Inside Gerry Harvey's echo chamber

Summary:After over a year of complaining about it, Gerry Harvey's issue with the GST on goods bought overseas online seems to be hitting home — or so he thinks.

After over a year of complaining about it, Gerry Harvey's issue with the GST on goods bought overseas online seems to be hitting home — or so he thinks.

In one of his frequent, and, let's be frank, predictable rants on Lateline last night, Harvey made some pretty decent, if oft said, points about how it's unfair that bricks-and-mortar retailers have to pay GST while overseas companies get to import goods that are under $1000 without paying the tax. That, alongside other operating costs, are crippling home-grown retail, according to Harvey.

How do you compete — I ask you. I opened a shop selling tennis racquets and golf clubs, and I put them in the window and I put them there and I've had to pay a lot of rent, and I've had to bring these goods in and then another guy can go and buy them off an overseas site, pay no duty, pay no GST and you tell me that's fair? Right? All I said: "That's unfair." Because the retailer here will then have to go out of business.

Of course he's right. The GST is unfair for physical retailers. But fixing that would be costly for the government, unless it's ready to put extreme strain on customs. The cost would outweigh the benefit. So unless there's some sort of GST subsidy for people to go buy those goods in a store instead of online, then there's no real way around it.

And the GST doesn't explain the bigger cost difference, with the price disparity between online and in stores being much larger than just the tax. Harvey explained this by saying that an Australian retailer cops set-up costs, wages and other taxes that the overseas retailer doesn't, meaning that it wouldn't be possible to offer products at a competitive price, even if these goods were from an Australian online retailer. Harvey said that if he were to cut out the bricks and mortar and substitute it for just online retail, even if a number of jobs would be created in the distribution of goods bought online, hundreds of thousands of retail jobs would be gone.

This also sounds reasonable; however, I think Gerry Harvey is just using these arguments as an excuse for the much higher prices faced in Australia. He needs to realise that you can't turn back the clock, or at least not without going back to the bad old days of massive government intervention in the retail sector to push up the costs of importing. Let's face it: that's not going to happen. Online is here, and it's here to stay.

Retailers have to learn to compete effectively with online retailers by changing their business model, or shrivel up and die.

And I think that's the part that Harvey still doesn't get. Rather than listening to what his customers want, and seeing the reality before him, he seems to come back to how it's the government's fault that retail is struggling.

This was underlined by his other comments at the interview.

I think I've got as good a hold on it as anyone, but I am seeing, by people out there, and they write about me and they talk about me as being somebody that missed the boat. You know, you're yesterday's man. Your time is over. You had your moment in the sun, and it's all over.

And so, I look at that and think, "Are they right? Is there any truth in what they're saying?" So I then go to the people that work with me and for me, and I say, "You're 30 or 40, have I missed it? Tell me if I'm losing it." Right? "No, no, no, no, no." They say, "You're not. You're up there."

And I can argue on the internet and all the things that are going to happen, all the things that have happened, I think as well as anyone. I definitely am right up there with it.

Seriously, Gerry; is your staff going to tell you if you're behind? I don't think so. Yes, you've opened some new websites to sell online, but the online battle will need more than that.

Topics: E-Commerce

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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