ADAM SHIRLEY:
I must admit I had to blink twice, and I said this earlier, when I saw that on CHOICE research with a bunch of mystery shoppers going to Coles, Woolies and Aldi, that the ACT was the cheapest for an average grocery shop for 14 common items as they’re called.
Dr Andrew Leigh is the Assistant Minister for Competition, Charities and Treasury, Federal Member for Fenner.
Dr Leigh, how is it when in Canberra we know that we pay a lot for a lot of things, that we come out cheaper in this comparison for regular grocery shops?
ANDREW LEIGH:
It’s certainly reassuring when you look at those prices and what we aimed to do with this report wasn’t promote any particular supermarket but to put information in the hands of consumers.
CHOICE has been doing these grocery monitoring reports every couple of years, but sometimes the information is behind the paywall, only available for CHOICE subscribers. So what we decided to do as a federal government was to fund CHOICE to do these reports every quarter and to make them public for all Australians.
So that’s the information that’s out there today, helping shoppers get a better deal, and of course every time you move down the road to a cheaper supermarket, you’re putting more competitive pressure on the system and you’re ensuring that all prices have downward pressure placed on them.
SHIRLEY:
The top 3, ACT, Victoria, Queensland, in that order, I mean they’re covered by 20 cents per average shop, which some people might not think is much. Would I be right in broadly saying if there’s a third player like Aldi you’ll pay less in your jurisdiction?
LEIGH:
That seems to be the clear result of the research. We know that when Aldi came into the system that we saw overall national grocery prices fall, but it’s very clear that Aldi is coming out about 25 per cent cheaper across the jurisdictions where it operates, and that means for shoppers in the Northern Territory and Tasmania which don’t have Aldi, they do end up paying a higher price for their groceries.
SHIRLEY:
What sort of pressure do you think research funded by your government puts on the big players really, or in fact do they look at it, nod their head and just keep doing what they do?
LEIGH:
Oh, no, I think their focus is very much, Adam, on shoppers’ habits. If shoppers are going to a competing supermarket they’ll respond in kind.
We know that they’re paying close attention to what items are in the CHOICE basket. We don’t want them gaming the system, we want them putting downward pressure on the prices right across their stores.
SHIRLEY:
But if you’re a Coles or a Woolies, you know, you diversify your business, as they have in so many different sectors, is this really going to touch the sides for them? How much pressure do you believe they really feel when they see a report like this?
LEIGH:
Huge amounts of pressure. Now they don’t have a captive market, people move around their shop all the time, and there’s been a rise in what they call ‘split basket shopping’, where people are doing part of their shop at one supermarket and part at another supermarket.
So, this competitive pressure is good, particularly in an environment in which we’ve got one of the most concentrated grocery sectors in the world. The market share of the 2 big players here is larger than it is in many other advanced countries and so in that environment it’s only fair that we have a lot of scrutiny being placed on the prices on the supermarket shelf.
SHIRLEY:
As welcome as the competition might be and that Canberrans might think this report is, is this the only or the primary way that you and the government is looking at trying to lower the cost of prices in supermarkets, where I guess we can say historical research has said we pay a fair bit because of the duopoly here?
LEIGH:
This is just one of the things we’re doing in supermarket space. So we’ve got the Australian Competition and Consumer Commission doing a deep dive into supermarkets. They’ll be reporting in August.
We’ve asked Craig Emerson, the former Competition Minister, to review the Food and Grocery Code of Conduct and whether it should be made mandatory. That report will be out in final form by the end of the month.
So we’re very concerned about the behaviour of the supermarkets. We want to make sure that farmers and shoppers get a better deal. That’s a big focus of my role as the Assistant Minister for Competition.
SHIRLEY:
Andrew Leigh is our guest, Assistant Minister for Competition, Federal Member for Fenner.
Where do you shop? Do you try and do a split basket shop, as Dr Leigh just defined it as, when you might go to Aldi, a grocery store, the butcher, not just the big 2, Coles and Woolies? 1300 681 666.
It might surprise you to know what we’re talking about is that a CHOICE secret shopper list of 14 common grocery items show that the ACT, out of all the states and territories, was cheaper for the average cost of that shop than any other part of Australia.
To what degree might you look at intervention in this area, depending on what your report in August comes back with, Dr Leigh, depending on what Craig Emerson tells you, that you might consider at least government intervention? Because there has been this description, this consideration, in other big industry players.
LEIGH:
We’re certainly open to whatever the ACCC comes back with, Adam. So far there hasn’t been very good international evidence for one of the things that the National Party’s been calling for, divestment powers. We’re also aware that these are not only significant businesses for shoppers but also for workers. Woolworths is Australia’s biggest private sector employer.
So when Peter Dutton at the start of the year was calling on people to boycott Woolworths, when he’s calling for the break‑up of Woolworths, it’s just not quite clear that’s good for people who work at Woolworths, or indeed for people who shop at Woolworths.
SHIRLEY:
There has been an argument though for things like the airline industry, I’m thinking Qantas and Jetstar Group, that there could be a case, locally Stephen Byron, for instance, has said we should definitely look at federal government intervention for breaking up such a powerful force, as he sees it. Can you make the same argument for supermarkets?
LEIGH:
We’ve got a strong competition watchdog and one of the things we’ve done through setting up the competition taskforce is now to put forward a plan for reforming Australia’s merger laws.
One of our big focuses, Adam, in getting more competition in the Australian economy, which is sorely needed, is making sure we don’t see mergers taking place which are anti-competitive. We need better scrutiny of those mergers – a simpler, fairer, more efficient merger system.
That’s where our energy has been focussed rather than on divestment, which is a power that’s very rarely used where it exists in other countries.
SHIRLEY:
This texter makes an interesting point. Why don’t we require the supermarkets to publish their unit prices in a spreadsheet every week so we can compare instead of doing a survey like this? How valuable might that be as an initiative?
LEIGH:
Yeah, I mean there’s certainly a lot of information available. If you go on to their websites you can find those data, and the unit prices on shelves –
SHIRLEY:
But it’s not central, you have to go from one site to the next I think. What this texter is suggesting is a central spreadsheet that you as a government force these big players to publish.
LEIGH:
Yeah, that’s right. I mean the items are different and so getting an apples to apples comparison isn’t straightforward. There are certainly aggregators that work to try and compare prices across supermarkets. My understanding is that they don’t tend to be terribly widely used, which is why we’ve focussed on this headline grocery shopping exercise which provides you with a single point of comparison across the supermarkets.
Now the question always, Adam, with information to consumers is how do you provide it in the right level of detail that people will really use it? These CHOICE reports have been popular in the past. That’s why we’re getting them done regularly and publicly.
SHIRLEY:
Okay. Andrew Leigh, we’ll see what the next one shows for point of comparison. Again, thank you for your time today.
LEIGH:
Real pleasure, Adam, thank you.