DAVID LIPSON:
Andrew Leigh, thanks for being with us. The Prime Minister says prices will absolutely go down for consumers at the checkout. Explain for us how prices will come down when supermarkets are paying more for the products they're stocking shelves with.
ANDREW LEIGH:
David, Australia has one of the most concentrated supermarket sectors in the world and it's really important that we apply an appropriate level of scrutiny to that sector. We've got three major pieces of work going on at the moment. There's Craig Emerson's review of the Food and Grocery Code of Conduct, which governs the supermarket's relationship with their suppliers. There's the ACCC's inquiry into grocery competition, which will look at both consumer and supplier issues. And then there's CHOICE, undertaking quarterly price monitoring, which will help Australians work out where to get the better deal. We believe that through better transparency, better accountability and stronger competition laws, that we are able to ensure that consumers and suppliers get a better deal.
LIPSON:
So, does that mean then that supermarkets get hit, that their profits will be lower?
LEIGH:
We're a strongly pro‑business government, and indeed, you've seen business investment do much better under this government than under the former government.
LIPSON:
I'm just trying to understand this, though, because if supermarkets are paying more for their products and charging less, something's got to give. They've either got to take lower profits to shareholders or they've got to offer less services to customers or lower wages to workers. Something's got to give, doesn't it?
LEIGH:
David, I think there's often a tendency to try and boil these things down to a zero‑sum game but part of this also is the conduct of the supermarkets. One of the things that Craig Emerson's review has heard is that there are instances in which suppliers fear retaliation. So, they don't raise issues with the supermarkets. Under a voluntary code, without the sort of independent arm's length process, you often don't get the sort of honesty from suppliers that you might get in a more open market. With a duopoly of supermarkets, there's a lot at stake for a supplier who complains and then fears retribution. That's why Craig Emerson is recommending we move to a mandatory code with serious penalties. This will, if the government was to go down that path, provide a greater level of confidence for farmers that they're getting a fair deal in their dealings with big supermarkets.
LIPSON:
Yeah So, just one more on this. So, I mean, you're saying consumers will get a better deal. Suppliers will get a better deal. Will supermarkets get as good a deal as they've had in the last couple of years?
LEIGH:
Look, we expect supermarkets will continue to thrive. This has been a strong‑
LIPSON:
As much as they have been, though?
LEIGH:
Look, the health of the supermarkets is important to Australians. Woolworths is Australia's biggest private sector employer. That's why I was very troubled earlier this year when Peter Dutton was urging people to boycott Woolworths. It's as though he doesn't think that there's 200,000 Australians that work there. It's why the Labor government doesn't believe that divestiture should be a first choice option. Because like the ACTU and the National Farmers Federation, we're concerned about those who work at supermarkets. So, we're looking at the whole picture here, focused on practical reforms that'll make a difference for farmers and make a difference for consumers.
LIPSON:
Speaking of the whole picture, the Prime Minister said this morning, we need a code of conduct that looks at the entire supply chain. Does that include online shopping outlets like Amazon, which now stock many of the products that you can get in the supermarket aisle?
LEIGH:
The recommendation that Craig Emerson has made is that the threshold for the Food and Grocery Code of Conduct should stay at $5 billion turnover. That means that you'd have Coles, Woolworths, Aldi and Metcash coming in. Costco sitting at around $4 billion, if it continued to grow, would conceivably come in the future.
LIPSON:
What about Amazon?
LEIGH:
Well, as I understand it, Amazon is sitting around a billion dollars of turnover, so it's well below that threshold. I've certainly heard some people making the case for Amazon being brought into Food and Grocery Code of Conduct. Craig Emerson's view, as an independent reviewer who has spoken to experts and stakeholders across the sector, is that the time for that isn't now.
LIPSON:
Andrew Leigh, thanks for being with us.
LEIGH:
Real pleasure, David. Thank you.