Tarrifs: The Achilles of local retail?
NATIONAL: Further reductions to tariffs on textile, clothing and footwear imports could save Australian consumers up to $1.5 billion per annum, a modelling research report by the Productivity Commission has claimed.
Under the current program of reductions, garments with a tariff of 17.5 per cent would be reduced to 10 per cent from January 2010. A further reduction would follow in 2015, when the maximum rate for all TCF items would fall to just five per cent.
While the program of reductions has already caused concern among many domestic TCF manufacturers - as reported in Ragtrader's July 11 issue - the modelling report argued any contraction in this sector would be offset by the expansion of "other" industries.
Chairman Gary Banks said projected total benefits to consumers from lower priced clothing and footwear were substantial, effectively increasing the competitiveness of domestic retailers.
"The modelling suggests there would be net gains to the Australian community from the current program of assistance reductions, even under quite pessimistic assumptions about employment and price effects," Banks noted in his foreword to the report.
The findings have already drawn strong support from high-profile Australian fashion retailers, many of which argued a reduction in TCF tariffs would have operational benefits.
Retail apparel group Webster Holdings, which operates chains Jigsaw, David Lawrence, Marcs and Morrissey, claimed tariff reductions would result in reduced retail prices for garments and improved cash flow. Group operations officer Lyle Hudson said although he was awaiting the full report (to be released on August 31), he believed the current tariff rate was "too high" for the many retailers which manufactured offshore.
"All national brands [under Webster Holdings] have high importation," Hudson said. Domestic retail and manufacturing giant Just Group claimed a reduction in tariffs on raw material imports could in fact bolster onshore production. That was the argument put forward by director of operations Wai Tang in his submission to the Federal Government's review of the TCF industry.
"We import...fashion orientated fabrics when the local textile industry cannot provide them, however we need to carefully manage raw material costs in order to be competitive with our locally manufactured garments, to offset the higher costs of manufacturing in Australia," Tang said.
Two of the group's key womenswear operations - Portmans and Jacqui E - had a solid production base in Australia, with 40 to 50 per cent of their combined $225 million retail sales reportedly stemming from locally manufactured products.
"The key consideration is to address the opportunities that directly impact on the economic viability of local manufacturing," Tang said.
Vertical intimate apparel player Bras N Things argued a reduction in the brasserie duty, currently sitting at 17.5 per cent, would enable increased investment in design and product development from Australian businesses. Merchandise manager Brad Dransfield said added investment would help to increase the export potential of local lingerie brands.
Dransfield noted that New Zealand had removed the duty rate on brasserie many years ago when it was discovered local specialist manufacturers no longer existed.
"With no New Zealand-based manufacture of brasserie, the duty was not protecting the industry but rather having a detrimental effect," Over the past 15 years, brasserie production in Australia had also moved offshore, he noted.
"The unnecessary duty was an impediment to the effective export of the brands that the New Zealand based company Bendon [producers of Elle McPherson Intimates] were aiming to export to worldwide markets."
By Assia Benmedjdoub