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Monday, 10 November 2008
Page: 10415

Ms HALL (7:50 PM) —I thank the member for Mallee for bringing this motion on the grocery sector to the House. It is an issue that has been of great concern to most members in the House. I am a bit disappointed that it was not dealt with under the last government and that he did not bring a motion to the parliament when the Howard government was in power for 12 years. But the Rudd government does acknowledge and has acknowledged the impact that rising food prices have on Australians.

One of the first acts of the Rudd government was to instigate an inquiry into the competitiveness of retail prices for standard groceries. The report was completed and forwarded to the Minister for Competition Policy and Consumer Affairs. That is the ACCC report that is mentioned in the motion moved by the member for Mallee, which in part 2 says: 

… this is a situation that the Australian Competition and Consumer Commission describes as ‘workably competitive’ …

I think we need to have a little look at the report. It says that, but then it makes a statement that there are a number of factors that currently limit the level of price competition. So the ACCC does acknowledge in its report that there are impediments and barriers. It talks about the high barriers to expansion, particularly in relation to the difficulty of finding sites for development; limited incentives for Coles and Woolworths to compete aggressively on prices; and limited price competition between Coles and Woolworths. I think one of the key factors is that 80 per cent of the market is controlled by Coles and Woolworths. That is a problem and it is mentioned by the National Association of Retail Grocers of Australia in their submission to the inquiry. I note that the inquiry solicited some 250 submissions. Of those, about 120 were late submissions, but the inquiry obviously connected enormously with the community.

One of the ongoing concerns that is raised with me as a member of parliament is the issue of increases in grocery prices. This inquiry took place in response to the fact that there is a problem—and I think it is more than a perceived problem; it is a problem—in relation to the prices that are being paid for groceries. It is the people that are on lower incomes, fixed incomes, who are finding that it has the greatest impact.

The problem also impacts on many of the people that the member for Mallee represents in this House. That is identified in the National Farmers Federation submission to the inquiry, which states that agriculture is a key stakeholder in the Australian domestic food supply chain and, as such, has a very strong interest in looking at the supply chain. It argues for transparency of competition and fairness. It talks about farm gate share of the retail market, and retail prices not always reflecting the farm gate price.

I think any member of parliament who has taken the time to go and speak with producers will know that they are paid a very small amount in comparison to what people like me pay in the supermarket. That is a problem. The submission talks about other aspects—the balance between rationalisation and market power—and really reflects the thoughts and the interests of the people that the National Farmers Federation represents.

There is also a submission by the Transport Workers Union of Australia. It talks about the domination of the grocery market by the two major retailers and the significant flow-on effects that that has on other participants in the supply chain. The excessive market power demonstrated by the major retailers in the transporting services and the impact that that has on the workers concerned the Transport Workers Union.

So you have got suppliers, the Transport Workers Union and distributors to the larger supermarkets, and you have the concentration of market dominance in the hands of Woolworths and Coles. That is 80 per cent in relation to groceries and 60 per cent in relation to petrol; the linking of grocery prices to petrol is an expansion even further.

NARGA, in their submission to the inquiry, believe that the question of market share and market concentration is critical to the price of groceries that is paid. All of us in the House represent people who pay these prices—people like the constituents of the member for Mallee and the member for Maribyrnong. It is a very complex issue, an issue that impacts on an enormous number of people. It impacts on us all and it was because of that that the Rudd government took the issue so seriously. It has really put a lot of effort into looking at food prices. With looking at food prices, NARGA pointed out that you cannot remove that from looking at the market share.

I would like to refer to CHOICE. They conducted a survey of more than 1,000 consumers in February 2008 and they found that 83 per cent of the consumers believe that they spend more on groceries compared to three years ago; only two per cent believe they are spending less. They point out that food price inflation has been greater in Australia over the last 10 to 12 years than in any other developed country and has increased by 43.6 per cent since 1996. CHOICE suggested the introduction of a food consumer price index that would be published by the Australian Bureau of Statistics each quarter.

I would like to mention that earlier this year, in legislation that was introduced where the utilities allowance was increased, the pension basket—the average goods that a pensioner purchases—was changed. It was either average male weekly earnings or looking at that basket. That, in itself, was acknowledging the impact that rising food prices have.

CHOICE suggested that food is part of the overall CPI index. The figures in relation to the prices of food have been masked by the significant increase in the volatility in food and grocery markets. CHOICE said that Australia has one of the most concentrated supermarket grocery sectors in the world. They went on to say that Woolworths and Coles have considerable market share. The supermarkets have the potential to bring cheaper prices through economies of scale but they also reduce competition in the sector, and I think that that is what the member for Mallee is pointing out.

I would also like to put on the record another issue for the supermarket sector, the phenomenon of creeping acquisitions, which has been identified by CHOICE and in other submissions to the ACCC, and its impact on market share and competition in the sector. I think that this is a very complex issue. We on this side of the House are committed to looking at and resolving the issue and bringing cheaper prices to Australians—(Time expired)