House debates

Wednesday, 28 February 2024

Matters of Public Importance

Grocery Prices

3:13 pm

Photo of Milton DickMilton Dick (Speaker) Share this | | Hansard source

I have received a letter from the honourable member for Kennedy proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The Government's failure to rein in the power of the supermarket duopoly and the necessity for legislating the regulation of food retailing.

I call upon those honourable members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

3:14 pm

Photo of Bob KatterBob Katter (Kennedy, Katter's Australian Party) Share this | | Hansard source

In 2001, Coles and Woolworths had 50.1 per cent of the market. That was monitored by an ANOP series, and the Australian Bureau of Statistics also had a series. By 2001, when we got to the 13th inquiry on Woolworths and Coles, one of those series indicated they had 68 per cent market control and the other one said 72 per cent. So, regardless of which one you wanted to choose, we're looking at two per cent growth a year. That was in 2001. Both series were discontinued. I asked the ANOP people, 'Why was it discontinued?' and he laughed and said, 'Why do you think?' So we can't even monitor; they've now cut up even our right to monitor how much they control, but no-one would question that their market share is up around 80, 85 or 90 per cent. No-one would question that.

This is the interesting part. In 2001, we took a basket of items—just a little tiny basket—like what people would eat every week, including potatoes, milk, sugar, eggs and bananas. The mark-up in 1991, when they had 50.1 per cent of the market, was 108 per cent. That is outrageous. My family had clothing stores. We also briefly had a couple of supermarkets. There's just no way in the world—my father said, 'People will kill you if you go over 30 per cent.'

In 1991, they were at 108 per cent. But when they get market share going over 70 per cent, the mark-up jumps to 179 per cent. The market was 108 per cent and now it's 179 per cent. People in this place are going to wait till they're making 300 per cent profit. You've never done anything. You realised there was a problem, because there have been 15 inquiries. You had two inquiries going at the same time, and, to quote the great Winston Churchill, 'When you absolutely must not do it, then you must, of course, have an inquiry and, the wider the breadth of the inquiry, the less likely it is to hit a target.' I mean, after 15 inquiries, not one single recommendation has been implemented in this place!

I don't know how much the Liberals are getting and the National Party are getting, but I do know that we paid an investigator to investigate it, and he said, 'They've really covered their tracks.' But we went along to a fundraiser, and he said, 'There were 13 people out of about 40 or 50 people who had their names down.' I don't know which retail outlet it was, but they were managers of either Woolworths or Coles shops. They'd gone along and made a donation not under the name Woolworths or Coles, but under their own personal name. For deceit, that'd take some beating I would think.

I've got nothing against the shoppers union—good on them—but they get site coverage, and I can assure you that they won't have site coverage if the Labor Party does what they should do for the people of Australia. People come into this place and they say 'affordability'. It's the latest buzzword, like 'climate change' has now been replaced by 'affordability'. What have you done on affordability? You just come in here and mouth buzzwords and, of course, you do absolutely nothing about it except hold an inquiry again and again.

I was in a state parliament, and we had a problem in places like the Gold Coast and Mission Beach because rich people went there, and suddenly the price of land shot through the roof, and, of course, poor old pensioners and retired railway workers couldn't pay the rates. So Russell Hinze, a much maligned minister, immediately moved to put A plus B divided by two. There's a problem there. He solved it. We had a trucking problem, and, within two weeks, he'd solved the problem.

When you see a problem like a 200 per cent mark-up on food and you come in here and have the hypocrisy to talk about affordability, how do you sleep with yourself at night? I hope you don't believe in Jesus and the hereafter, because you're going to go to a very hot place, I would think, with your cowardice.

Photo of Sharon ClaydonSharon Claydon (Newcastle, Australian Labor Party) Share this | | Hansard source


Photo of Bob KatterBob Katter (Kennedy, Katter's Australian Party) Share this | | Hansard source

Madam Deputy Speaker, I reiterate again that, when they had 50.1 per cent of the market, they had the disgusting mark-up of 108 per cent. As their market share grew, so did the outrageous mark-up, to 179 per cent. Those figures are two or three years old and my colleague from South Australia behind me pointed out today that I was using potatoes as an example. I had $3.99, and she quoted a figure which was well in excess of that. Those figures that I was quoting were 12 months old. The supermarkets are having the world's greatest picnic.

Someone said, 'What about the employees of Woolworths and Coles?' There won't be any. You've all been down there, and if you're waiting at the check-out to be served you'll wait 20 minutes. If you go and serve yourself, you can go straight through. That's good, but what happens to the workers that have jobs there? Their jobs are vanishing at a rate of knots.

I'm not going to go into the farmers and how they are suffering, but I will say this: at the time of the deregulation of the milk industry by the National Party, on the Friday we were on 61c a litre; on the Monday, we were on 29c a litre—that happened in one day. And who did it? It was the National Party in this place, and I was a member. Shamefully, I have to admit I was a member of that party. That was the final straw for me, and I got out as I watched my poor old dairy farmers vanish. There were 258, but then it was only 58. At a meeting, the state member, Shane Knuth, a member of our party, said, 'Try 48,' and the lady behind him said, 'Try 38.' That area had the highest suicide rate in Australia. That is what you did to the farmers. To your shame, Liberal and National parties, they still vote for you. Doesn't it make your sin infinitely worse that those poor people still believe in you. Shame, shame.

