Retail Trading Bill
Tuesday, 3 July 2018
Today, I am pleased to introduce the Retail Trading Bill 2018, which will give choice back to South Australians by reforming our outdated shop trading laws in the current Shop Trading Hours Act 1977. As part of the Liberal government's election platform, a commitment was made to deregulate South Australia's shop trading hours, reduce red tape and liberalise trading times by allowing non-exempt stores across the state to remain open for a broader range of hours every day of the week, including public holidays, whilst maintaining restrictions on Christmas Day, Good Friday and ANZAC Day morning.
Numerous reviews and reports from commonwealth government organisations, such as the Australian Competition and Consumer Commission (ACCC) and the Productivity Commission, continue to call for further deregulation of trading hours around Australia, particularly in South Australia, Western Australia and Queensland. In late 2013, the commonwealth government undertook a comprehensive review of competition laws and policy in Australia. A review panel, chaired by Professor Ian Harper, undertook the review, and the final report was released in March 2015.
The regulation of retail trading hours was identified as an area for immediate reform by the panel. The report noted that South Australia, Western Australia and Queensland retain significant restrictions on retail trading hours and that these restrictions are a regulatory impediment to competition by raising barriers to expansion. The panel claimed that consumer preference should be the best driver of trading hours and that the growing use of online shopping is undermining the intent of restrictions on retail trading hours for bricks and mortar retailers.
The panel noted that independent and small businesses are able to differentiate their offerings to fulfil consumer demands and compete in the face of deregulated trading hours. Further, where restrictions apply to a particular sector or type of business, this can result in consumers having less flexibility and choice. The panel recommended that any remaining restrictions on retail trading hours in Australia should be removed, with the possible exception of Christmas Day, Good Friday and the morning of ANZAC Day, and should be applied broadly to avoid discriminating among different types of retailers.
The panel highlighted the experience of deregulation in Tasmania in 2002. Following deregulation, between the years 2003 and 2006, Tasmania experienced 25 per cent growth in retail sales compared with Australia-wide growth of 16 per cent. Despite concerns that deregulation would lead to a loss of employment, because of a decline in the number of smaller retailers, this was not the case. The panel cites ABS data that showed employment in retail trade in Tasmania increased significantly from 23,500 total jobs in November 2002 to 25,500 total jobs in November 2003. This represented 8.3 per cent retail jobs growth over the year, which was greater than the 4.3 per cent average jobs growth across all Tasmanian industries.
Consumer surveys of public opinion have also demonstrated strong support for changes to shop trading laws. A recent report commissioned by Business SA and conducted by the University of South Australia's Institute for Choice was published in March 2018. It found that three-quarters of South Australian consumers wanted to see changes to shop trading hours, including staying open later on weekends, opening earlier on Sunday mornings and allowing suburban centres to open on public holidays.
The Institute for Choice found that 75 per cent of the South Australian consumers surveyed wanted to see changes to shop trading hours. In regional areas, where there are no regulations, residents did not want to see any changes. The current restrictions on trading hours provided by the act apply to non-exempt shops in a prescribed or proclaimed shopping district. The prescribed shopping districts are the central business district, the tourist precinct, the metropolitan shopping district and the Glenelg tourist precinct. These are collectively defined as the greater Adelaide shopping district.
In the greater Adelaide shopping district, current permitted trading hours for non-exempt shops are: Monday to Friday, 12 midnight until 9pm; Saturday, 12 midnight until 5pm; and Sunday, 11am until 5pm. Car and boat dealerships in all districts have greater restrictions and can only trade until 6pm, Monday to Wednesday; until 9pm on Thursday and Friday; and until 5pm on a Saturday, but cannot trade on Sundays and public holidays.
Hardware, furniture, floor coverings and auto parts stores in all districts can also open at 9am on Sundays and public holidays, except for Good Friday, Christmas Day and not before 12 noon on ANZAC Day. Non-exempt shops in the CBD tourist precinct can also trade from 11am until 5pm on all public holidays except Good Friday, Christmas Day and not before 12 noon on ANZAC Day. Exempt shops in the CBD and any area can trade on any day they wish, including Good Friday, Christmas Day and before 12 noon on ANZAC Day.
Importantly, the metropolitan shopping district consists of the metropolitan area, which includes the City of Onkaparinga in the south and the corporation of the Town of Gawler in the north. As a result, Gawler, Aldinga, McLaren Vale and Willunga are in the metropolitan area and are regulated by shop trading hours. However, Mount Barker, Tanunda and Victor Harbor are deregulated and can trade every day of the year at any time. Proclaimed shopping districts are regional districts that came into existence upon an application being made by local councils to the minister, who could then proclaim a town or group of towns as a shopping district. There was once as many as 69 proclaimed shopping districts, but there are now only three. These are Millicent; Grace (the town of Mallala); and Binnum (the towns of Binnum, Frances and Kybybolite).
