EMMA ALBERICI, PRESENTER: Shares in David Jones were today placed in a trading halt with speculation mounting that this week will see another big retailer in trouble.

The company is expected to reveal a 20 per cent fall in first-half profits just days after its chief rival Myer announced a 20 per cent drop in its earnings.

Many of the problems in the retail sector are being put down to the rise of online sales, with accounting firm Ernst & Young now estimating that 118,000 jobs will be lost in retailing in the next three years as more and more people turn to internet shopping.

Harvey Norman's Gerry Harvey has been the most outspoken critic of this new phenomenon that he says is devastating parts of the Australian retail landscape.

Around one third of online sales in Australia come from overseas.

Mr Harvey has campaigned to have a loophole that allows imported goods to the value of $1,000 to enter the country tax free closed.

Gerry Harvey joined me in the studio just a short time ago.

Gerry Harvey, thanks very much for joining us.

GERRY HARVEY, HARVEY NORMAN EXEC. CHAIRMAN: Thank you.

EMMA ALBERICI: Now, a lot of Australians remember you because they grew up watching you on the TV as the face of Harvey Norman; for about 30 years or so you were doing those ads.

GERRY HARVEY: I started in 1961, which is 51 years ago.

EMMA ALBERICI: Well, a lot of people today would now see a bloke who hasn't necessarily moved with the times. Who's been stuck in an era that was before online and e-tailing.

GERRY HARVEY: Yes, they see me as that, and that's interesting. And that's - maybe that's my fault because I've sort of promoted that a little bit perhaps.

I think I'm up there as close to it as anyone. I think I've got as good a hold on it as anyone, but I am seeing, by people out there, and they write about me and they talk about me as being somebody that missed the boat. You know, you're yesterday's man. Your time is over. You had your moment in the sun and it's all over.

And so, I look at that and think, "Are they right? Is there any truth in what they're saying?" So I then go to the people that work with me and for me and I say, "You're 30 or 40, have I missed it? Tell me if I'm losing it." Right? "No, no, no, no, no." They say, "You're not. You're up there."

And I can argue on the internet and all the things that are going to happen, all the things that have happened I think as well as anyone. I definitely am right up there with it. So, ...

EMMA ALBERICI: But the point is, isn't it that ...

GERRY HARVEY: But I'm not seen like that.

EMMA ALBERICI: But isn't the point that in - certainly in the US and the UK, sales are rocketing online. This is inevitably the way of the future for retailing.

GERRY HARVEY: Yeah, but this is where people get it all mixed up. They don't get it. And that's the whole problem. So, ...

EMMA ALBERICI: What is it this that they're not getting?

GERRY HARVEY: Alright, well you've got to go through it by category. So when you start talking about the categories that we are in, OK?, and talk about the internet sales in those categories - that's what you've got to do.

Now when I brought it up over a year ago I said there is going to be big problems in retail land because of certain things that are happening. And the media attacked me. Even the politicians attacked me. So, I unwittingly brought all this on myself, but I was right.

Everything I said over a year, year and a half ago was exactly right. And I've been proven to be right now.

EMMA ALBERICI: But isn't the point that if you can't beat them, join them?

GERRY HARVEY: No, but hang on.

EMMA ALBERICI: Yes, if people are gravitating online, shouldn't you be doing the same thing?

GERRY HARVEY: Yes, I am. The thing is, I was online in 19 - no, 2000, sorry - '99 or 2000 I was online. And I went online, and that was in the middle of a dotcom boom. And I was writing $25,000 a week. And I had 10,000 hits an hour.

So did all these people visiting the sites, but they weren't buying. So I went out in public and said, "Look, I've got 10,000 hits an hour and I sell $25,000 a week. This is a joke."

EMMA ALBERICI: Well I guess the fact is, isn't it, that it's not a mature market in Australia, but it's heading in that direction if you look at the evidence from overseas?

