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For some time, 3 Big Retailers have been sooking about Australian consumers buying goods online. I’d like to take this opportunity to sook about the Big 3 sooks.
Australia’s retailers are suffering, say 3 retailers, because Australians are buying stuff overseas online. They can’t compete, say the Big 3, because overseas sellers don’t have to charge GST on sales under one thousand dollars. When Australia’s retailers suffer, shop assistants lose jobs, say the Big 3, best level the playing field by collecting the GST on overseas purchasers.
Although I can’t say I’ve seen a large outpouring of public support for the idea, it seems the possibility of imposing GST on these transactions is under serious consideration by the government.
Recently, the Age reported VISA, the global payments company, has dismissed the ideas of collecting the GST [sales tax] on overseas purchases by Australian shoppers. It would be unworkable, says Visa, and could lead to litigation or damage its reputation.
It goes without saying many of us would prefer GST free shopping, but several other aspects of this complaint from the Big 3 are galling.
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Company profits are, quite simply, reward for risk.
There is no sliding scale that allows for governments to take a matching portion of profits or reward when they absorb a portion of a company’s risk.
Some businesses expect governments to help them, simply on the offchance they’ll keep Australians employed.
There is no question that businesses provide jobs, and governments ought help businesses where this will help create or maintain employment. What I do question is the assumption that all businesses always create jobs for Australians.
We have, in recent years, seen a growth in the rate at which businesses create jobs offshore. Iconic Australian owned products – e.g. Bonds singlets – are now made overseas. This year, Heinz Australia closed some of its Australian plants and shifted jobs to New Zealand. Like many corporations around the world, Australian businesses reduce the number of jobs available to Australians by using phone rooms in India.
The Big 3 retailers are not sending manufacturing jobs offshore, because for a very long time they bought goods manufactured overseas anyway.
In short, there is no unbreakable link between the health of Australian businesses and the number of Australian jobs.
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Until the late 1960s/early 1970s, Australia and New Zealand were effectively Britain’s farm. We were no longer useful once Britain began recovering from World War II, and decided to throw its lot in with the EU [European Union].
While Australia still derives much of its income from Primary Industry – mainly by digging big holes in the ground and shipping the diggings offshore – like most developed countries we have moved from a focus on primary industry, through a manufacturing stage and into a world where services are major employers.
As the world shrinks and as formerly third world countries develop, they are better placed than Australia to make money from labour intensive businesses.
Beyond making sure we can always feed ourselves if we have to, it’s a good thing for both Australia and for the Philippines, for example, if we import bananas. Everyone in the world needs water, shelter, food and work, so I’m not a “buy Australian no matter what” nut.
To be honest, if I ring my telco with a problem, I do it late at night so I’ll be patched through to India. Their phone room people are easier to understand, infinitely more patient, always follow up when they say they will, and are never rude. [Admittedly no all Indian phone rooms are great, but this lot are.]
Where we are letting ourselves down is in failing to adapt quickly and creatively to today’s economic reality and tomorrow’s inevitabilities. We need to use our talents to take advantage of those things developing countries do not have. We need to develop our own unique products or services or know how, and find our own niche markets where developing countries cannot compete.
[Developing carbon neutral energy sources would give us an economic edge, whether global warming is real or not.]
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In their constant whining about online shopping, these big retailers are simply proving what consumers already know, which is that they have been caught asleep on the job.
Blind Freddy saw this coming. Many smaller Australian retailers positioned themselves for online shopping a long time ago, and they are doing very well thank you.
Australian retailers who successfully sell on line are paying GST, and this is only fair: That tax is not in place to make life easier or harder for Australian businesses, it is there to cover the cost of infrastructure that makes their online trade possible. These costs include the existence and support of contract law, company law, telecommunication networks and other essential services.
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The big 3 insist GST must be levied on overseas purchases less than $1,000 in order to level the playing field. They should grow up. If they can’t get their act together here, maybe they should follow their suppliers overseas and sell to us from there?
