22/07/2022 - 14:04

Time to fully deregulate archaic trading hours

22/07/2022 - 14:04

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Mannkal Economic Education Foundation scholar Sebastian Tofts-Len pens his case for deregulating Western Australia's trading hours.

Time to fully deregulate archaic trading hours
Trading hours are a debated topic in Western Australia. Photo: Gabriel Olivera

In late April of this year, Mandurah Council voted in favour of permanently extending local retail trading hours.

The council commissioned a report which found the decision would inject $11 million into the local economy and deliver more employment opportunities. A community engagement survey (also commissioned by the council) showed more than 76 per cent of respondents supported extended trading hours.

The results of this survey unsurprisingly fall in line with a poll conducted (in 2020 by Painted Dog Research) indicating overwhelming support (74 per cent) for deregulating trading hours.

Deregulation of trading hours has been slow progressing in WA, despite the vast majority of residents supporting it. In 2018, the government took a step backwards by reducing trading hours during Christmas.

In 2019, then Liberal Party leader Liza Harvey backflipped on its party’s policy to deregulate trading hours. In 2020, Mark McGowan said his government will consider its position on the issue “at some stage”.

There was a recent victory when last Christmas and the New Year period saw shopping hours extended temporarily.

However, it seems that the political appetite for permanent retail reform has stagnated (when really it should be an immediate priority).

What we need is not just temporary reform during some holidays, or extended trading hours in particular cities such as Mandurah - but universal, state-wide deregulation.

WA has fallen behind the rest of the country with its archaic retail trading hours.

Despite the howls of outrage you will hear from lobby groups like the Shop Distributive and Allied Employees Association arguing deregulation will threaten small businesses, the empirical evidence is overwhelmingly not in their favour.

Research from the Economic Regulation Authority dispels the myth that small businesses will suffer from deregulating trading hours.

It found the structural adjustments that would arise from full deregulation would not negatively affect small businesses. Furthermore, when comparing participation rates of small businesses between cities with and without deregulated trading hours, the figures are around the same.

Only the most highly inefficient stores on the margin that fail to compete will close. This is to be expected in any free market.

The overall gains of deregulation, however, are wide reaching.

Independent research from the University of Western Australia found that in the long-term, full deregulation of shop trading hours will lead to greater economic efficiency, choice and quality for consumers.

A Productivity Commission report released around the same time also found the preferred course of action is to fully deregulate trading hours, including on public holidays. Such action will increase competition resulting in lower prices, create more jobs and improve consumer choice.

The protectionist rhetoric we hear from the opposing side is nothing new.

On a larger scale, Australia experienced a similar policy debate in the 1970s over free trade. It was finally in the 1980s that the Hawke-Keating Government put Australia’s economic prosperity ahead of entitled farmers’ demands by cutting tariffs and ending subsidies.

WA should do the same when it comes to trading hours. It is no surprise that lobby groups will try protecting the few privileged retailers that are not exposed to any real competition under current laws.

The case of concentrated benefits and dispersed costs strikes again.

Political parties will always talk big on productivity enhancing reforms.

While WA will continue to debate many issues in this sphere such as taxation and minimum wages, it is rare for a policy to be overwhelmingly supported by the public and have robust empirical research to demonstrate that it will benefit consumers, employees and employers.

Deregulation will also provide a much-needed boost to brick-and-mortar stores finding it increasingly difficult to compete with online services. At this point, fully deregulating trading hours is low hanging fruit to improve our state’s productivity.

There is no good reason why politicians should continue denying consumers convenience and choice in retail shopping. Understandably, some stores would not want to open outside of current business trading hours. However, why should these outdated laws prevent others from doing so?

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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