There are the figures. There are people in this country going hungry now because no-one has the moral courage to stand up and act and do what should be done and is done in every other country in the world. When I looked last time, the worst country in the world was England, where the big six food retailers had 36 per cent of the market. Here we have the big two, with 85 to 90 per cent of the market. Every country has laws that say you can't have a monopoly, a duopoly or the centralisation of market power. We have those laws, but they are a joke. They are not being enforced and never will be enforced. Also, the laws themselves are grossly inadequate, and that is why we are introducing this bill. I will be very surprised if everybody on the crossbench doesn't vote for it. We got more than 33 per cent of the vote in the last election, whilst you mob got less than 33 per cent, and you mob got less than 33 per cent. So watch out, because it's growing and it will grow even further when people learn of the perfidious behaviour of this government and the last government in doing absolutely nothing and watching the farmers get destroyed.

I think something like 30 per cent now of our fresh fruit and vegetables is coming from overseas, where people work for slave labour wage levels. And that's the farmers and the retailers—how many times have I heard the word 'affordability' in this place. Here's food, the most important commodity, and the people who are selling it have got mark-ups of 200 per cent. And we accept it. This legislation will stop that. (Time expired)

3:24 pm

Photo of Andrew LeighAndrew Leigh (Fenner, Australian Labor Party, Assistant Minister for Competition, Charities and Treasury) Share this | | Hansard source

It is a great thing in this House to be discussing the important issue of competition, and for that I thank the member for Kennedy for bringing forward this matter of public importance.

If you're a sports fan in Australia you have plenty of choices. If you're an AFL fan you've got 18 teams to choose from. If you're a fan of the Women's Big Bash League you've got eight teams to choose from. If you're a fan of the Australian Ice Hockey League you have 10 teams to choose from including the Canberra Brave, the Central Coast Rhinos, the Melbourne Mustangs and the Sydney Ice Dogs. If you're an A-League fan you have 12 teams to choose from. The fact is that many of these leagues are also growing new teams, so we've had the GWS Giants and the Tasmanian JackJumpers.

However, in business you'd be lucky if you had not 18 choices, not eight choices but just a few, because too many Australian industries—from banking to baby food to beer—are dominated by just a couple of big firms. While we've seen our sporting codes growing new teams, the trend in corporate Australia over the last generation has been towards mergers. Over the past 30 years the number of corporate mergers has grown by a factor of six and the value of corporate mergers has grown by a factor of 11. If our sporting codes had gone the same way we'd all be barracking for the same few teams.

The result of these mergers has been that over the course of the last couple of decades we've had an increase in market concentration and we've seen an increase in mark-ups—the gap between prices and costs. We've seen a decline in the job switching rate, which matters because switching jobs is typically the best way of getting a pay rise in the career of a typical employer. If we look at the start-up rate focusing on employing small businesses, Australians are starting fewer firms now than in the past. The result of increasing market power is that consumers pay more, farmers earn less and small businesses are constrained. More competition, on the other hand, is good for consumers, good for workers and good for innovation.

We were talking during question time about the gender pay gap, and it turns out that more competitive sporting codes tend to have less discrimination. We've seen that in major league baseball because as it became more competitive, racial pay gaps narrowed. We've seen this with the gender pay gap in banking. To go back to the example of sport, vigorous competition can be a force for egalitarianism. Kenyan runners dominated the marathon because the world marathon made it a serious sport with serious prize money. They were then able to compete on that level playing field.

Conversely, a lack of competition most hurts the poor. The member for Kennedy has talked about the impact on farmers, but it's also true that we see a lack of competition having an adverse impact on low-income consumers. If you don't have a car you can't drive to a cheaper supermarket. If you don't have a good internet connection you can't connect up to get good online sales. It's no coincidence that payday lenders are going door to door in the poorest communities.

Competition keeps prices low and encourages firms to innovate. If consumers can choose, they're less likely to be gouged on price. If workers can choose they're more likely to get a fair return for their labour. We know competition is important for spurring economic growth. We saw this in the 1990s when the reforms of Fred Hilmer and Paul Keating kicked off one of the most productive decades in the postwar era, during which we had strong growth in labour productivity. At the end of that decade there was a permanent 2½ per cent increase in national income, which in today's dollars is equivalent to some $5,000 a household.

We have instead had a lousy period of productivity growth. Under the former government we had labour productivity growth at its slowest rate in the postwar era. We have a lot of stasis in the Australian economy. If you go back to the mid-1980s the biggest Australian firms in the stockmarket were Westpac, the Commonwealth Bank, NAB, ANZ and BHP. Now they're Westpac, the Commonwealth Bank, NAB, BHP and CSL. Don't worry too much about ANZ because it's sitting just behind the pack. Monopoly power transfers resources from consumers to shareholders, thereby worsening inequality. We are committed to the fair go on this side of the House, and you can't have a fair go without fair competition.

The member for Kennedy mentioned some of the history of supermarket aggregation but he did not go very far back. It is somewhat surprising, as the member for Kennedy has been a member of parliament since I was two years old—in 1974—taking only a year out between the Queensland and the national parliaments. Let me take him back a little further.

Photo of Bob KatterBob Katter (Kennedy, Katter's Australian Party) Share this | | Hansard source

It's been 50 years.

