Uproar at retailers' online GST campaign

Uproar at retailers' online GST campaign

Summary: Brick-and-mortar retailers have already experienced considerable resistance against their campaign to have GST imposed on purchases under $1000 from overseas sites, with consumer groups and politicians weighing in against a change to the GST threshold.


Brick-and-mortar retailers have already experienced considerable resistance against their campaign to have GST imposed on purchases under $1000 from overseas sites, with consumer groups and politicians weighing in against a change to the GST threshold.

The campaign, backed by Myer, David Jones, Harvey Norman, Target, House, Borders, Angus & Robertson among others, began with full-page advertisements in some of the nation's newspapers.

The retailers are concerned that the exemption for foreign sites will disadvantage them and cause thousands of job losses.

Harvey Norman chairman Gerry Harvey said that exemption gives overseas retailers "a free kick".

"Why can't I have the same deal as overseas retailers?" he told ABC Radio.

"I employ people in this country, I do pay taxes, I pay rent, so can I have the same go?"

Harvey said overseas retailers regarded the GST exemption as "manna from heaven".

"You've got stores all over the world thinking 'what a beauty that Australia is'," he said.

"This is a shocker."

Electronic Frontiers Australia chairman Colin Jacobs said he thought the number of jobs said to be endangered by the disparity was likely overblown given that the vast majority of purchases were still done with traditional businesses.

He also thought it far more likely that the high dollar was causing a flight to online, rather than any difference in GST.

Jacobs said he believed that the truth would come out in an inquiry by the Productivity Commission looking into the matter.

The current system was very beneficial for consumers, Jacobs said, adding that any change to impose a lower threshold for GST would "vastly complicate transactions".

He also believed that such a move would be going against the goals of the government's flagship project, the National Broadband Network.

"Part of the vision for the National Broadband Network is that more and more commerce will move online," he said. Any moves that would create a disincentive to move online would hinder that vision, he believed.

"With the NBN on the way, any changes targeted specifically at hindering online shopping should only occur after a lot more study and consultation."

Harvey Norman and Myer previously threatened to open online stores in China to combat the problem.

Online retailer Ruslan Kogan called their bluff and said that if those retailers did so, he would link to their sites on his own site.

Jacobs said the fact that they have not as yet taken that option raised a question about whether the playing field is really as uneven as they claim.

The Electronic Frontiers Australia chairman pointed out that bricks-and-mortar retailers saw online retailers as competition and that anything they say should be seen through that prism.

Consumer advocacy group Choice described the retailers' campaign as an "alarmist red herring" driven by self interest.

"The big chains should recognise that it's their high prices, limited range and poor customer service that increasingly encourages people to use the internet," spokesperson Christopher Zinn said in a statement.

"Consumers are simply chasing the best deal and the best service and often these days that is found online."

Choice used the example of a digital camera (Canon IXUS 1000 HS) available online from Myer for $557.

The same camera could be purchased though an Australian online retailer for $433.50.

Purchasing the camera from Hong Kong through a company with Australia-based sales staff would cost $346.

"Major stores are not being forced by anyone to charge these high prices," Zinn said.

"This debate is about quality of service, competitive pricing and the inability of some retailers to understand the future of internet shopping."

Independent Senator Nick Xenophon said the campaign doesn't acknowledge that small businesses are those most hurt by internet shopping.

"It's extraordinary to hear Myer, David Jones, Harvey Norman and Target all claiming they want a level playing field when ... the extraordinary market power of these very businesses has put enormous pressure on the small business sector," he said in a statement.

"It's like watching Goliath pretend he's David."

Xenophon said the big retailers with their buying power and considerable resources had significant advantage over smaller retailers.

"I would argue if anyone was going to get an exemption from GST on goods under $1000 ... it should only be the small business sector."

Assistant Treasurer Bill Shorten maintained that imposing the GST on every item purchased from overseas is too expensive.

"The cost of compliance would be greater than the tax raised," he said, adding consumers and retailers wanted a considered response from the government, not a knee-jerk reaction.

Shorten said there was no denying Australian retailers were doing it tough in recent times.

"But the GFC [global financial crisis], the high dollar, poor sales before Christmas, I don't think justifies flattening a tax willy-nilly where it hasn't existed before."

Harvey was unimpressed by the argument, accusing Shorten of being out of touch.

