Source: Australian Treasurer
ROSS SOLLY:
Earlier this week, Andrew Leigh and I stood cheek‑by‑jowl expressing our Oreo outrage when we discussed that Oreos were leading the charge in terms of items that were being bumped up to ridiculous price levels by supermarkets as part of their campaign. Now, today, Andrew Leigh, the Assistant Minister for Competition, Charities and Treasury, released an interim report from the ACCC into the supermarkets. And look, it basically confirmed everything that we might have already known. Andrew Leigh joins us on the program. Good to have you on the show, Andrew Leigh.
ANDREW LEIGH:
Thanks, Ross, great to be back with you. Now, I was in a supermarket this afternoon and I saw Oreos that were half price. I nearly picked you up a pack.
SOLLY:
Isn’t that amazing? Andrew Leigh, who says that the radio has no power anymore.
LEIGH:
Exactly. I think the Canberra supermarkets are listening.
SOLLY:
That would be judging by the report that you handed down today, a bit of an outrider, because it seems that the ACCC is finding that the big 2, especially the big 2 – Coles and Woolworths – are taking advantage of their market power.
LEIGH:
Yes, that’s right. They’ve got 67 per cent of the market and the ACCC has pointed to a range of different ways in which they might be throwing their weight around with their consumers and with their suppliers, which as economists say, exercising monopoly power down and monopsony power up. It talked about the issue of land banking – which might keep out potential competitors, about the way in which discounting practices are sometimes too opaque. Multiple product discounts that make it hard to compare across stores and then also this phenomenon of shrinkflation, where suddenly you discover that there’s not as many Tim Tams in the packet and yet the price has stayed the same.
SOLLY:
Yeah, which is a bit of a surprise. On the land banking, Andrew Leigh, what powers do you have? Does the government have or what powers might you need to bring in to force? I mean, one of them, I can’t remember whether it’s Coles or Woolies, owned about more than 100 blocks that weren’t developed on the other one, had dozens of blocks. What powers are there to make them actually either hand those blocks over or actually do something with them?
LEIGH:
Well, it’s a pure state and territory issue, Ross which is why we’ve got National Competition Policy going again. We want to work with states and territories on some of these issues that cross across the federation – because whether it’s your federal government, your state government or your territory government – they want to make sure consumers are getting a fair deal. We’ve got to ensure that companies are either building or else handing the land back.
SOLLY:
Sorry to jump in. As the Minister for Competition, do you know whether most states and territories have those powers, like, for example, here in the ACT? Are there examples here of land banking going on that you’re aware of?
LEIGH:
Yeah, I mean, it’s an ongoing concern, Ross. I’ve certainly had people contacting me saying this development hasn’t gone ahead, why is it sitting there looking like an eyesore? But the extra layer on this is that there’s a competition angle that doesn’t always apply with other forms of development. So, you might have a housing development that languishes for a while. That’s frustrating for the people in the local neighbourhood, but a supermarket site that’s locked up can have an impact on the prices that people are paying every day. So, what we’re doing with the states and territories is making sure they’ve got that competition lens when they’re looking at these planning and zoning approaches. And they’ve been really constructive – Daniel Mookhey, Andrew Barr, the other state and territory Treasurers in engaging on this competition issue.
SOLLY:
But have they been going hard enough? I mean, I’m just looking here, it’s Woolworths that has 110 vacant sites nationwide. The Treasurers and the Premiers and the Chief Ministers maybe aren’t going hard enough. They’re not bringing out the big stick yet. Andrew Leigh is it time they did?
LEIGH
So, well, we’ll be working through that with them, Ross. They’ve all got different rules about how long an operator can hold on to a particular site. What we need to do through a National Competition Policy is ensure that they’ve got that clear competition lens in what they’re doing. The National Competition Policy has a great lineage. When we got a guy in the 1990s, it produced a permanent lift in GDP of 2.5 per cent. That’s about $5,000 for every Australian household. The issues are different now, but the framework’s the same. We’ve got to get more competition, more dynamism in the economy, not just in supermarkets, but in everything from banking to baby food to beer.
