External Relations Minister Ian Gorst said that he had been approached by a number of Islanders concerned about the high cost of bringing in goods due to supply chain issues, with one business claiming clothes were 16% more expensive to buy.
During the minister’s quarterly hearing with the Economic and International Affairs Panel, Deputy Steve Luce told the Senator that an ‘excellent source’ had advised him that certain building materials now cost 50% more than they had done six months ago.
In response to questioning by panel chairman Deputy David Johnson, Senator Gorst said that Brexit had left certain imports, particularly those which pass in and out of the EU, more vulnerable to tariffs and taxes.
‘A number of traders have approached me because what they have been experiencing is some difficulty in regard to the application of tariffs or VAT when goods or parts have originated from outside of the EU but the supply chain has meant that they have travelled in or through the EU,’ he said.
‘Customs and Immigration officials are working with those individuals and those companies because the reality is that they will need to try and source their goods through a different supply chain or supply line. We are trying to respond in a co-ordinated fashion because some of these charges are quite large.
‘I was approached by someone who was importing clothing and they were experiencing a 16% charge being added because of the touching of the EU in the supply line.’
Deputy Luce asked the minister whether he felt this was due to Brexit or Covid and if the government was aware of ‘massive increases in costs in some parts of our economy in recent months’.
Senator Gorst said that he believed Economic Development Minister Lyndon Farnham was ‘well aware of the increase in costs in the economy’.
‘The stark fact is that all of the points that you touched on will be the causation of increased costs, depending on where goods are coming from,’ he said.
‘If they are coming from the EU or flowing through the EU there will be increased costs there, so businesses need to think about supply lines. And there is no doubt that Covid-constrained supply lines will have increased costs. A 50% increase sounds excessive. We need to ensure that others aren’t increasing the mark-up in a way that’s inappropriate to profit from the difficulties that Islanders are facing with Covid and Brexit. If there is that level of cost increase it would seem to me that that is something that I will raise with Senator Farnham and the competition regulator to look at.’
Deputy Luce said that his claim of 50% price hikes was ‘not scaremongering’ and had come from ‘an excellent source’.