Productivity Commission report shines a spotlight on high cost of doing business in Australia

PEAK retail industry body the Australian Retailers Association (ARA) today welcomed the Productivity Commission’s Relative Cost of Doing Business in Australia report which highlighted several areas that require immediate government attention including occupancy costs and deregulation of trading hours.

ARA Executive Director Russell Zimmerman said the report highlighted labour costs and rent as a share of revenue are much higher in Australia than in the United Kingdom (UK) and the United States (USA).

“There needs to be an open and honest conversation within the industry about the impact of trading hours on retail businesses. The Productivity Commission report noted many industry comments regarding retailer’s reluctance and inability to open their stores on a Sunday due to the impact of penalty rates and crippling costs of labour.

“The ARA was pleased to see highlighted in the report that the deregulation of trading hours is expected to increase economic activity and lower retailer’s costs of doing business as well as increase choice and convenience for consumers. Further, it could enhance employment opportunities for younger and older workers and those working part time or on a casual basis (findings 5.2).

“The report also noted the high cost of doing business particularly within the clothing and footwear sectors (almost double that of USA/UK). Labour costs to revenue ratios were notably higher for clothing and footwear retailers operating in Australia (findings 4.2).

“Occupancy cost ratios as a share of sales revenue are also higher here in Australia than in the UK, USA and Europe. We urgently need to look at zoning and planning as well as accessibility to information for retailers regarding rents. In relative terms, rent as a share of revenue is higher in Australia than the UK and USA at a broad industry level. Other costs have also risen including electricity (36%), insurance (34%), air-conditioning (21%), cleaning (19%) and repairs and maintenance (13%).

“While the portion of businesses that receive orders via the internet is growing, the report indicated that 38 percent of Australian retailers that were assessed could be called digital commerce laggards which is of course a cause for concern.

“The ARA will certainly be working alongside the retail industry and government to ensure the cost of doing business in Australia is sustainable.

“We look forward to the government’s response to these matters - now the Productivity Commission report has been finalised it is time for actions, not words,” Mr Zimmerman said.

Since 1903, the Australian Retailers Association (ARA) has been the peak industry body representing Australia’s $265 billion retail sector, which employs over 1.2 million people. The ARA ensures retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia.

Visit www.retail.org.au or call 1300 368 041.

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