We take a look at new changes to penalty rates in retail and other service industries and the potential introduction of a new tax for international goods currently in a GST-free threshold and what these will mean for the Australian retail sector.
The start of a new financial year means major changes are on the horizon for Australian retailers. While one of the biggest potential game changers – GST on all goods under $1000 for international online sellers – will not yet come into play, changes to penalty rates in retail, as well as the hospitality and fast-food industries, are being rolled in and may have a significant impact on Australian businesses and workers.
Changes to penalty rates
For those in the hospitality, retail and fast-food industries, the new financial year will see penalty rate changes made by the Federal Government take effect. The first change is to public holiday rates with other changes, such as Sunday rates, being phased in over the next few years. This means we won’t see the full cuts come into play until 2020.
Full-time and part-time workers in these industries will now see their public holiday rates cut from 250 per cent of their standard wage to 225 per cent, and casuals will decrease from 275 per cent to 175 per cent.
When Sunday rate cuts come into effect, they will see retail workers’ wages decrease from 200 per cent to 150 per cent for full-timers, while part-time workers will see a reduction from 200 per cent to 175 per cent. In hospitality, workers will have Sunday penalty rates reduced from 175 per cent to 150 per cent.
There are passionate arguments for and against this decision from different segments of the community. Some organisations, such as the Australian Retailers Association (ARA), are embracing the changes.
In an ARA media release, Executive Director Russel Zimmerman called it “one of the most progressive decisions the Australian retail industry has seen in a number of years” and stated “this reduction in Sunday Penalty Rates will provide more employment opportunities for young workers seeking both additional hours and new employment over the weekend.”
Yet while Zimmerman is in support, and the Productivity Commission also pushed for the changes, there has been much concern expressed from the other side of the fence.
Ged Kearney, president of the Australian Council of Trade Unions slammed the decision, arguing it’s taking money straight out of the pockets of those who probably need it the most and are potentially living week to week already.
“This decision will have a massive impact on household budgets of so many families. Nearly a million workers will be affected by this pay cut … their families and their budgets and their livelihoods,” he says.
GST for overseas online sellers
Many of us can understand, and may have experienced, the threat of overseas online merchandisers who are selling goods at a cheaper price. Particularly for SMEs in Australia, competition from overseas sellers can make it difficult to gain a foothold in the market.
However, a new proposed legislation would see overseas merchandisers having to pay GST on all purchases. Currently, overseas online purchases that are under $1000 don’t attract GST, giving them an advantage in the market.
While the new legislation was originally mooted for July 2017, in June changes were made to the framework through an amendment made to the legislation in Senate, meaning this new tax has been delayed and won’t kick in until 1 July 2018. And that’s only once the bill has been approved in the House of Representatives again to become a law.
There had already been doubts surrounding the new GST, as the government hasn’t clearly stated how they’ll actually go about enforcing the collection of the GST.
The idea with the tax is that it will “establish a level playing field for our domestic retailers,” says Treasurer Scott Morrison.
However, in Booktopia founder Tony Nash’s opinion, that may not be entirely true. “If you look at it as a higher level, it’s not about levelling the playing field, though it will go some way,” he says.
While it’s still too early to tell how these changes will truly impact the retail space, and with the low-value GST-free threshold still to be reworked, it’s hard to say what this will really mean for online retailers in Australia.
One thing is clear, it’s never been more important to stay ahead of the curve, as you’ll need to remain agile to keep up with the competition both within Australia and overseas.