Over the years, the other 66 proclaimed shopping districts have been progressively abolished by the minister at the request of the relevant councils. Most recently, in 2017, 32 of the remaining 35 districts were abolished by the previous minister. This was as a result of the Local Government Association being notified that a number of retail stores in South Australia had inadvertently been trading for many years outside of the trading hours prescribed by the act. The Local Government Association then liaised with the minister and subsequently wrote to each regional council to suggest an application be made to abolish the proclaimed shopping district, resulting in the shops being able to trade at any time they wished.
Of the remaining proclaimed shopping districts, Millicent is the only one where the act has any real relevance. In a proclaimed shopping district, the permitted trading hours for non-exempt shops are: Monday to Friday, except Thursday, 12 midnight until 6pm; Thursday, 12 midnight until 9pm; and Saturday, 12 midnight until 5pm. A shop in a prescribed or proclaimed shopping district that is an exempt shop does not have to comply with any of the above restricted trading hours. Exempt shops include:
- shops with a floor area of 200 square metres and which does not adjoin to a storeroom with a floor area exceeding one half of the floor area of the shop;
- shops which sell foodstuffs with a floor area that does not exceed 400 square metres and which does not adjoin to a storeroom with a floor area exceeding one half of the floor area of the shop, noting that in order to meet this exemption the foodstuffs must be 80 per cent or more of the aggregate price of goods sold at the shop during the immediately preceding period of seven consecutive days;
- a shop that sells sporting goods within the premises of a squash centre, ten pin bowling alley or golf club, noting that in order to meet this exemption the goods must be 80 per cent or more of the aggregate price of goods sold at the shop during the immediately preceding period of seven consecutive days; and
- a garden shop, noting that in order to meet this exemption the goods displayed at the garden shop and purchased in the immediately preceding period of seven consecutive trading days must be 80 per cent or more of the aggregate price of all goods selected from goods displayed at the garden shop.
Shops that sell:
- antiques (other than coins or stamps); or
- live fish, fish food, aquariums, accessories for aquariums; or
- paintings, reproductions, drawings, etchings, pottery, sculptures, artefacts, wood carvings, leatherware, weavings, handmade goods of glass, iron, copper or silver; or
- newspapers, books, periodicals, greeting cards, posters, wrapping paper, stationery; or
- pharmaceutical preparations, cosmetic and toilet requisites, first aid requisites, medical and surgical appliances; or
- fresh flowers, living plants, floral arrangements, wreaths; or
- non-alcoholic drinks, ice cream, confectionery, light refreshments; or
- household pets, pet foods and accessories, garden supplies; or
food for consumption on the premises or prepared at the premises for consumption off the premises; or
souvenirs of a time, place or occasion identified as such by inscription, stamping or marking; or
cigarettes, cigars, tobacco, smoker's requisites; or
I note that is the list in the act of exempt shops. I hope you are keeping up. But then there is a caveat, noting that in order to meet this exemption the sale of all or any of the goods in each category of shop that I have just listed must be 80 per cent or more of the aggregate price of goods sold at the shop during the immediately preceding period of seven consecutive days.
The 80 per cent/20 per cent rule on paper may appear simple. However, in practice its application makes little sense, and in some instances, such as applying it to a petrol station, it can become problematic based on anomalies between the act and the Shop Trading Hours Regulations 2003. For example, it is ironic that a hardware store is able to use the 80 per cent/20 per cent rule to sell other goods such as vacuum cleaners, toasters and kettles, yet a store that specialises in those household items cannot trade the same hours as the hardware store.
Furthermore, as to the definition of 'hardware and building materials', which is required to determine the 80 per cent portion when applying the 80 per cent/20 per cent rule, itself is a legacy item and was inserted based on the goods that were sold by the former Harry's Hardware Store in Mile End. One would barely consider some of these items in today's environment as 'hardware and building materials'.
Similarly, it is ironic that a furniture or floor covering shop is allowed to trade on public holidays and at 9am on a Sunday morning and may use the 80 per cent/20 per cent rule to sell manchester and soft furnishings, yet other homewares stores selling manchester and soft furnishings cannot trade at the same hours. Key features of the reform bill include:
- 24-hour trading for non-exempt shops every day of the year except Christmas Day, Good Friday and not before 12 noon on ANZAC Day;
- the definition of a non-exempt shop now uses a staffing model as opposed to a floor area provision as provided in the current act. A non-exempt shop must have no more than 20 persons employed and working in the shop and the total number of persons employed and working in the same shopkeeper shops in South Australia cannot exceed 100. The staffing model option is used in all other states;
- one shopping district: the metropolitan area (regional South Australia will continue to be fully deregulated with the three remaining country proclaimed shopping districts abolished);
- a streamlined list of exempt shops that now only includes shops that could exceed staffing level parameters and, based on current practices, are likely to trade on the days that remain restricted;
- an exemption power, either on the minister's own initiative or upon application, which can be issued for the whole or a part of the metropolitan area, a specified class of shops and individual shops;
- existing employee protections on Sunday remain and an emphasis on the current protections already afforded to public holidays by the National Employment Standards under the commonwealth Fair Work Act 2009 is included as a note within the bill; and
- existing protections for tenants, being that a landlord cannot include a lease term requiring a shop be open on a Sunday, remain for the metropolitan area.