GERRY HARVEY: I know. But again, it's by categories. Now if you want to go into furniture, which we're very big, we're the biggest in Australia. If you want to go into bedding, we're the biggest in Australia. The sales on the internet are zilch, or so close to it it doesn't matter. There is no internet business in furniture or bedding. Zero - practically in the world.

Now, we'll go to the next thing: whitegoods. You know, refrigerators, washing machines, all that sort of thing. There's no internet sales in the world on that to speak of. It's - BestBuy, which are the biggest in America, their total sales online are 5 per cent of their total sales.

If you go to most retailers in the world that are selling that, it's under 1 per cent. Now these are the facts. People don't want to talk about the facts, they want to talk about some crappy bullsh***y thing. I don't know what it is.

EMMA ALBERICI: But the fight that you picked was with the Government over the products that were under $1,000.

GERRY HARVEY: Yes, sure.

EMMA ALBERICI: The things that don't attract the GST when they're bought from overseas.

GERRY HARVEY: Yes. Yes. But not the sort of things we sell. That was the whole thing: they said, "Oh, Harvey, greedy, greedy ..."

EMMA ALBERICI: But you sell some computers and computer games and so on that would fall into that bracket.

GERRY HARVEY: But nothing, nothing - most of the stuff that's bought overseas on that $1,000 thing, all I was saying was it's going to be a problem for retail, not for me; it wasn't a problem for me. But they all said, "Oh, you're protecting yourself." It wasn't me.

EMMA ALBERICI: But you are starting to source some of those items that do fall into that bracket from overseas for that very reason, aren't you?

GERRY HARVEY: Tiny, tiny.

EMMA ALBERICI: But will it become bigger?

GERRY HARVEY: A little bit. That's the problem: that people say how big it is. It's not. This is the problem. Now it is in certain categories: shoes, handbags, dresses, tennis racquets, golf clubs, lots of ...

EMMA ALBERICI: Music, films, computer games and so on.

GERRY HARVEY: Music, films. But basically we don't sell that stuff. So, it's not affecting us to speak of. All I said: "This will be a problem for retail. You will see a lot of retailers go out of business." And guess what? In the last 12 months you've seen a lot of retailers go out of business. More ...

EMMA ALBERICI: But do you think they should've changed their models, gone online, done things differently?

GERRY HARVEY: But how do you compete - I ask you. I opened a shop selling tennis racquets and golf clubs, and I put them in the window and I put them there and I've had to pay a lot of rent and I've had to bring these goods in and then another guy can go and buy them off an overseas site, pay no duty, pay no GST and you tell me that's fair? Right? All I said: "That's unfair." Because the retailer here will then have to go out of business.

EMMA ALBERICI: Unless he sources his product from overseas and sells it in the same way, online, locally. Because it's going to be more attractive to buy from a local retailer online than one from overseas. Faster delivery, better customer care ...

GERRY HARVEY: No, no, no, wrong, wrong!

EMMA ALBERICI: Why is that wrong?

GERRY HARVEY: Because there's no sales to speak of online. The only ones of those products that are sold online basically ...

EMMA ALBERICI: But doesn't that present an opportunity? You're an entrepreneur. Isn't that an opportunity? If they're buying if from overseas online, surely they'd buy it here online, if it was available.

GERRY HARVEY: Yes, but they can't buy it at the price, so they don't buy it. Simple as that. So the guy overseas has none of the on-costs. he's got none of the rent, none the wages, none of the GST and none of the duties, so of course he can sell it a lot cheaper.

So what we've done is used our Irish shop and we're sending games from Ireland straight to the consumer. So we're doing it like they are - only on games, right. Because we can't compete unless we do that.

But that means all the staff in Australia get sacked. 1.3 million people are employed in retail in Australia. If you sack 200,000 of those people, that'll be at least 500,000, 600,000, 700,000 people that'll lose their job. Can't people see that?

EMMA ALBERICI: But Gerry Harvey, don't those jobs migrate to a different sector?

GERRY HARVEY: Such as what?

