Article on Retail Red Tape by Tony Shepherd in the AFR

This opinion article by Tony Shepherd, President of the Business Council of Australia, was published in The Australian Financial Review on 15 May 2013 under the title ‘States Need to Cut Retail Red Tape’.

In Adelaide, on a Sunday, it is illegal to sell a boat.

It is not known what provoked the South Australian parliament into making this legislation, but its existence highlights the fact that trading restrictions on Australia’s retail industry are thoroughly obsolete. They work against consumers, block employment and generally frustrate national economic performance and productivity.

More than 1.2 million Australians work in the retail sector. There are more jobs in retail than in the financial services, mining, media, telecommunications, agriculture, forestry and fishing industries put together. The very size of the retail industry means anything that lifts its economic performance is important to the national economy. Size matters and small improvements can have big consequences.

The Productivity Commission, in its Report into the Economic Structure and Performance of the Australian Retail Industry, recommended completely deregulating trading hours across Australia.

Predictably and disappointingly, state parliaments across Australia have assiduously ignored this recommendation.

The advent of online retailing has changed the competitive landscape for Australia’s retailers. Online retailing did not exist 20 years ago, but today it is a fast-growing feature of the retail sector. There are no state government regulations on the operating hours of websites.

Unfortunately, state parliaments around Australia have struggled to accept the new retailing reality and the challenge that international online retailing presents. Instead, the states persist with regulations that restrict the productivity of traditional retailers and obstruct their ability to meet customer expectations and respond to the online challenge.

In Western Australia, hardware stores cannot open before 11am on Sundays if they stock both light bulbs and light fittings. This is because the Retail Trading Hours Regulation 1988 prohibits the sale of light fittings before then. Light bulbs, yes, light fittings, no.

In NSW, the Retail Trading Act 2008 makes Boxing Day shopping legal in 40 local government areas, but illegal in another 112. This gives rise to all sorts of inconsistencies and inconvenience. Boxing Day shopping is legal in Dungog, Cowra and Narrandera but illegal in Parramatta, Newcastle and Wollongong. The fact that the law picks winners and advantages some while disadvantaging others is not lost on David Borger, the Director of the Western Sydney Business Chamber, who has called for the law to be reformed: “Political leaders talk about creating more jobs and business opportunities in Western Sydney – here is the opportunity to do it with a stroke of the pen. It is time to bring retail trading on Boxing Day into the 21st century.”

In South Australia, the Shop Trading Hours Act 1977 prevents shops in Adelaide from opening before 11am on a Sunday. But an exemption is available that allows shops to open early if they sell “asbestos cement sheet and articles”. How thoughtful.

In Queensland, there is a horrible hodgepodge of restrictions. The Trading (Allowable Hours) Act 1990 runs over 57 pages. The result is that there is an extraordinary mishmash of restrictions on trading hours. For example, on Saturdays, shops in South East Queensland must close by 5pm, but in inner-city Brisbane by 5.30pm, in the “City Heart” of inner-city Brisbane by 7pm, in New Farm by 9pm and on the Gold Coast by 10pm. It must make sense to someone …

The Queensland Competition Authority has recommended deregulating trading hours be and reported that such a reform would benefit Queensland by $200 million a year. The Newman government is yet to respond.

The repeal of anticompetitive and redundant regulation was a key part of the National Competition Policy’s program of micro-economic reform. To make it happen, the Commonwealth had to resort to paying the states hundreds of millions of dollars to get them to modernise their regulations and cut red tape. It’s time for the Commonwealth to revisit the case for regulatory reform. If either Wayne Swan or Joe Hockey wants to reinvigorate productivity, they should figure out a way to cajole the states into abolishing the red tape that entangles Australia’s retailers and frustrates its consumers.