State and Federal governments need to abolish current planning regulations to improve competition in the retail sector, a new report from the Centre of Independent Studies has argued, placing Australia as one of the most over-priced markets in the world.
The report comes just days after the Productivity Commission released its final report into the retail sector, recommending similar reforms for planning and zoning laws to be relaxed.
The new CIS report – which lists Australia as being overpriced in a number of different respects including imports, housing and land supply – says Australians are being ripped off when it comes to shopping.
Report author Oliver Marc Hartwich told SmartCompany this morning the country is “simply too expensive”, and international price comparisons don’t add up.
“I’m a frequent traveller, and it’s easy to see the Australian prices are among the most expensive in the world. Now, there are some good reasons for that, such as shipping costs and the relative size of the market, but it is ridiculous.”
“Car parking is one area that’s a concern. A few weeks ago I parked in a car park next to a hotel, and if I had stayed there overnight, the parking would have cost more than a night’s stay at the hotel.”
The report compares retail prices for products bought in Australia, alongside products in Canada, the US, Japan and Germany.
In five out of six cases, Australia was the most expensive. For instance, a Western Digital hard drive costs $84 in Australia, but $74 in Canada, $67 in the United States, $75 in Japan and $77 in Germany.
The price differentials are most obvious in some other items. An IKEA kitchen package costs $4,936 in Australia, but $2,946 in Canada, $2,330 in the United States, and $3,758 in Germany.
Part of the problem is retail rents, which are among the most expensive in the developed world. The report notes that while Australia has a higher concentration of shopping centres than some countries, such as Britain, access to these is getting more expensive.
For instance, Sydney was ranked as the most expensive out of 19 cities for a three-hour park, with a cost of about $34.
Hartwich says the solution is in competition, and deregulating the planning and zoning process.
It’s certainly an area of contention, with a retail tenancy code of conduct planned to respond to tenant complaints.
“Part of the price differential can be accounted for in the dollar, but the margin is still very high. A lot of that is having to pay for retail space.”
“Get rid of the planning regulations. It’s ridiculous that an official decides whether a new store comes into Australia, when in a market economy the people and market should decide.”
Hartwich says the Government should be taken out of the picture, except to maintain safety requirements.
“It reduces the possibility of retailers to come into the market with these decisions. Let’s take the Government completely out of the picture.”
“Make sure buildings are safe and structurally sound, but as to the question of whether new stores are needed? The market should be deciding that.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
