Xenophon champions retailers
The committee has yet to finalise a timetable for the inquiry or call for submissions, with the composition of the Senate changing on July 1 and membership of committees to be determined.
The reference to the committee was moved by Senator Nick Xenophon last month, who told the Senate he wants to explore a fairer system and reduce burden on SMEs while also considering benefits to landlords.
Xenophon, a South Australian senator, has maintained a keen interest in the retail industry, seeking in 2000 to have money collected by shopping centre landlords from casual lease tenants offset against centre outgoings.
He has also attempted to tighten legislation regulating franchising.
His reference motion to the Senate Economics References Committee seeks an examinayion of the first right of refusal for tenants to renew their lease; affordable effective, and timely dispute resolution processes; the need for a national lease register; requirements on bank guarantees by tenants; and disclosure of incentives.
Xenophon also wants the committee to examine a fair form of rent adjustment, implications of statutory rent thresholds, requirements for the provision of sales results, and contractual obligations relating to store fitouts and refits.
Current state of play
Retail tenancy laws are currently enacted by state and territory governments and are broadly consistent, although national retailers and landlords are concerned about the cost and inconvenience of some variations, including lease register obligations.
Retailers and landlords have debated a harmonised disclosure statement and national code of practice for shopping centres, but there has been limited progress, with none of the state governments pressing for a national approach to retail leasing.
The Federal Government has several current inquiries running involving the retail industry, including a review of the franchising code of conduct, a competition policy review, and an assessment of the relative costs of doing business in Australia.
The Productivity Commission has issued an interim report on the cost of doing business for Australian retailers compared to overseas counterparts.
The report confirms that costs are higher in Australia than the US, UK, and many other overseas markets.
Australian retailers have higher staff and occupancy costs and are forced to absorb significant costs associated with limits on trading hours and unnecessary regulation.
The Productivity Commission found labour costs are the largest expense for most retailers, with Australia’s minimum wages and penalty rates substantially increasing the cost base and impacting on margins and on prices.
The Productivity Commission’s final report will be provided to the Federal Government in October and the agency is currently seeking comment on its interim findings and further information from retailers.
The report is available here.
This article first appeared in Inside Retail PREMIUM issue 2006.
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