At lunchtime the Productivity Commission released its report on the retail industry and its struggles with the internet. We’ll bring detailed coverage in tomorrow’s edition, but the key to understand the sector’s travails — confirmed yesterday by more dire sales data — is that this is only the beginning.

As Crikey’s Bernard Keane noted last week, the retail sector is beset not just by a secular change in the saving and spending habits of Australian consumers that may guarantee the extraordinary growth in demand of the last 15 years never returns, but by the impact of the internet on a market that has, for generations, enjoyed the protection of distance and ignorance. As Keane said, Australian retail now is where the music industry was at the end of the late 1990s, only just realising that its business model is under heavy attack.

Given retail is such a significant employer, the temptation for politicians to respond to its cries for assistance is great. So far, the Gillard government has resisted that temptation, merely agreeing to ask the PC to investigate the issue of the GST threshold — which is, few people are willing to point out, currently lower in real terms than it was under the wholesale sales tax regime in the 1970s.

But the best strategy for politicians is to stand back and let consumers dictate the pace of this change. Not merely is trying to reverse the impacts of the internet a Canute-like task, but the shock the internet delivers to Australian manufacturers, wholesalers, distributors and retailers will shake out supply chain inefficiencies that have been there for generations, in a way that no amount of competition law could ever do.

There will be impacts, and jobs will be lost in the short-term even as others are created in other sectors. But that’s always been a necessary price of economic reform — and the impact of the internet on retailing is a major economic reform. Even if no politician or bureaucrat has ever sought it.