The bill does not mandate when shops can and cannot open. The decision of when to operate is left with the shop owners, similar to how businesses operate in most industries. Businesses will be provided with greater choice as to when to open, potentially providing more opportunities to employ more staff and create new jobs.
Consumers will benefit by having one set of trading rules for all shops covered by the bill, making it clearer and easier to choose when and where to shop. Essential services provided by shops such as chemists and petrol stations, along with shops expected to be unrestricted such as cafes, restaurants, take-away food outlets and shops that primarily offer goods on hire and that only sell goods by retail as an incidental activity, have been specifically listed as exempt from the bill. This will provide reassurance that access to these services at unusual hours is not limited by the bill.
The reforms will also bring South Australia more in line with trading hours offered around Australia. Over the years, South Australia has seen incremental change to its shop trading laws. When the current act came into operation, non-exempt shops could only trade until 6pm on four weeknights, until 9pm on the designated late-night trading night and until 12.30pm on Saturday. The definition of an exempt shop was determined by both floor area (200 square metres) and staffing levels. There were also restrictions on the sale of red meat and trading hours for hairdressers, regardless of size and staff. Most of regional South Australia was also regulated by the act.
In 1980, the act was amended to allow hardware stores to trade on weekends and most public holidays, and the floor restriction for an exempt shop selling foodstuffs (i.e. supermarkets) increased from 200 square metres to 400 square metres. In 1990, Saturday afternoon trading until 5pm commenced. In 1994 and 1995 respectively, the restrictions on the sale of red meat and regulated hours for hairdressers were removed.
In 1995, Sunday trading from 11pm until 5pm was introduced to the Adelaide CBD, then there was gradual change in the late 1990s that enabled shops in the city and suburbs to trade until 9pm on all weeknights. In 2000, the Glenelg tourist precinct was established so that non-exempt shops in the Jetty Road area were able to trade on a Sunday, the same as the Adelaide CBD. In 2003, the act was again amended to extend Sunday trading to the rest of metropolitan Adelaide and staffing level restrictions were removed from the definition of exempt shop. Finally, 2012 saw the introduction of trading on most public holidays in the Adelaide CBD.
During debate on virtually all of these changes to shop trading hours, there were claims that smaller retailers would be significantly disadvantaged and many would be driven out of business. However, the reality has been that smaller and independent retailers have not only survived but have continued to thrive. Of course, similar claims are being made about this bill.
It is interesting to note that in the last year independent retailers are opening new stores in competition to large retailers in deregulated areas such as Mount Barker and the Adelaide CBD. In fact, in recent years two of our state's most successful independent retailers have opened a number of interstate stores in deregulated markets, where they compete successfully with large retailers.
If this bill is not passed by the parliament then, sadly, the existing act, with all its anomalies and legal uncertainties, will have to be enforced. A recent audit by SafeWork SA has demonstrated that a number of independent retailers have been trading outside of the hours permitted by the legislation. In particular, they have been trading on public holidays, before 11 am on Sundays and after hours during the week and on weekends.
It is clear that these independent retailers are responding to consumer demand for extended trading hours, and have made the decision that it is in their commercial interests to do so. Clearly, their employees have also been happy to work during these extended trading hours. Some retailers have resorted to using curtains, screens or boxes to block off part of their floor area in an attempt to reduce their floor area below 200 square metres, or 400 square metres in the case of a supermarket, to enable them to trade on a public holiday.
There is also legal argument about how the actual floor area of a shop should be calculated. For example, it has been argued that areas such as entrances, trolley areas, counters and areas behind the deli counter should be excluded from the floor area calculation. There has also been legal argument about the interpretation of the 80 per cent rule for petrol stations and inconsistencies between the act and regulations made under the act.
Retailers like Harvey Norman have had to build stores in South Australia with roller doors inside because on public holidays they are not allowed to sell electrical goods but are allowed to sell furniture. There are many other similar anomalies and legal uncertainties with the current legislation. However, if the parliament rejects this bill then, as I said earlier, there will be no alternative other than to enforce compliance with the current act. I seek leave to have the detailed explanation of clauses inserted into Hansard without my reading them.