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Call for government to help small online businesses

After a six-month-long inquiry, the government on Wednesday released a report on the impact of global internet competition on Australian businesses.

The Innovation, Industry, Science and Resources Committee, which prepared the report, recommended the government set up a digital grants program for small businesses to help them take advantage of opportunities, such as online retail.

Under its plan, businesses would have to match the government funding.

“Online shopping is only going to continue to grow and disrupt trade in traditional bricks and mortar shops around the country,” innovation committee chair Barnaby Joyce said in a statement.

“It is vital that we support Australian businesses to invest in the digital technologies – while demonstrating advantages of the virtual marketplace based in regional areas where infrastructure like the NBN is available and overheads such as rent can be much cheaper – that will enable them to take advantage of internet retail opportunities.”

The report noted that global online retailers are proving to be more disruptive than the arrival of international entrants such as Aldi, Costco, Zara and Uniqlo not only due to the increased competition, but also from the introduction of new business models that retailers need to contend with.

This global shift is compounded by local pressures, such as the high cost of wages and rents, regulatory barriers including restrictions on trading hours, taxation and compliance cost pressures, which place a larger burden on small businesses, which tend to have lower revenues.

At the same time, the report recognised that global internet businesses have created a range of opportunities for new and existing small businesses to grow. Indeed, while e-commerce still represents a small proportion of the overall retail industry in Australia, both turnover and employment in online retail have been growing rapidly.

And yet, Australia’s investment in innovation lags behind other countries, according to the CSIRO’s Data61 research group.

The committee also recommended the government establish a digital retraining fund to help Australian workers gain digital skills that will assist them in finding future employment and fund the development of a forecasting capability for future digital skills needs.

The committee also wants the government to consider reforming competition law taking into account the way major tech firms collect, use and monetise data in potentially anti-competitive ways.

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