By Grant Shepherd
SYDNEY: According to the Australian Retailers Association, retailers around the country are facing a tenancy crisis, but the Government aren’t doing anything to solve the problem.
The ARA has urged the Federal Government to take action on the Productivity Commission’s Market for Retail Tenancy final report (August 2008) in order to help alleviate the spiralling occupancy costs occurring currently in the retail sector due to the global financial crisis.
According to Richard Evans, executive director at the ARA, the Federal Government has not taken any action in regards to retail leasing since the recommendations from the Productivity Commission over eight months ago.
“Retailers, who have been struggling with low consumer confidence and increasing costs for over 12 months, are still waiting for the Rudd Government to take action on unfair and restrictive retail leasing legislation,” he said.
Evans also emphasised that occupancy costs that total over 15 per cent of retail turnover are not sustainable and with the low levels of consumer confidence and falling retail sales, retailers are struggling.
“Retailers are hurting and while landlords are trying to assist some individual tenants the larger issue of lease renegotiation still remains. The Government must step in and take long overdue action to help retailers reduce spiralling occupancy costs in tough economic times.”
Evans also accused the Federal Government of having ‘no courage’ when it comes to resolving this issue.
“Governments have been told for years that shopping centres operate in a virtual monopoly due to planning laws and restrictive competition practices within their negotiations with retail tenants.”
He also highlighted that retail tenants are disadvantaged at the negotiation table due to one-sided disclosure requirements and he outlined four remedies that can fix the situation:
- Separating legislation for major shopping centres from suburban high street retail outlets.
- Simplifying retail leasing legislation nationally through harmonisation of state laws.
- Applying a code of conduct to the sector administered by the ACCC.
- Disclosure of turnover figures to independent third party to be reported at category level.
“The Rudd Government – with its policy of reducing the cost burden of differing state legislations – must take immediate action on retail leasing.”