EMMA ALBERICI: Online, distribution, freight, logistics, warehouses.

GERRY HARVEY: No. What a joke! What a joke! Hang on a second. The bloke from overseas sends it over, it's put on a truck and Australia Post or somebody delivers it to somebody's house. You've got a delivery man delivering it. That's what the - the salesman, the shop ...

EMMA ALBERICI: But there are new freight companies opening up almost weekly in Australia to capitalise on the fact.

GERRY HARVEY: OK, so we'll lose 100,000 jobs in retail and we'll pick up 2,000 jobs in distribution. Net loss: 98,000 people. That's how big it is; I'm telling you, that's how big it is. It's a real worry going forward.

Now eventually, let me tell you, the Government's starting to get it, all the retail organisations. You've got all the retailers have industry bodies - they all get it. So, the politicians are gradually getting it, the retailers are all getting it, the whole community's going to get it sooner or later.

EMMA ALBERICI: Does the Government get it? I mean, Wayne Swan called you a whinger.

GERRY HARVEY: I don't know whether, you know - that's just a Wayne Swan throwaway line. I don't think he thinks I'm a whinger. I mean, I'm only telling the - I'm not whingeing, I'm just telling it as it is and it's not for my benefit, right - tiny. But not for my benefit.

It's just the whole Australian economy I'm looking at and the number of retailers that are going to go out of business - and manufacturers. We're out there supporting Australian manufacturers all the time, trying to keep a furniture industry going in this country.

We are the only furniture retailer in Australia, furniture and bedding retailer in Australia that's really supported Australian manufacturers to keep them going. You can check with Australian Made, you can check with all the Australian furniture manufacturers.

We are doing all things possible for the benefit of this country. And, I don't see anything wrong with that. I don't think we should bring everything from overseas. I think we should make some things in Australia.

EMMA ALBERICI: Now, if we just move on to what's happening today in government. They are saying they want to cut taxes for small and medium businesses, funded through a tax on mining companies. Is that something you support?

GERRY HARVEY: Well the tax they're going to cut - the big problem with small business - I talk to small business every day of the week. Small business has a huge problem. They've got wages that are killing them, they've got rent that's killing them and they're talking about cutting their tax from 30 per cent to 29 per cent.

That's not their big problem. Their big problem is their big problem, not the 1 per cent that they're going to have - they're trying to make a profit. Cutting their tax by 1 per cent's not going to solve their problems.

EMMA ALBERICI: How do you solve their problems?

GERRY HARVEY: Well, the problem is that you've got so many costs. Any small businessman listening to me now, I'd say nine, 99 per cent will agree with me. They work long hours. I know people working 80 and 100 hours a week. They've got all the forms to fill in, they've got all the government regulations. It's never-ending. You just work, work, work. And you think to yourself, "Am I ever going to get out of this?"

And then your business drops 10 per cent. "What the hell am I going to do now?" And the Government comes up and says, "I'm going to cut your tax 1 per cent." "Hell, I've bigger problems than that! I'll pay 35 per cent tax. Let me make a profit."

It's more important to make a profit. And to make a profit you need next to - very little government intervention if possible. The more of that you get - and every year you get more and more.

You hear about the politicians, "Oh, we're going to cut the red tape to business." They never cut it! Go back five years: there was a lot less. Five years before that, it was a lot less. Guess what? Another five years, there'll be a lot more than there is now!

EMMA ALBERICI: But fundamentally, redistributing the bounty from the resources boom in Australia so that the benefits - this is what the Government says - so the benefits are shared more evenly around to ordinary Australians ...

GERRY HARVEY: There's a better way to do it. It's not to cut the tax from 30 to 29. It's to cut the red tape ...

EMMA ALBERICI: No, but do you think we should be taking more money from the mining sector through a special mining tax?

