The ‘Road to Recovery’

Our 10-point plan

May 2020

Background

Covid-19, also known as Coronavirus, is a global pandemic affecting countries around the world in some cases with devastating results. Officially named COVID-19 by the World Health Organization (WHO) on February 11, 2020, the respiratory disease is caused by the SARS-CoV-2 virus that was first detected in Central China’s city of Wuhan on December 8, 2019. Loss of life, business closures, unemployment and lockdowns are unfortunately now commonplace. We are experiencing an event not seen for around 100 years since the Spanish flue pandemic. Governments around the world have reacted very differently and we are fortunate that the Australian government had the foresight to act early and even ahead of the WHO declaration of a pandemic.

We do however see many businesses shuttered and government spending at levels never before seen to support small businesses and people affected by this virus.  Many businesses are taking different approaches to keep trading and even innovate during these times as we can no longer just do business the old way.

Whilst suffering downturns in fuel volume as has been widely reported in the media, we have to date successfully lobbied for our industry to be allowed to be able to continue to operate during this pandemic. This however comes with enormous responsibilities to our staff and customers whether retailers or suppliers from a health and wellbeing perspective. We will ultimately get through this; however there are still many months of uncertainty and various restrictions ahead for our country.

Recovery

The question now as governments consider a ‘road to recovery’ is how AACS can assist our Members through the months ahead and bringing useful information to them as well as putting the position of the industry to government/s to chart a course through what lies ahead.

What are some of the areas that the Convenience industry would like to see that will assist our industry recover more speedily and to a stronger future:

1. Temporary suspension of non-essential regulatory reviews: time consuming reviews that add nothing to productivity, business growth or public benefit should be held over until the economy improves or even reviewed in terms of whether they should proceed at all.
2. Moratorium on further tobacco excise increases and greater law enforcement at ‘street level’ on sales of illicit tobacco:  we have seen the steady growth of illicit tobacco sales in our country, taking away sales from legal and responsible retailers and suppliers as well as robbing the government of excise. Certainly we see the excellent work that Border Fore is doing in making seizures of large quantities of tobacco products, however products are still making it to street level and being sold at prices far cheaper than legitimate products with no taxes being paid. As the cost of legal tobacco increases consumers shifts their purchasing to these illicit products which are sold to people of all ages. Its time to recognise this real problem and to bring some reality back to the pricing of legal tobacco.
3. Extension to tax relief including reducing corporate tax rate and consideration of wider tax reform and theremoval or significantly reduction of  payroll tax:  tax reform is a topic tat has been discussed in so many forums over the years without real outcomes. As the government looks to kick start the economy in the wake of COVID-19 this is one area that will spur investment, incentive and employment. Why penalise businesses, particularly small businesses, for giving people meaningful employment?
4. Clarity and consistency in guidance to business and individuals: bureaucracy leads to a loss of productivity, red and green tape, confused messages and inertia. This is time for consistent messages across various levels of government, federal, state and local, and to allow business to get on with what they do best – serving their customers in the most efficient manner.
5. Opening  internal borders when appropriate: governments, federal and state, have done an excellent job in containing the spread of COVID -19, however there will be a time that relaxation of restrictions are required to boost tourism, regional businesses and movement across our country.  
6. Allowing the Convenience industry to sell alcohol: Convenience store operators are responsible retailers. We sell age restricted products now such as tobacco and lottery and with the appropriate training in place we can safely and responsibly also sell alcohol. This would not be 24 hours but in line with other retailers in their local areas. Alcohol regulations are archaic in many states and it has given the major supermarket operators further competitive advantage over smaller retailers.
7. Allowing eCigarettes to be sold in Convenience Stores: Public Health UK has stated that eCigarettes are 95% safer for users than traditional tobacco products. Many Australian experts agree that they are a safer alternative and should be made available.  As with illicit tobacco being indiscriminately sold to anyone, so too is there a market for eCigarettes and even nicotine based liquids which are illegal, and from unknown sources of manufacture.
8. Develop guidance for our industry as to what safe trading looks like in a COVID-19 environment: AACS has developed a basic plan for our operators as a minimum stadrad and will continue to be guided by Australian Health experts on any changes required or new developments. In this we do recommend the download of the COVIDSafe app for all staff as well as flu shots.
9. Removal of authorisations that have allowed the major supermarkets to collaborate on supply, that appears to have disadvantaged supply to smaller and independent retailers: this has become a real issue as we see ‘normality’ returning to supermarket purchasing and even the lifting of some purchase limits, our stores are receiving only a fraction of what they order from their distributors. The authorisation a[ears t be helping the operations of the major stores disproportionately  to smaller retailers who in fact appear to ebb at ever greater  disadvantage.
10. Least cost routing for electronic payments to be implemented as the move away from cash transactions intensifies: Australia is becoming a cashless society and this trend is being accelerated during the coronavirus pandemic. Tap-and-go is becoming a far more frequently used method of transacting in convenience stores, increasing further as a result of measures such as social distancing.  The announcement from the Australian Payments Network (APN) last week of contactless card payment limits increasing to $200 will further increase the use of tap-and-go in some areas. Convenience operators are stepping up to meet consumers’ expectations and preferences in this regard, but are presently prevented from routing these tap-and-go transactions through the least costly payments network.  Instead of using Australia’s own eftpos network, which is significantly cheaper, our members are forced to use more expensive international networks such as Visa and Mastercard to route these transactions and provide the most convenient service to customers.   This negatively affects the cost of doing business for convenience stores and can also limit the employment opportunities we’re able to provide at the local community level, as the difference for stores between these networks amounts to thousands of dollars each year.  The Reserve Bank has been making clear for at least 12 months that merchants should have access to the lowest transaction cost route for tap-and-go payments, however the big banks have still not offered this choice, meaning convenience stores are paying significantly more than they should for these transactions. We acknowledge that the Reserve Bank is undertaking a Review of Retail Payments Regulation, which is meant to address this issue. The AACS has made a submission to the Review which can be found at https://www.rba.gov.au/payments-and-infrastructure/submissions/review-of-retail-payments-regulation/index.html.    The AACS appreciates the Reserve Bank’s strong support on the issue of least cost routing and we understand the need to postpone the Review in the wake of COVID-19.  However, this delay means convenience stores will be forced to continue paying higher transaction costs for the foreseeable future. We believe there is an immediate solution to this issue. The Government has made clear its focus on keeping people in jobs and businesses in business during the coronavirus pandemic. Requiring the big banks to offer convenience stores and other merchants the lowest cost route for processing tap-and-go transactions is an immediate and practical way to reduce costs, support businesses and underpin jobs at this very difficult time.  Should the big banks persist in withholding this option to merchants, we believe it would be prudent for the Reserve Bank to regulate to make this a requirement.

Business continuity

Along with H&S matters for the ongoing COVIDSafe operation of our stores, businesses will need to consider possible disruptions e.g. virus break out in a location requiring lockdown interruption to supply; interruption to staffing; supply if unusually high demand is again experienced on products if restrictions are again imposed.