Photo of Andrew LeighAndrew Leigh (Fenner, Australian Labor Party, Assistant Minister for Competition, Charities and Treasury) Share this | | Hansard source

It is half a century ago, Member for Kennedy. As David Merrett notes in his book, Coles and Woolworths accounted for most of their competitors through a series of acquisitions. Six years after they entered the market, their share was 20 per cent. By the time the member for Kennedy first became a MP in 1974, it was nearly 40 per cent. Twenty years on and the two big supermarket operators had more than 60 per cent of the market.

We saw in the 4 Corners recent report that now for every $10 Australians pay for groceries, $6.50 is spent at Coles and Woolworths and just $1 at ALDI. That 4 Corners report had a story of a cherry farmer who sent 15 tonnes of cherries to Coles, an entire semitrailer load, expecting to receive $90,000. Instead, he was told it was not up to standard and got less than $6,000 on the seconds market. He said, 'So that is market power when you can simply reject something for no good reason.' Another supplier told the story of asking to be paid five per cent more and being told that request would only be approved if he paid Coles $25,000. We have seen accounts of farmers being asked to pay so-called rebate charges in order to have their invoices paid on time. Fruit Growers Victoria have said many members have had little choice but to agree to pay rebate charges sometimes as high as four per cent to get their invoice paid on time. The operations of the large supermarkets mean that they are now tending to buy direct. One report said that, in Queensland, 10 to 15 years ago some 80 per cent of fresh produce ran through the central market at Rocklea. Now 80 per cent is sold directly to supermarkets.

I want to draw particular attention of the House to a report, Australian food story: feeding the nation and beyond, from a committee ably chaired by the member for Paterson. That spoke of the challenges of the supermarket duopoly and quoted the National Farmers Federation about the lack of transparency in the supply chain. It called for a review of the Food and Grocery Code of Conduct, to consider whether it should be made mandatory. The government is doing just that, and I thank the member for Paterson for this important work on this important report. The government has charged former competition minister Craig Emerson with reviewing the Food and Grocery Code of Conduct, and his consultation paper specifically goes to whether it should be made mandatory.

Since coming to office, the government have increased the penalties for anticompetitive conduct and we have banned unfair contract terms. We have set up a competition taskforce in Treasury which is actively considering issues such as reviewing Australia's merger laws and considering whether noncompete clauses that apply to one in five workers and are used by one in five firms ought to be reformed in order that workers can more easily have the freedom to go to a better job. We've tasked the Australian Competition and Consumer Commission with a review of the supermarkets that will report this year on the conduct of the supermarkets and any reforms that need to take place. And in order to deliver immediately for consumers, we are funding CHOICE to do quarterly price monitoring, ensuring that consumers know where the best deal is available.

I started with sport, let me finish with it. Sometimes collusion reminds me of a story that David Williamson told about making the movie Phar Lap. He said, 'We had to replicate the exact winning order of the horses in the 1930 Melbourne Cup, which Phar Lap won. I remember asking some of our jockeys whether it was possible to do this. They looked at each other and burst out laughing. Sure enough, the horses crossed the winning line in perfect order, and every one of the jockeys looked as if he was trying his heart out.' We don't want an Australian economy that looks like the movie depicted by David Williamson in that quote.

3:34 pm

Photo of Helen HainesHelen Haines (Indi, Independent) Share this | | Hansard source

As I rise to speak today, I am very aware that, all over Australia at this moment, there are people standing in one of the major supermarkets and looking down at their trolley with absolute anxiety. The mums, the dads, the retirees, the students from share houses—all of them are doing the sums and putting stuff back on the shelves because the prices are too much. More than ever I see items left behind at the self-check-out. Clearly, people have reached the top of their budget. Some of the prices that I see when I walk around the supermarkets literally take my breath away. Dairy products are actually the ones that really hit home. I come from a dairy farming family. I know those prices are not flowing through to the dairy farmers.

The cost of living has risen for so many for so many months and, while we're feeling it in our mortgages or rent rises, it's at the supermarket check-out where everyday Australians feel this literally every day. We know that Australia is going through a period of inflation; in fact, we learnt today that prices rose 3.4 per cent in the year to January. But many people will tell you the price increases we have seen at Coles and Woolies have been well above that, and the data backs that up too. We know that the latest half-yearly profit for Coles was more than half a billion dollars. At Woolies, it was $929 million, almost $1 billion profit, in just six months. Profits like that when so many are struggling to scrape by are pretty hard to stomach.

Part of the problem is Australia's highly concentrated supermarket sector. Woolworths and Coles have a combined market share of 65 per cent. Compare that to Britain, where the top two supermarkets have a combined market share of 43 per cent; and the United States, where the four largest supermarkets have a combined market share of 34 per cent. This concentration, as we have heard today, leads to a lack of competition. Without competition, we do not have the market forces that we need to keep prices fair and low.

That's why I'm so glad to speak today to this matter of public importance brought forward by the member for Kennedy. I want to thank the member for Kennedy and the member for Clark, who are so far ahead of the game on this one—irrespective of what they choose to wear to parliament!—that they introduced a private members' bill more than 10 years ago that sought to address this problem. Imagine if that had been taken up at the time. Like me, the member for Kennedy represents rural and regional communities, many of whom are farmers who provide produce to these supermarkets. Like the customers, the farmers are also being pushed to the brink by this supermarket duopoly. While the prices we pay at the check-out have gone up, the prices paid to farmers absolutely have not. And they can't just find someone else to sell to either; as I said earlier, Coles and Woolies are 65 per cent of the supermarket sector, so we all lose here.