GERRY HARVEY: Well there's a good argument to take more money from the mining sector. I'm like that (makes hand gesture indicating ambivalence) on that because at the end of the day if a mine opens up in Chile or South Africa and it was cheaper to operate there, which it is because of labour costs, they're much cheaper and that sort of thing and the taxes are lower, so if there's a big incentive for that to happen, I don't want to tax these guys out of the business here because these are world players. They're going to go wherever the product is the cheapest to mine, wherever the costs are the lowest, and it's as simple as that.

So, while you're making a lot of money and you can afford to pay extra taxes, sure. But if you're going to kill the goose, right? Please don't do that. Just be very careful how you do it.

And I'm worried, when I talk to Government ministers and bureaucrats, do they get it? Right? Do they really understand business? How many people work in government in the bureaucracy and as politicians - they're lawyers and they're lawyers and they're lawyers and they're union leaders and union leaders and union leaders.

How many business people do you get? How many people do you get that have actually been out there, worked and run a business? They are very rare.

And you see some of these ridiculous decisions that are made by governments all the time and you think, "Surely there must've been someone when they had that meeting that told them this was crazy!" No.

EMMA ALBERICI: Well there's certainly been quite a few mining company bosses that have been saying the mining tax is crazy. So much so that Wayne Swan reckons the mining billionaires are becoming a threat to democracy with their persistent campaigns against this mining tax. Does he have a point?

GERRY HARVEY: No, they're not a threat to democracy because democracy's all about Wayne Swan having a say and all about the mining millionaire having a say. We're all allowed to have a say. So, if you're talking about democracy, you can't say, "I'm going to shut that bloke up and that bloke up and I'm going to have all the say."

So Wayne's got to let everybody have a say. And that might be hard for him, but that's what he's got to get his head around: let the others have a say. They might have point of view; they might be right, they might be wrong. They have the right to have a say.

EMMA ALBERICI: Have you had a say directly to Wayne Swan about this whole issue of the GST on the online purchases and so on?

GERRY HARVEY: Look, you know, in my entire life I've talked to lots of politicians. And just the other day I was thinking to myself, "I've lobbied politicians, I've talked to them and I'm yet to think of one time that I ever talked to someone and got my way." It never happened.

I've now got to the stage if - there's no point talking to them. I just - I laugh. I talk to them, tell them a joke, laugh at them, whatever you like, but to actually tell them how to do their job, I've given up. Given up long time ago.

EMMA ALBERICI: On both sides?

GERRY HARVEY: Any side of politics. I've talked to Liberal politicians, I've talked to Labor politicians and some others and I can honestly say I've never been helped by a politician yet, ever. If I have, I've forgotten about it.

And plenty of times I've talked to them. But it's just a waste of time. They do what they're going to do anyway, so I've given up. I just say, "Oh, well, I'll get on with what I do and they'll get on with what they do, just don't worry about them."

But they still annoy me. Right? It annoys me when I see the waste, the huge waste in state politics, in Commonwealth spending and all that sort of thing. I think - I'm a miserable sort of bloke. I like to save a dollar, you know?

If I can figure out how to get from here to there and a little bit cheaper and - you know, I didn't get a car to come here; I drive my own car and I try to get a free spot and all that sort of thing.

But they waste. They'll have someone drive them here and the car'll sit there for 10 hours. Sometimes they'll forget it sat there and talk about it the next day. They don't care!

Right, they haven't got this thing about it's not their money. And so they just waste money on a grand, grand scale.

If you and I were led into the bureaucracy, right? Let's walk in there and see what we can save them. You'd get a hell of a shock. So would I. It'd be much worse than I even think it is.

EMMA ALBERICI: That's Tony Abbott's argument, isn't it?

GERRY HARVEY: Well - but again, the Liberals were bad and the Labor Party's worse. I mean, none of them are good. These people are hopeless - the whole lot of them, state and federal. Doesn't matter which party's in. One's just a little bit better than other. They've never been good in my lifetime.

EMMA ALBERICI: Gerry Harvey, we'll have to leave it there. Thank you so much for coming in.

GERRY HARVEY: Thank you.