If you want to know the human cost of the Morrison government’s do-nothing economic policy, ask the 1600 staff of the Harris Scarfe retail chain.
They now face an uncertain festive season after the chain, with 66 outlets across the country, was placed in receivership. The assets of the 170-year-old company were, Deloitte Restructuring Services reassuringly declared, likely to be enough to pay their entitlements, and stores will continue to trade for now. This comes less than a month after owner Greenlit Brands announced it was selling the chain to private equity outfit Allegro Funds.
Another veteran of Australian retail, Dimmey’s shuttered its mainly regional stores for good in November, adding to the list of around a dozen retailers that have shut down this year.
The word “recession” should never be used lightly, but Australian retail — which was already struggling with structural changes in how we spend our money, plus online and foreign competition — is in recession. And there’s no recovery on the horizon.
Retail turnover actually fell slightly in dollar terms in October, the third time in the last 12 months. Annual growth has slowed to just over 2% from more than 3% a year ago. Some sectors are particularly struggling: car retailing has racked up nearly 20 months of consecutive falls, including a 9.8% slump in November; department stores in October this year had lower dollar turnover than in October 2017. Retail is Australia’s second biggest employer, but jobs in the sector grew by just 0.7% in the year to August and fell in the three months to August in seasonally adjusted terms.
Remember that this is despite three interest rate cuts and the alleged “cash splash” tax cuts, which have vanished into bank accounts and mortgages. Households remain under pressure from both stagnating wages — which will continue for at least the next two years — and from continuing income tax bracket creep that the government’s tax cuts won’t come close to addressing. Throw in the government waving through private health insurance premium rises well above the consumer price index or wage price index and the outlook for retail is bleak.
Sales revenue and earnings for big outlets such as David Jones, Myer, Target and Kmart are already weak or falling, while Big W is still in the recovery ward at Woolworths. Harris Scarfe could be a warning about what is to come for bigger, more nationally prominent retailers.
Like its tax cuts, the government’s spending efforts to date — the bring-forward of a small amount of infrastructure spending and a boost to home care packages for the aged care sector — are far short of sufficient. They certainly compare poorly with what the New Zealand government announced yesterday: a NZ$12 billion investment package targeting transport infrastructure, schools and regional investment.
The Kiwis have unemployment at 4.2%, which makes our level of 5.3% look pathetic. But they’re worried about softening economic growth, and are prepared to borrow at absurdly low interest rates in order to keep the economy moving and improve infrastructure.
Here, Treasurer Josh Frydenberg insists the economy is “back in the black and back on track”. If he means that retailers can’t see anything but black, he’s not far wrong. The staff of Harris Scarfe won’t be the last workers to suffer from the government’s pig-headed indifference.