I want to make it clear that I'm not criticising the employees at Coles and Woolies. The sector is one of the biggest employers in my electorate of Indi, and I've been welcomed into so many of their stores and met workers on shop floors. I commend them for their work and I thank them for putting back on the shelves those items that are left behind by struggling shoppers and doing so without shedding one bit of embarrassment on those shoppers. The current system isn't working for them either. It's not working for shoppers, it's not working for farmers and we need action.

It's not enough for politicians to simply have a go at the supermarkets. It may feel politically easy—we all like to have a crack at them—but it needs to be followed up by real action. I understand that many in the government will say, 'But we're doing something about this. We just heard about it,' and point at the review of the Food and Grocery Code of Conduct undertaken by Dr Craig Emerson, the Australian Competition and Consumer Commission's investigation of pricing and competition in the supermarket sector, a competition taskforce in Treasury and a Senate review into the cost of living, as well as other measures. We've got more reviews than we've got supermarket chains; that's for sure.

These reviews are important, and I commend the government for taking them on, but the rubber will really hit the road only if the government chooses to do something about the recommendations that come from them. I really encourage them to take up the mantle on this. It won't be easy when there will be lobbyists and donors from across the business world, not just the supermarkets, who will fight back against these recommendations. They'll fight back against any measure that we try to take to increase competition.

My message now to the government and to all of us here on opposition benches and on the crossbench is: stand up to them. Having a go at the supermarkets is the easy part. The hard part comes next. Let's have the courage to get behind some absolute change in this terrible system and do something for the people we represent.

3:39 pm

Photo of Daniel MulinoDaniel Mulino (Fraser, Australian Labor Party) Share this | | Hansard source

This is an incredibly important issue, and I do give credit to the member for Kennedy for raising this. I want to start by making the observation that I think it's fair to say that all speakers in this debate would agree that market concentration in supermarkets is a problem. Also I would suggest that market concentration in a number of sectors in our economy is a problem. What we need to put in place in this building, in this chamber and the other chamber, over time, are a series of measures that deal with competition at both the economywide level and also the sector-specific level. I'm going to comment on both of those in the course of this contribution.

Can I also make the observation that I think everybody who is going to speak in this debate would have spoken to constituents and would have spoken to people in their everyday lives who are struggling with prices in supermarkets and also with prices in other areas of their lives. So this is clearly something which is touching people right throughout our community.

I speak on this issue as a member who shares their concerns and also as the chair of the House economics committee. I want to share with this chamber the fact that that committee will very soon complete an inquiry into competition, which has been conducted over more than a year. To follow-up on some of the points made by the minister earlier in this matter of public importance debate, the committee has received a significant amount of evidence about economywide issues with competition in retail and supermarkets and also more broadly. That includes the fact that market concentration is high in many sectors but also that over the last five, 10, 20 years in many sectors and on average across the economy it has worsened. That is something the member for Kennedy referred to in relation to supermarkets, and I just want to make the observation that this is something which is occurring across a number of sectors.

The other point I think is that mark-ups in a number of sectors are increasing, and also firm entry and exit is worsening—in particular, in a dynamic sense, the growth of small new-entrant firms relative to the growth of more established firms is worsening.

When a lot of empiricists, when a lot of people who look at competition both from an empirical or a data perspective and from a theoretical perspective look at this, they try and use all of these measures because no one single measure captures the level of competition or dynamism or consumer outcomes in a market. What my committee received evidence on was that on all of these measures across the economy as a whole and in a number of key sectors things are getting worse. I want to put that into this debate to reinforce the fact that this is an important issue in retail and more generally across our economy.

That's why I want to start with a couple of economywide measures that the government has undertaken, including increased penalties for anticompetitive conduct and banning unfair contract terms. That won't solve all of these issues. There are some deep systemic issues in our economy, but these are important steps. So some action has already been taken at that economywide level.

I also want to point to the fact that my committee received a significant amount of evidence in relation to mergers. The Treasurer's competition task force, which was set up six to nine months ago, has already issued a very significant options paper on mergers. So this is an area that is already receiving significant attention, after having not been looked at for well over a decade—probably two decades. Again, this is a systemic economywide issue that is already receiving significant attention.

We have already heard that Craig Emerson is looking at the food and grocery code, but I think it's also worth mentioning that before that there was already completed an inquiry into the food and grocery code of conduct dispute resolution processes, which of course are so important. The committee work that was completed by the House economics committee received evidence from agricultural producers, upstream producers, about a lot of the difficulties of negotiating with the supermarket sector given market power. The government has already accepted the recommendations arising from that.

There are important reviews underway by the ACCC, by CHOICE, by Craig Emerson, but there are also areas where action has been taken. These are systemic issues that can't be solved in a very short period of time. The government is very conscious of how important they are, and it will build on actions taken to date, with further actions over the course of this parliament.