Carousel image credit: Australia Dollars image by InfoMofo, CC2.0

Topics: Hardware, Government, Government AU, Laptops, Mobility, Tech Industry

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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  • I've been shopping online for years and frequently don't have to leave the house to do my christmas shopping. Why? Convenience, better range and choice and better prices. Most of my online shopping is done on overseas websites because Australian retailers have (comparatively) ignored the online marketplace. Australian shopping websites either don't exist for the products I'm after or they do exist, but are cluncky and painful to use. Its unfathomable that Australian retailers have ignored the online marketplace, have only just woken up to the fact that they are losing business and instead of quickly setting up their own sites are focusing on the GST issue. They should put their energies and money into competing for my business instead.

    I don't shop on overseas websites to save 10% GST, the price savings are usually much higher. Eg tablet computer purchased overseas for $1200 including shipping was priced at $3800 in Australia; motorcycle jacket which cost $500 in Australia - I purchased 2 of them online for $450 including shipping; in 2003 back when our dollar wasn't very strong against the US dollar I purchased a projector online from the US for $2K including shipping when it retailed in AU for $5K (when I visited the US a few months later I saw the exact same model selling for $1K including a free screen!).

    The big retailers need to do a LOT better in the online marketplace to attract my business.
  • Gerry Harvey states that foreign retailers are getting a 'free kick' - Gerry, why aren't you selling into international markets and 'earning' yourself and your shareholders your own free kick? We operate in an international marketplace and you have stores in a number of foreign markets already. Stop complaining Gerry, you're no different than Telstra trying to control their fixed line monopoly. Define and execute your online strategy Gerry, we can't live in the past and you can't expect consumers to pay extra just because you're slipping and living in a pre-Internet era!
  • Gerry Harvey, Your franchisees having been raping people with bad advice, woeful warranties and gold plated HDMI cables for years. The fact is I'd rather deal with no salesman than one of yours, even if the prices were the same.
  • Local stores have been price gouging for years and years. I don't shop online to save a tiny 10%, I shop online because it's MUCH cheaper even using normal postage (vs a local store bulk shipping) to ship it here with the store I'm purchasing from still making their own profit.
  • Gerry Gerry Gerry.

    I friend rang me two days ago with a internet problem. I Diagnosed it over the phone and advised them that their modem was broken and they need a replacement.

    Just go to Harvey Norman and ask for a "ADSL2 Modem/Wireless router".

    They call me back a couple hours later unable to configure the modem.

    After 10 minutes of back and forth we discovery that they were sold a WIRELESS ROUTER (no modem) even after the purchaser asked specifically for a MODEM and was told yes yes yes this is a modem from your "salesman".

    So guess what next one that breaks will be order ONLINE... a facility you dont even offer i might add.

    Stop whinging setup your own online store then whinge when no one uses it because it is CRAP..... Which it will be based on my previous experience with your company.

  • I reckon the online retailers should have to pay a levy for salespeople that avoid eye contact with staff and also be forced to offer 6 different checkouts, only 1 of which is open and there is a 10 minute queue to get served. only THEN would the playing field be even. I waited at David Jones today for 10 minutes while a staff member served a lady, chatted with her about her daughter and then served another customer who had just turned up 30 seconds earlier. I bought the product online tonight.
  • What those who are crying foul (Myer, David Jones, Harvey Norman and Target) have in common? They all overprice their products though many are made cheaply in China. Any time if I don’t buy online, I would gladly buy from Kmart, Bunnings or Dicksmith, not only their prices are affordable but they have a very good return policy if you have made a mistake in your purchase but Harvey Norman does not have, they have that ridiculous line: “Please choose carefully, we don’t offer refund or exchange if you make a mistake…blah blah blah” How can you choose carefully as technology is so complicated for many these days and if you make a mistake in your purchase, they will not refund you. How intransigent and cruel this it to your own customers? When it comes to electronics, Myer can be the most expensive shop around, why would you choose to buy from them? At the end of the day they are not competitive at all and their customer service is left to be desired.
  • Sadly, if the "billionaire retailers" have the same amount of clout as the "billionaire miners" (remember they inadvertently, with a little help from a few faceless, behind the scenes numbers crunchers, unseated the then PM)... then we can typically, look forward to this request (cum threat) from the "billionaire retailers", going through parliament with bi-partisan support, quicker than you can say, Twiggy and Gerry said...!
  • A few things to consider:

    1. Exchange rate advantages are the same for ALL Australians, including big retailers. Most goods currently sold in their stores would have been purchased from OS are exchange rates similar to what we have now. Plus big reatilers have the advantage of bulk savings in buying and freight.

