facing staff in a bid to improve its in-store customer service.

Of course, running in two directions at once isn’t cheap, and doing it in an environment where sales growth is tepid or non-existent means Myer investors should brace for further hits to earnings. Net profit for 2012-13 fell 14.3 per cent to $139.3 million.

But let’s put all that aside for a second and focus another issue raised during Brookes’ press conference yesterday – his reaction to this week’s report from a federal government taskforce that recommended the lowering of the GST import threshold.

While the report made it clear that the expense of collecting GST on imported goods below the current $1,000 threshold would likely be higher than the revenue earned, Brookes believes the government needs to act.

"My encouragement would be to take the finding, adopt it very quickly, there are no barriers in the way,” Brookes said.

"Myer and other retailers are not looking for a free kick in this area; we just want to have a level playing field.”

I have sympathy with the argument from Brookes and the rest of the retail lobby that the playing field should be levelled.

But from a practical point of view, I don’t think there is any remote chance of this happening. The reason is simple: What politician is going to make a legislative change that will effectively increase the prices millions of Australians pay for stuff online?

Remember the backlash that Gerry Harvey faced from consumers when he first suggested that the GST import threshold should be scrapped?

I can guarantee that politicians from Labor and the Coalition haven’t and with an election about 12 months away, there is no way either side would risk raising the ire of voting consumers by supporting any threshold cut.

Bernie Brookes made a really interesting point yesterday about how retail rents are falling as power shifts from the landlords to the retailers, just as the internet has seen power shift from retailers to consumers.

It’s a bit different in politics, of course. The power of the household has always been far stronger than that of any business lobby group. And no politician is going to back a GST change that would directly hit the household.

James Thomson is a former editor of BRW’s Rich 200 and the publisher of SmartCompany and LeadingCompany.

This article first appeared on SmartCompany on September 14. Republished with permission.