3:44 pm

Photo of Zali SteggallZali Steggall (Warringah, Independent) Share this | | Hansard source

The cost-of-living crisis is very real for many Australians. Many people are feeling this with their power bills, with their insurance premiums and, of course, with their grocery bills at the supermarket. There is no doubt that we have a high concentration of market control in relation to supermarket chains, with Woolies taking 37 per cent of the market share and Coles 28 per cent.

Research from the Grattan Institute in 2017 concluded that 'a few large sectors, such as banking, have become more concentrated, while others, such as supermarkets, have become less concentrated' over a period of time, and they used in that case the example of the expansion of Aldi over two decades to a 10 per cent market share. Other measures of competitive pressure have not changed much, and the Grattan Institute concluded, 'The profitability of firms in Australia has not risen much since 2000 or become more dispersed.'

But competition in our retail industries is good for consumers, and what we have at the moment is really a situation with insufficient competition, so we must look at what the drivers are and what has brought us to that place. It is basic market economics: competition protects consumers from price gouging and colluding. Still, it's vital that the ACCC be empowered to do its job to ensure that there is no market collusion, anticompetitive conduct, price gouging or third-line forcing.

So here we are. Food prices have risen sharply in the last three years, fuelling cost-of-living pressures and food insecurity. Analysis by UBS in late 2023 found that food prices at Coles and Woolies increased by some 9.6 per cent over the previous 12 months. That is considerable. Some 3.7 million Australian households experienced food insecurity in 2023—10 per cent more than in 2022. It is quite outstanding to think that, in Australia—a developed nation and a wealthy nation, by most standards—so many households are feeling food insecurity.

The supermarket chains claim that such prices are due to factors beyond their control like inflation and higher wholesale prices—that is, the cost of a product from the manufacturer to the retailer. We have six inquiries running simultaneously right now to look at this. In particular, the ACCC inquiry is focusing on the assessment of competition and how items are priced and, importantly, is also reviewing the practice of specials, which are often misleading in how they induce consumers into thinking they are getting a deal when, in fact, are proposing a higher individual price.

The Competition Review by Treasury is also looking at several retail sectors, including the supermarkets, so we have a lot of inquiries going on. I know the Treasury is also looking at the Food and Grocery Code of Conduct, with the key question being whether to make the code of conduct mandatory. I think that is an important aspect that the government must grapple with and be courageous enough, once we have all these inquiries, to actually take action on to ensure a much better Food and Grocery Code of Conduct. Ultimately, it would result in the ACCC having stronger powers of enforcement and include financial penalties for noncompliance. That would go some way to addressing the power imbalance between producers and supermarkets and ensure producers are getting a competitive wholesale price for their stock and produce.

I welcome the announcements today that came from, I think, pressure from this debate and from the discussions with, for example, Woolies in relation to now reducing the price of over 400 items. But it begs the question: why has it taken so long, and is it the public pressure that is now forcing that? It's clear that accountability and visibility on this matters, and it's so important for the government to play its role and for the ACCC to play its role.

We have to look at where this is all heading: food prices, insurance costs and climate impacts. These are all disruptive, and we know they are only going to make the cost of living more and more expensive. We know of the impacts on food prices through bushfires, record-high temperatures and floods. A 2022 report by Farmers for Climate Action concluded that drought is becoming more frequent and production is affected by lower crop yields, livestock stress and higher operational costs. We know that there are many drivers that impact these products, so, whilst there is an argument that operational costs may have risen for the supermarket chains, there also must be analysis of recent record profits delivered by supermarket giants. So we know we must have that accountability and ability to be scrutable.

Competition works if there is a balance in companies returning a profit—it is a free market—but not at the expense of consumers being gouged due to lack of alternative options. So maintaining competition is vitally important, and I urge the government to act.

3:49 pm

Photo of Meryl SwansonMeryl Swanson (Paterson, Australian Labor Party) Share this | | Hansard source

I want to extend my sincere gratitude and thanks to the member for Kennedy for raising this matter of public importance today. It is a matter of incredible public importance. It speaks to not only the duopoly in Australia in terms of groceries and food prices but something far broader than that, and that is food security within Australia. As the minister pointed out earlier in his contribution, the government started to take real action on this months ago now. I stand before the House as the Chair of the Standing Committee on Agriculture and say that the committee produced a report called Australian food story: feeding the nation and beyond. That committee had excellent contributions from Ms Sharkie, members of the government and members of the opposition. We travelled the length and breadth of the country, talking to farmers, food producers and manufacturers, and food and grocery suppliers, Woolworths appeared before the committee, and I commend them for that. Coles did not. We talked to literally tens of dozens of organisations that represent thousands of people who feed millions of Australians every day about food security. It was a serious inquiry and I commend this report to you, Member for Kennedy. If you are truly interested in feeding Australia and reducing food insecurity here, please take the time to read it.

We have made some really great recommendations, including things like having a minister for food. We think food is so important we should have a minister for it. At the moment it falls in the gap between agriculture and industry. Let's face it: everyone eats. We want Australians to be able to afford to eat and eat well. That is why we have recommended a minister for food. We have gone so far as to say that we need a national food action plan. It's not good enough to just say, 'We need to whack Coles and Woolworths on the head.' It goes far deeper than them.

