The threshold question: Economic impact of the low value threshold on the retail industry
Thursday, 15 March 2011 — An Ernst & Young report commissioned by the National Retail Association Ltd assessing the economic impact of online retailing on Australia has found that up to 118,700 traditional retail jobs will be lost by 2015, including up to 33,400 as a direct result of the Low Value Threshold (LVT).
Ernst & Young Head of Economics, Regulation and Policy David Cochrane said that the firm’s modelling showed that the continuation of the LVT would result in the loss of up to 33,400 jobs to overseas online retailers by 2015 and the shrinking of GDP by up to $6.5 billion by 2015.
“Our research also shows that other developed countries have LVTs far below the Australian threshold and, in fact, the UK is abolishing the LVT altogether to ensure a level playing field,” Dr Cochrane said.
Other findings of the report included:
- Online retail growth will drive further structural change in this sector. Total non-food online retail sales are projected to grow from $10.6 billion to $24.2 billion between 2011 and 2015 (or 8.5% to 16.9% of all non-food retail turnover).
- Foreign online retailers currently enjoy an average 14% price advantage over their Australian based counterparts and will hold 75% of all non-food online retail sales in Australia by 2015.
- Approximately 75% of all online transactions are under $100. To alter the purchasing behaviour of online consumers, the current exemption threshold will need to be lowered significantly (that is, to a level well below $100).
For the full report click here.
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