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Policy and politics must work to help retailers

As the retail industry faces economic headwinds, the Australian Retailers Association (ARA) believes decisions from the Fair Work Commission and the Reserve Bank of Australia (RBA) will have far-ranging implications for the sector.

Recently the Commission ruled to increase the national minimum wage by 3 per cent, to $19.49 per hour, starting from 1 July.

It also increased Modern Awards by 3 per cent including the General Retail Industry Award, which will rise to $21.41 per hour for full- and part-time employees, and $26.76 per hour for casuals.

While the rise was in line with expectations, retailers had hoped for a more modest increase of 1.8 per cent, which would have struck a balance between tough conditions in the sector and the need for employees to have their wages increase in line with prices.

As it stands, the increase is more than double the rate of inflation and also outpaces GDP growth, which was at 2.3 per cent for the year to December 2018.

However, while the decision will make it more expensive – and therefore more difficult – for small businesses to hire extra staff, it could also boost consumer spending by putting more money in the pockets of low-wage earners.

Also easing the squeeze is the RBA’s decision to cut interest rates by 25 basis points. This policy will aid struggling retailers – who are experiencing the lowest retail sales growth in 50 years – by increasing consumers’ disposable income, thereby stimulating spending.

"Business leaders have chorused their support for more infrastructure spending and regulatory reform in order to continue the country’s unmatched 27-year run of economic prosperity"

Trade figures for April showed an unexpected deterioration from the March numbers, leading to widespread conjecture about the overall health of the $320 billion retail sector.

In addition to the RBA’s decision, stimulatory changes – including the Morrison Government’s proposed tax cuts – may well filter through in the coming months, giving the industry a reprieve from the challenging market conditions.

A time for action

Indeed, Australia’s soft GDP figures, released in June, have only added to calls for government intervention to boost the economy.

Business leaders have chorused their support for more infrastructure spending and regulatory reform in order to continue the country’s unmatched 27-year run of economic prosperity.

Following the reforms of the Hawke, Keating and Howard Governments, Australia saw major dividends – but the last 10 years have seen a disappointing lack of vision and action from both the major parties.

The politicisation of tax changes and the Canberra “blame game” have lead to the country resting on its laurels instead of adapting and evolving to meet the challenges of today and tomorrow.

Even worse, Australia’s economic reputation and prospects have been damaged overseas.

Rather than accepting slowing global conditions, it’s now time for state and federal governments of all political stripes to pro-actively identify and execute a bold agenda.

The ARA supports a cut to the company tax rate to 25 per cent, which would make businesses more competitive, as well as re-examining tax compliance structures for businesses.

GST and PAYE are also overdue for review, with states needing to align taxation to give certainty and foster efficiency for cross-state businesses.

While company tax cuts have been painted as “handouts to billionaires”, the reality is that lowering and simplifying taxes, streamlining regulation and cutting red tape for businesses – as well as undertaking major infrastructure projects – would generate much-needed jobs and boost the economy.


Image credit: Sleepless Media

Russell Zimmerman

Russell Zimmerman is the executive director of the Australian Retailers Association (ARA). Email:

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