I am delighted to publish this guest post from my fellow economist Rod Bogaards, currently a consultant to the World Bank, on the recent Queensland trading hours review by John Mickel. GT
Trading hours’ report fails to make the case for continued regulation in Queensland
by Rod Bogaards
The Mickel Report recommendations are a step in the right direction to address the over-regulation of retail trading hours in Queensland. But given less restrictive retail trading hours are in place in most other Australian jurisdictions, it begs the question: Did the report go far enough?
Following the release of the report, the Queensland Government was quick to announce its support for nearly all of the recommendations.
Unfortunately for Queensland, the report’s recommendations do not appear to be the result of a dispassionate assessment of the viable reform options, but a negotiated outcome of special interest groups. That is, analysis appears to have taken a back seat to consensus.
This is perhaps not surprising, given the Trading Hours Review Reference Group comprised representatives from business associations and unions:
- National Retail Association
- Chamber of Commerce and Industry Queensland
- Master Grocers Australia
- Queensland Tourism Industry Council
- Shop, Distributive and Allied Employees’ Association
- Australian Workers’ Union
- United Voice
- Queensland Council of Unions.
The most notable omission was a consumer representative to counter interest group arguments. This omission is problematic, given consumers are the most affected group in the community when it comes to retail trading hours. They bear the costs of the regulations. In particular, they bear the costs of being unable to shop at locations and times suited to their requirements and the higher prices they pay because of the reduced competition arising from restrictions on retail trading hours.
Instead of having a seat at the table, consumers had to make do with their views being conveyed via a survey (or for the highly motivated, an individual submission). Nevertheless, when given the opportunity to have their say, the survey evidence was clear that the majority of Queensland consumers don’t want regulated retail trading hours and, even more so, they don’t want large retail shops to be constrained by Sunday or geographic restrictions (Mickel Report, p. 75).
So what happened? How did Queensland end up with an independent report that recommended to continue regulating trading hours when the majority of Queensland consumers don’t want it and many independent inquiries across Australia, some dating back to the 1980s, have presented solid evidence supporting deregulation?
The report does detail the evidence from the Productivity Commission and others knocking out the arguments to regulate trading hours to protect some small businesses from competition. However, the main flaw is that the report fails to identify a problem that would require regulation. It also misses the key step of analysing and comparing the impacts of different options so that any trade-offs can be made explicit.
The inquiry recommended retaining regulated trading hours so some retail employees will not have to work outside ‘traditional’ hours. In effect, it places the interests of some full-time retail employees above the interests of consumers, retailers, part-time/casual retail employees (who are more likely to self-select into working ‘unsociable’ hours) and unemployed job seekers.
But why? Restricted trading hours apply to only some retail businesses (non-exempt stores) and therefore to only some retail workers. Why should those retail workers be protected from ‘unsociable hours’ but not the 90 per cent of non-retail workers in the state? If there really are significant benefits from restricting trading hours, why apply them to only retail workers? Why shouldn’t all workers — in restaurants, hotels, nightclubs, airports and many white collar jobs — be able to share in the benefits of not working ‘unsociable hours’ in Queensland?
The community would be better served by the Queensland Government receiving more objective reports on policy issues. Such reports should, at a minimum, undertake base-level regulatory review and provide evidence of a policy problem requiring regulation and some analysis of options, rather than views of the beneficiaries of regulation.
Rod Bogaards is an economic consultant to the World Bank and former Director of the Productivity Commission.