While the media in general has characterised the Federal Budget as a bit of a shocker, the ARA and other representatives of the retail sector have judged it in a more benign light.
While there was little in the Budget directly focussed on retailing, there was also little in it likely to encourage an outbreak of profligate spending by consumers.
The ARA gave the Abbott Government a tick for ‘reducing the long-term blow out in Government expenditure’ and for ‘a solid plan which will see supply chain improvements and efficiency through infrastructure spend.’
The 1.5 percent cut in company tax was also noted positively.
There was no decision made on reduction in the $1000 threshold of the low-value GST exemption for overseas goods, but the ARA seemed to infer it is in the pipeline: ‘We are still waiting, however, for a decision to be finalised on removal of the low value GST exemption for overseas goods under $1000,’ said ARA executive director, Russell Zimmerman. (What do you know that we don’t Russell?)
The ARA noted that the subsidies to employers taking on employees over 50 ‘could open the door to older workers entering the retail sector.’
Margy Osmond, CEO of the Australian National Retailers’ Association (ANRA), the lobby group for larger retailers, saw good and bad in the Budget.
She liked the spending on infrastructure: ‘In the longer term the dedicated road infrastructure investment will provide a better transport network to large scale logistic operators like retailers. The jobs associated with this infrastructure will also mean a brighter future for a number of communities and their retail businesses.’
She expressed concern that some measures could lead to an erosion of consumer confidence ‘at a critical time,’ and didn’t much like the increase in fuel excise will she said will cause ‘rising transportation and freight costs as well as a hit to consumers’ hip pockets.’ (But with the ANRA’s two biggest constituents, Woolworths and Coles, dominating the service station racket, and those two able to manipulate prices where independent service station owners can’t, there is a silver lining to that cloud for the ANRA – less competitors.)
Another perspective came from Jeff Rogut, CEO of the Australasian Association of Convenience Stores (AACS).
‘Fuel is already a very low margin product for petrol station retailers, who, for all their efforts and hours worked, make far less revenue than the Government on this product,’ Mr Rogut said.
‘Competitively-priced fuel also encourages merchandise sales for these small businesses when customers visit the store. These additional sales are crucial to the profitability and even viability of some of these stores.’
COMMENT: The state of high anxiety which kicked in during the self-indulgent fiasco which was the last Federal Government, and has since been cynically cultivated by talk of economic catastrophe by the current incumbents, seems set to continue. If a country gets the government and politicians it deserves, then we Australians must have broken a mirror at some stage in the past few years! It’s a consumer economy and retailing is smack bang in the middle of the equation. How can retailers do their best if the people in charge keep freaking out their customers?