Download Fragment

Wednesday, 2 November 2011
Page: 7975

Grocery Prices

Senator CROSSIN (Northern Territory) (14:58): My question is to Minister Carr, the Minister for Innovation, Industry, Science and Research. I understand that Woolworths has announced that it plans to double the sale of its Homebrand products, raising major concerns about market access for local suppliers. Can the minister inform the Senate what the government is doing to stop this big retailer from exploiting its excessive market power?

Senator CARR (Victoria—Minister for Innovation, Industry, Science and Research) (14:59): I thank Senator Crossin for the question. I know this is a matter that should concern all senators. On the basis of claims that have been put to me by reputable firms, there is serious cause for concern about the abuse of market power. Today I informed the Australian Food and Grocery Council that I have taken steps to put before the ACCC for a proper and independent investigation information on a number of widespread allegations made by Australian food producers and food manufacturers. There is a series of widespread allegations concerning the misuse of market power by the major retail chains in this country, who are now able to control some 80 per cent of the retail food sales in this country.

Very few people are prepared to speak out on these matters given the nature of market relationships. However, Heinz has done so. In practical terms, if you do not deal with Coles or Woolworths you are out of business. There are a number of complaints, including the auctioning off of shelf space with a view to excluding competitors; extracting concessions in contract negotia­tions by denying access to shelf space; arbitrary deduction of costs for stock-handling services, even when those services are not required; the rescinding of contracts mid term; and the use of home brands to destroy the intellectual property of suppliers. For example, I am told that suppliers are forced to divulge their product plans 12 months in advance to major supermarket chains and that, having disclosed these plans, they find copycat products being developed as home brand products. (Time expired)

Senator CROSSIN (Northern Territory) (15:01): Mr President, I ask a supplementary question. I ask the minister whether he can respond to claims that consumers are better off thanks to the aggressive home brand drive.

Senator CARR (Victoria—Minister for Innovation, Industry, Science and Research) (15:01): We have heard many times that these are strategies that are really aimed at protecting consumer rights. They are not. They are about protecting supermarket profits. The reality is very simple. Despite the intense competition on a small number of products, the two major food retailers enjoy some of the highest profit margins in the developed world. They are achieving this by pushing costs and risks onto manufacturers. So we should not delude ourselves that home brands are about expanding choice. They are about constraining choice. They take up the same shelf space as fully branded products, and what we are seeing now are oppor­tunities being pursued by the major chains to destroy brands and trademarks and consumer loyalties. They are about crippling firms, deterring new investments, eroding capabilities and undermining manufacturing jobs in this country. These raise very serious concerns. (Time expired)

Senator CROSSIN (Northern Territory) (15:02): Mr President, I ask a further supplementary question. I ask the minister whether he can advise the Senate what the government is doing to help local food processors get a larger share of this economy.

Senator CARR (Victoria—Minister for Innovation, Industry, Science and Research) (15:02): Thank you, Senator Crossin.

Opposition senators interjecting—

Senator CARR: I have heard from the National Party, who ought to be doing a lot more on these issues. I have heard from them, 'What are you doing?' We have put these matters before the ACCC. We welcome the statements from the new Chairman of the ACCC that he wants to explore the full extent of ACCC powers in these matters. The ACCC has extensive investigative powers and quite substantial capacities to ensure confidentiality. We know that these are very tough times for Australian manufacturers. We are dealing with a record high dollar. We are dealing with the effects of a prolonged drought and now, of course, with a past summer of disasters. What we have done through the resource rent arrangements, for instance, is provide opportunities for tax cuts. We are providing $150 million to assist manufacturers in the food industry to adapt to new circumstances as a result of climate change. We are ensuring that we have good news for Australian manufacturers. This is a government that will stand shoulder to shoulder with Australian manufacturers and Australian workers in the defence of jobs. (Time expired)

Senator CHRIS EVANS: Mr President, I ask that further questions be placed on the Notice Paper.