SOLLY:
Yeah, I’m just worried, though Andrew Leigh, I mean, we can sit here and we’ve talked about this day‑in day‑out, unless the states and the territories are actually given the tools or bring the tools in to take some action, Coles and Woolies will see this and they’ll go, oh, here’s just another report. We’ll just go on business as usual. Maybe divesting is something that you need to start looking at seriously. I know every time we raise it, you push it to one side, but the Liberal Party is keen on it. The National Party is keen on it. There seems to be a growing momentum, Andrew Leigh, for this to be taken seriously.
LEIGH:
Well, Ross, it’s not just me that’s sceptical about this. Every major competition review going back a couple of decades, the Dawson Review, the Harper Review, the Hilmer Review, have all recommended against divestiture. Craig Emerson didn’t recommend it. His review of the food and grocery code, the National Farmers’ Federation don’t support it, the ACTU aren’t calling for it and where it exists in other countries, it’s very rarely used. And that’s why we’re focusing on these measures that we know will make a practical difference.
SOLLY:
Maybe it’s not used, though. Andrew Leigh because it’s there. It’s there and it’s available. And the supermarkets know that the government in that country has that power available to them if they want it. I mean, you may never use it. You might never use it, but imagine having that up your sleeve and then you get delivered a report saying 2 big supermarkets are taking the mickey, they’re buying up all this land, they’re not using it, they’re fleecing people at the till. Imagine then if you just roll up your sleeve and say, look what I’ve got here.
LEIGH:
Well, Ross, we’re listening to the experts on this and the experts are saying you need merger reform, National Competition Policy, a mandatory Food and Grocery Code of Conduct. They’re some of the things we’re getting on to do. We’ve got the CHOICE price monitoring, which came out yesterday showing slightly different results in the first time round. First time round here in the ACT, it was Woolies that got the silver medal, this time Coles that got the silver medal. Aldi’s come in gold both times. That’s important information for people knowing how much they can save by shopping around.
SOLLY:
Do you think Aldi needs to be given, and I know you can’t, governments can’t pick favourites, but I wonder whether Aldi needs to be given a bit of a leg‑up here because obviously, I mean, the surveys are showing they’re the cheapest option.
LEIGH:
Yeah, they’ve certainly grown their market share going up to about 9 per cent of the market, but they don’t offer a full range of groceries, which is why the average Aldi is located just 400 metres from a Coles or Woolies. So, they’re encouraging people to do some shopping there and some shopping at Coles and Woolies. I think that’s happening more frequently. The jurisdictions that need most assistance are Tasmania and the Northern Territory, which don’t have an Aldi, and therefore their shoppers are missing out on that 25 per cent cheaper groceries in those jurisdictions.
SOLLY:
I don’t. I hate gotcha journalism. I’m not going to do gotcha. But I just want to know, Andrew Leigh, are you saying that divestiture is off the table? It’s never, never. It’ll never happen.
LEIGH:
Look, it’s not our focus right now, Ross. You ask the experts on this. We asked Dawson, Harper, Hillmer, Emerson. They don’t point to it. They point to a range of other things and that’s what we’re doing. We’ve got a big, ambitious competition reform agenda focused on things that we know and that the experts say will make a difference.
SOLLY:
Alright. I think the shoppers would love that to happen. Quarter to 6, we’re chatting with Andrew Leigh, who’s the Assistant Minister for Competition Charities and Treasury. Just one other thing on this. I noticed Wayne Swan today, former Treasurer, saying that he, he thought that the way the supermarkets have been behaving had actually pushed up inflation. Is he right?
LEIGH:
Well, if the claims are found to be true, and obviously they’re before the courts right now, then that would mean that Australians had paid more for their groceries. These so called fake discounts, which were applied when Coles and Woolies allegedly increased the price of certain things like Oreos for a couple of weeks and then dropped them and advertised them with a price drop sticker. Now we’re talking about 500 products on which Australians would have spent millions of dollars. So, yes, that would have had an impact on inflation. I don’t think it’s going to be the major driver of inflation over this period, but it will be there in the statistics.
SOLLY:
Andrew Leigh, thanks for your time on a Friday afternoon. Who’s going to win the footy tomorrow, by the way?
LEIGH:
Let’s hope the Swanies get over the line.
SOLLY:
All right. I think there’s a lot of listeners who would agree with you. Thank you, Andrew Leigh.
LEIGH:
Thanks, Ross. Thank you.
MIL OSI News –