    2. Several years ago, I purchased an Australian book from Amazon, cheaper and in less time than I could get it from a major Australian bookseller. If the writing has been on the wall for years and these retailers have done nothing, they have reaped from their own incompetance.

    3. No one will buy from OS if they save only 10%. But when phone accessories cost 5-10 times what they cost from Hong Kong, one would have to be nuts to buy locally, expecially when it's the SAME goods (just rebranded). To buy from OS, there must be a low likelihood of problems with the goods, and enough margin to cover freight back if need be. And in a lot of cases there is plenty more to be saved.

    4. It may get to the point in some industries where 'shops' here are just 'pay to try' places with enough range to get an idea whether an article issuitable, and then buy it overseas. Then, SERVICE and RANGE will be the key.

    5. Online selling has to be an 'ethos' to work - not just an also ran for existing staff to manage with little or no real adaptation to the demands of the paradigm. Some US companies' staff are so helpful via email.

    6. There are poor service levels in Australia, and I have noted Sydney seems to be bad. However, I think it reflects the way management of those stores treat their staff. Go into a Body Shop and see the plentiful numbers of staff and how helpful they WANT to be, and you will see that something must be terribly wrong in other stores. Make it so your staff just love to be working there and you will see that it infects your customers as well!

    Drop the excuses and get with it. If you are really managers, then manage - don't complain!
  • Same thing happened to me here on two occasions here just recently, at different stores. I eventually butted into their idle conversations to state "guess I'm still invisible" before dumping my intended purchases on the counter & walking out
  • People like G Harvey are keeping Australia stuck in the 70s....resting on easily won laurels.. I bet he would love the internet to go away.
  • Get real, you idiots! Who is going to buy a refrigerator on-line? Who is going to buy a TV-antenna installation on-line? Who is actually idiotic enough to buy a mobile phone on-line only to find that it doesn't work in Australia?

    Kogan is doing something that none of the noise-making empty vessels are doing: He is asking his customers, "What do you want out of this type of product?" Then he goes and deals with the manufacturers to get the goods at the best possible price for AUSTRALIAN customers.

    Look at the rip-off that CFL lights have been. We were paying up to $20 each for them, and now they're flooding the shelves at $2.00. The even cheaper LED bulbs are still way over-priced. I just bought TEN (10) bulbs from China (including postage) for what it would have cost to buy THREE (3) in Australia! And you want to accuse me of dodging GST?

    Mr Harvey, I think that "G" stands for "Grow a brain!"

    Our economy has been wrecked by companies like yours that have brought in cheap imports to under local manufacturers to the point that we no longer have any manufacturing, and now that savvy consumers are bypassing you to get those same imports that are now the only available product you suddenly start crying, "It's not fair!"

  • My family and I own a small business in country NSW, our sales have decreased by over 30% this year (as have many other small businesses in our town). I understand the problems faced by retailers - but even I confess to buying online and at Woolworths for my food to the detriment of the independent grocers. Although I agree these big retailers have gone about this issue all wrong, they are in a position to bring the problem to the publics attention. It is hard enough for the small business to compete with these large corporations who have the advantage of buying power to offer lower prices - I can tell you right now for our small business that turns over $1m a year, we don't draw a salary AT ALL from it, our staff get paid only slightly above award wages - as it is all we can afford, and we are still looking at having to lay someone off this year if our turnover does not increase. And we are one of the better businesses in town. Some businesses are barely making $200 a week GROSS. Businesses are shutting down and people ARE losing their jobs. What are these small towns going to look like with no retail stores at all if people continue to shop online? It might work in the cities - but in the country we are really suffering because of online shopping. People also come into our store and ask us to match internet prices which is fine - however a lot of the time for us to match internet prices we make a LOSS on the goods sold. I know people are thinking they are doing the right thing by getting prices online and asking their local retailer to match the price - but for most of us it just isn't possible. A bit off tangent - I just wanted to have my say...
    angry retailer