I'm happy the member raised dairy, because one of our key recommendations—in fact, the third recommendation of this report—is looking at the dairy industry and the seafood industry. So you are onto something here, Member for Kennedy. You know it's important and so do the government. We get this. That is why we have requested the ACCC look at this issue, and we have also asked Dr Craig Emerson, who is respected by every facet of political advantage in Australia, to have a good look at what is happening with our food and grocery suppliers.

I want to just read something from the report's foreword:

Despite Australia being one of the most food secure countries in the world, recent developments both at home and abroad have shown that food security presents real and growing challenges to the nation. Food security is already a challenge for many in our community—particularly those on lower incomes and in remote communities. COVID-19 and recent flood events both impacted the integrity of the food supply chain. The war in Ukraine has driven up grain prices and the cost of energy and fuel. Outbreaks of Foot and Mouth Disease and Lumpy Skin Disease in Indonesia have highlighted biosecurity risks to our food system—as has the arrival of Varroa mite on Australia's shores. Food security is not something that any of us can take for granted. It requires ongoing attention from industry, the community and governments.

The formulation of a comprehensive national food plan is something I feel really passionate about, setting out measurable targets and regular updates so that we know Australians are able to afford really high-quality food, that Australian farmers can receive the prices that they deserve, not to be gouged by people that set prices, and also that we can have faith in our supply chains. That requires a lot of investment. It requires a lot of serious investigation. But I have never been prouder to be part of a government that is actually taking this seriously. It's the first time in two decades we've looked at this. In fact, the last time we looked at this seriously people said, 'We need to do something,' and that didn't happen. We are doing something and we are going to not only make Australia a food-secure nation but improve the plight of all Australians who eat and deserve the best food possible.

3:54 pm

Photo of Max Chandler-MatherMax Chandler-Mather (Griffith, Australian Greens) Share this | | Hansard source

We know that, for the past few years, mortgage holders, renters and ordinary workers have been repeatedly punished by the inflation crisis caused by corporate price gouging. Every time the RBA rocked up to put up interest rates, mortgage rates went up and people had to pay more and more, forced to pay for an inflation crisis caused by corporate price gouging. This screwed over ordinary workers. What we always knew—and a lot of people in Australia knew this—was that it wasn't workers causing this inflation crisis; it was corporate price gouging. I can't think of a better example than the market duopoly of Coles and Woolworths driving up prices and screwing over ordinary workers.

In our economic and political system, every time the gas corporations jacked up their prices and every time Coles and Woolworths jacked up their prices, driving the inflation crisis, the people that were punished for it were the people with mortgages, who were also screwed over by the RBA's interest rate increases. It's hardly fair. Basically, the economic plan, from the perspective of the political establishment, was: 'Oh no! Coles and Woolworths are using their market power to jack up prices. We're going to fix this by forcing mortgage holders into financial stress by driving up mortgage rates and reducing their spending power.' In practical terms, that means pushing them into poverty.

Last year Coles made a $1.1 billion profit and Woolworths made a $1.62 billion profit. We know, from the evidence around the world, that those are the highest rates of profitability for supermarkets in the developed world, but we have a political and economic system that allows them to get away with that scot-free. At the same time, we have a political and economic system that punishes mortgage holders and renters by jacking up interest rates and pushing people into poverty. It's outrageous. No wonder so many people are fed up with politics.

For me, there are two stories which sum up just how broken the system is. While doorknocking over the weekend, I met two people. The first was a single mum in a one-bedroom place with one kid and another expected in a few months. She told me that her grocery bill at the supermarket kept going up and up, and then she got a rent increase. She started to realise that the only way she would be able to make ends meet, shopping at Coles or Woolworths, was to start skipping meals herself. She said to me, 'I need to do that because my baby needs the nappy rash cream.'

Coles and Woolworths regularly come out and say: 'We're going to crack down on shoplifting. We're going to spend all of this extra money on our self-serve checkouts, which we've used to cut workers at our businesses, to crack down on people shoplifting.' How is it that we have a political system that allows Coles and Woolworths to push these people into poverty—screw them over, jack up prices and make record profits—and then cracks down on people who have been forced into a such a desperate position that they have to shoplift so they can feed their kids the next day? That's the political and economic system that we have right now.

The second story was from a Woolworths worker—a young woman who earns about $27 an hour working in the bakery as a supervisor. She said to me, 'I sat down and worked out that, over the course of a few days, I make Woolworths about half a million dollars but I'm only on $27 an hour.' Her rent is going up, so she and her partner are having to move back in with their parents. They can't afford to live anywhere near where she works. Again, it is legal for Woolworths to jack up prices, make record profits and screw people over—and the way they make their record profits is by underpaying their workers and screwing them over—and for the people to get screwed.

The government is aware of the corporate price gouging. The government is aware of the fact that the inflation crisis is being driven by gas corporations, supermarkets and other big corporations—the banks, for instance, making a $10 billion profit off the back of mortgage holders paying more on their mortgages. They're aware that that's the cause of the inflation crisis, but, rather than crack down on it, they say, 'We'll look at it, but we're not really sure what we're going to do.' All of a sudden, when it's those big powerful corporations like Coles and Woolworths, the government is powerless, but whenever it's ordinary people, whenever it's people doing it tough, it's, 'We'll crack down on them.'

I think it is pretty clear, at a very basic level, that there are things we can do right now to crack down on Coles and Woolworths, but at a broader level we can start looking at corporate super profits. At the very least, why not introduce a corporate super profits tax?