What they are really arguing for is equal outcomes and, for capitalists to ask for such a thing requires a lot of cheek. If their profits are down then the price system, the free market system, is working. It’s telling them to review the situation. What a reduction in profits does not mean is “you poor bastard, you are entitled to help from mummy, start crying”. It means show a little vision and entrepreneurship.
Changes to GST will not restore all of their business anyway, if only because consumers are spending less across the board.
The word for this is not ‘offshore’, the word is ‘recession’.
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One of the things currently sending buyers to offshore websites is the high purchasing power of the Australian dollar. If the GST change is implemented and the dollar drops back to its former average, are the big 3 going to have a more than level playing field? How does that help the voters who are supposed to support this change?
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The price of a dollar is also bruising many other businesses which won’t be helped by the extension of GST.
Every player in the tourist trade, for example, from the pilot who flies a plane to the proprietor who makes scones and tea in a dinky little small-town tearoom is suffering. These are people who do not have any way to gain more customers from extending the GST.
The big 3 do have the means to increase their share of customer spending, but they’ve been getting away with mediocrity for so long they don’t realise just how mediocre they have been. The rising dollar has given them a wake-up call, but they just keep hitting the snooze button while they wait for the government to bring them breakfast in bed.
Get up and get it yourself, I say. You’ve had it coming and now it’s here. Deal with it.
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Microeconomics 101: The price a customer will pay for a widget depends on
- how much the shopkeeper wants
- how much other shopkeepers are asking for widgets
- whether a widget needs a remote control, batteries, software or other stuff before it will work [thus adding to the total cost]
- whether a widge-wot – a much cheaper version of a widget – will be just as good
- whether the customer has money left over after paying their rent
The final and most important factor is something we’ll call Other.
It’s ALL the stuff that actually matters most, but which goes over the heads of price traders.
[To put it another way, if you can only compete on price the market is too crowded, and it’s time to jump ship.]
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Here’s my top ten list of reasons for not shopping with any of the Big 3 – reasons which all come under the heading “Other”:
- can’t hear myself think for the loud music
- can’t get the help I need e.g. how to
- can’t find anyone to serve me at all
- sales staff don’t want to waste time with customers who don’t already know what they want
- too many encyclopaedia salesmen
- the perfume they have at the door to lure me in makes me feel physically ill
- lack of choices
- delivery promised but never delivered means I take a day off work and lose pay for nothing
- poor after sales service
- too few checkouts
There are more reasons, but I think you get the idea.
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I like books, I especially like books which are not to everybody’s taste, and there’s absolutely nothing better than finding something interesting that’s been remaindered.
Sometimes, I want something out of print and so an e-book is the answer.
Readings outlets have an enormous range but are too far to travel so I shop online.
If I buy their e-books I can read them using Google Chrome, with no need to buy any special reader or software.
If I spend enough I don’t have to pay postage on hard copies.
If I email them with a query I hear back within a few business hours, and they don’t talk to me like the technological dinosaur that I am, they help me because they want me to succeed.
No, I don’t shop offshore.
Why would it be so hard for other retailers?
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Clothes, I buy from op-shops. I can buy something for five or six dollars, go to a sewing repair shop for alterations, then get the garment cleaned – all for less than a new garment from one of the Big 3.
I don’t shop offshore for clothes, don’t support retailers exploiting third world sweatshops, and all the money I spend stays here.
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I shop and bank online all the time, and 95% of the time this is onshore.
With the exception of perishables like milk, there is very little that can’t be bought online.
The last time I bought a PC online it arrived within 3 days, but played up. Within another 3 days a techie turned up at the promised time, replaced one part to fix the problem, and another 2 parts which others had complained about, and was on his way in 20 minutes.
Do I care if the Big 3 go broke? No. Their employees will survive because someone with more initiative will soon arrive to take over their share of the market.
I’ll stop sooking now. Hope the Big 3 do, and soon.
