Kim Carr (Victoria, Australian Labor Party, Minister for Defence Materiel) Share this | Hansard source

I thank Senator Gallacher for his question and his concern about the future of the food industry in the current retail environment. Coles and Woolworths are amongst the most profitable supermarket chains in the world. While they employ many thousands of Australians, they have been very effective in the way in which they have operated. These two companies now control about 80 per cent of the supermarket retail sales. So we have a strong interest in ensuring that consumer options remain open, just as we have a strong interest in ensuring that the capabilities of our manufacturers are maintained. I have genuine concerns about the way in which our supermarket chains are treating our local suppliers. I continue to receive complaints from manufacturers about the way in which contract negotiations are conducted and contract terms are applied.

There are many ways in which these problems could be fixed, but there is absolutely no doubt in my mind of the consequences of doing nothing. We just have to look at what Heinz have been saying. Heinz have already shut a factory in Victoria and have restructured two others. Its chief executive in Pittsburgh, William Johnson, singled out Australia in November as having 'the worst operating environment that the company faces anywhere in the world'. Our supermarkets are increasingly using their home brands, they are increasingly eroding brand loyalty and they are forcing suppliers to operate on wafer thin margins. If a company the size of Heinz feels under pressure, imagine the position of many small and medium-size companies. Those companies employ hundreds of thousands of Australians, and imagine how they feel in those negotiations.

Complaints that I have received suggest to me that this is more than just a question of robust capitalism at work. It is critical that supermarkets operate on a fair and reasonable basis with their local suppliers. I welcome the Food And Grocery Council's statement. (Time expired)