3:59 pm

Photo of Libby CokerLibby Coker (Corangamite, Australian Labor Party) Share this | | Hansard source

At its heart, this matter of public importance is about cost-of-living pressures facing Australians. The Albanese government recognise that many in our communities are doing it tough, and we're doing everything we can to reduce the burden. We know that the cost of groceries is putting Australians under the pump, and we're continuing to take meaningful action to hold supermarkets to account, because we know the cost of groceries is rising and making it harder for families to put healthy food on the table.

People across my electorate are coming up to me at the cricket, in the supermarket and at local markets to tell me they aren't paying a fair price for their groceries. Meg from Torquay told me that something needs to be done. 'It's insane,' she said. 'Over the last five years, the price of my grocery basket has been going up and up.' For local, hardworking people like Meg, it's time for government to tackle this issue and take a proactive approach, and that's just what the Albanese government is doing.

I do acknowledge that, as a government, we don't control the market economy, but it is our job to use every lever to ensure the market best serves our communities with their consumer practices. Our Treasurer has pulled those levers to ensure supermarkets will be held to account, that their prices are fair and reasonable and that suppliers, including our farmers and local producers, are given a fair go. At the moment, I'm being told that this is not always the case. In response to rising community concern, the Treasurer has directed the ACCC to conduct a 12-month price inquiry into the supermarket industry. The ACCC will examine the competitiveness of retail prices for the groceries we buy every week. The recommendations of this inquiry will be provided to government in early 2025, and we will work with the ACCC to ensure shoppers and suppliers are getting a fair deal.

Our government is also providing $1.1 million funding to consumer organisation Choice to provide shoppers with a clear understanding of how supermarkets are performing on this score. That's because, across thousands of products, it can be hard for people to find the best deal. We're backing Choice, which is renowned for its commitment to consumer fairness, to provide clear and regular information on prices across a basket of goods. This will promote transparency, enhance competition and drive value.

It doesn't stop there. We've appointed Dr Craig Emerson to lead a review of the Food and Grocery Code of Conduct. A consultation paper has been released, and I've been encouraging everyone across my electorate to make their submission. This is about making sure families and our farmers get a fair go, because, when farmers are selling their product for less, supermarkets should charge Australians less. For me, it's that simple. These actions send a clear message: our Albanese government is prepared to take action to ensure Australians are not paying one dollar more than they should for the things they need.

Moreover, these inquiries are all about taking more action on cost-of-living challenges and ensuring Australians have an economy that works for them. That's why, along with these inquiries, we're delivering a tax cut for every Australian taxpayer. We want Australians to earn more and keep more of what they earn. In my electorate, more than 85 per cent of locals like Meg will be heading to the checkout with a bigger tax cut and more money in their pocket. This means more dollars in the pockets of all Australians across my electorate and across the nation—more than $1,500 for a local worker on an average wage.

In closing, we know that more competition is better for consumers, suppliers and our nation. Most importantly, we want more competition that is better for prices at the checkout, and we want to ensure that our hardworking Australians keep more of what they earn.

4:04 pm

Photo of Andrew WilkieAndrew Wilkie (Clark, Independent) Share this | | Hansard source

There's no denying that Australians are feeling the pinch right now. Whether putting a roof overhead, filling up the car with fuel or going to the doctor, the cost is being felt and felt hard. Nowhere is this pain being felt more regularly than on the trip to the supermarket for the most basic of things, like food to feed the family. Indeed, according to an article published earlier this month by the Conversation, food prices have risen sharply since 2021, with some 3.7 million Australian households experiencing food insecurity in 2023, 10 per cent more than the previous year. Moreover, in its submission to the Senate select committee's inquiry into the price-setting practices and market power of major supermarkets, the Department of Agriculture, Fisheries and Forestry noted food and non-alcoholic beverage prices were 4.5 per cent higher than the previous year. This, the department observed, showed food prices had risen faster than prices in the economy more broadly.

Of course, there are many factors contributing to the rising cost of food, including COVID; climate events, including floods and bushfires; and international conflicts. Events such as these often fall outside of our immediate control, but an area where the government can make a positive and immediate difference in reducing the cost of living is by reining in the supermarket duopoly that has dominated the food retail market for way too long. The undeniable fact is that, whereas other countries have multiple major retail food outlets increasing competition and therefore lowering prices, in Australia Coles and Woolworths dominate the Australian market. Indeed, the two major supermarkets control at least 65 per cent of Australia's grocery market, which, as reported in the recent, damning episode of Four Corners, means that, on average, for every $10 Australians pay for groceries, more than $6.50 is spent at Coles and Woolworths.

It's no wonder, then, that the big two have reported record profits in recent years—for instance, $1.1 billion and $1.62 billion for Coles and Woolworths respectively in 2022-23. Moreover, Woolworths's latest report shows that its pretax profit last financial year rose from 5.3 to six per cent, worth an additional $318 million, at the same time that the cost of doing business was flat. So, while people are paying more and struggling desperately to put food on the table for their families and while producers and farmers are grappling to keep their doors open and earn a liveable income, Coles and Woolworths are raking in the big bucks, and that is simply unconscionable.

But it hasn't happened in a vacuum. Coles and Woolworths actually haven't been doing anything beyond what successive Australian governments have allowed them to do. In other words, ineffective regulations and enforcement mechanisms have got us to where we are now. For example, as former chair of the ACCC Rod Sims noted during the Four Corners episode, the grocery code of conduct is a disgrace. It's a code with no penalties. It's like having a speed limit of 60 kilometres per hour but no penalty for someone who does 80. Moreover, our inadequate consumer laws do little to stop the duopoly engaging in practices such as unfair pricing, misleading conduct regarding 'specials' and undercutting producers and suppliers, with minimal consequences.

What makes it worse is that the ACCC isn't equipped with the power to respond. Indeed, as noted by former ACCC commissioner Allan Fels, the ACCC's powers to investigate overcharging by the major supermarket chains are limited unless requested by the government. Hence, it was welcome when the government announced last month that it would direct the commission to conduct an inquiry into Australia's supermarket sector, including their pricing practices and the relationship between wholesale, farm-gate and retail pricing. This inquiry goes hand in hand with five separate inquiries into the sector. No wonder Woolworths announced just this morning a price drop on 400 items. That's after we appeared as pigs.

Also welcome—in fact, especially welcome—is the member for Kennedy's bill to reduce the market share of any supermarket to no more than 20 people cent via enforced and progressive divestiture over five years. I guess that might sound dramatic and unrealistic to some people, but I'm very happy to second the bill, our second go at it, because the reality is that it's way beyond time to stop fussing about and instead take a sledgehammer to the nut.

4:09 pm

Photo of Matt BurnellMatt Burnell (Spence, Australian Labor Party) Share this | | Hansard source

It's a poorly kept secret that I look forward to a call-up for the MPI. It is often a no-frills and no-holds-barred affair where we end up with government and opposition debating one of very few limited areas of discussion. It leaves very little to the imagination at times. They are more of a series than a feature film at times.

This is a little bit different from the norm, a description that can be used to describe the member for Kennedy—though I'm not sure if I'm relieved or somewhat disappointed to see the member now dressed substantially less eccentrically than he was earlier today, along with the member for Clark, from what I observed across a few media outlets. I can't blame him, nor them, for going the whole hog on this issue and I'm sure he was tickled pink with the coverage.

I must say that MPI debates can feel a little like rolling in the mud sometimes. However, when it comes to addressing abuses of market power within the food and grocery industry, I'm sure we all stand with the member for Kennedy and hope we can all bring home the bacon. It's an issue of great importance to myself and to my constituents of Spence. As recently as Monday of the previous sitting week, I was proud to have moved a motion in this place during private members' business that was, in broad terms, germane to the matter the member for Kennedy has raised here in this debate.

The impact of the duopoly of Coles and Woolworths in our food and grocery sector is one that transcends a singular cost-of-living issue. The sheer market power of these two companies—two companies that have a market share of 65 per cent of this multibillion-dollar market—affects everything caught in its orbit. As the member for Kennedy would be aware, the House Standing Committee on Agriculture tabled its inquiry report on food security titled Australian food story: feeding the nation and beyond. I know the member for Kennedy made a submission to the inquiry. On that note I am also pleased that my colleague the member for Paterson, who is the chair of the House Standing Committee on Agriculture, has participated in this debate.

As part of this inquiry the impact of the supermarket duopoly on food security and our agriculture sector—our farmers—formed part of the committee's inquiry process. I could be said that many participants in the industry would still be too cautious to speak out despite the protections that are attached to the participation in a parliamentary inquiry. Despite what the member for Kennedy and others in the crossbench party room may believe, the Albanese Labor government is not a bystander in the fight against cost-of-living pressures—far from it.

It doesn't take a rocket scientist to recognise the imbalance of power between Australia's supermarket giants and those that supply them and their consumers. The relationship between the supermarket giants and farmers has been described as being the price makers in this relationship. Many farmers feel as if they only have one legitimate choice in front of them if they are not to accept what Woolworths and Coles have set for them, and that is to leave the industry entirely. It is a sad reality to the number of businesses operating in the agriculture and horticultural industries—industries that employ roughly two per cent of my electorate's workforce. That may seem small by comparison to the size of the industry in Kennedy, which sits at 9.2 per cent, but I'm sure we can both agree that jobs in agriculture are precious as they are the ones that feed our nation. This has been a sad reality for many now former farmers, some whose families have worked the land for generations before them.

Australia's farmers of yesterday had to contend with a whole number of challenges in order to keep their farms and families going, but they could not have anticipated dealing with the likes of Coles and Woolworths existing as the two major customers of their produce, either directly or through a third party. =

This is not a uniquely Australian problem by any means, but the extent of the market concentration in the food and grocery market has Australia sitting above the US and the UK. The UK's market concentration has their big two only accounting for 42 per cent of the pie.

In closing, I've lived this experience. I watched my parents on our family farm back in the 90s really struggle with the ability to make ends meet. We were price takers, we weren't price setters, and I think we can all agree that something needs to be done to ensure that the profits being taken by the big two are shared more proportionately throughout the supply chain. That's not just our farmers. It's also our transport logistics teams, our front-of-house checkout teams and the whole supply chain within the food retail sector. I thank the House.

Photo of Sharon ClaydonSharon Claydon (Newcastle, Australian Labor Party) Share this | | Hansard source

The discussion is now concluded.