JO MCMANUS:
Well, supermarkets are under the spotlight yet again. Last week, you’ll recall, CHOICE released the first of ongoing reports on price monitoring. And you may remember that, surprise, surprise, Coles and Woolies’ basket of goods was basically the same price. We know Aldi was a lot cheaper, we know IGA was a bit more expensive, but the 2 big ones basically exactly the same. So, today the government announced that what was a voluntary code of conduct for the supermarkets will become mandatory. And that means they could be fined billions, I’m not saying millions, billions with a B for Bobby, of dollars if they breach the code. Interested to know what it all means, whether it’s going to make any difference to the prices that you pay each week, which is, I think, what we all actually care about. So, Andrew Leigh is the Assistant Minister for Competition, Charities and Treasury, and it’s with that hat on that he joins me this morning. Good morning, Andrew.
ANDREW LEIGH:
Good morning, Jo. Great to be with you and your listeners.
MCMANUS:
Yeah, thank you very much. Look, first of all, can you tell us what this mandatory code will do – what it means, how it works?
LEIGH:
Australia’s supermarket sector is one of the most concentrated in the world. The big 3 have a 75 per cent market share and the risk when you’ve got large firms is that they can squeeze their consumers, and they can also squeeze their suppliers. The Food and Grocery Code of Conduct, set up nearly a decade ago, has been a voluntary code and many farmers have been telling us it’s just not working. Suppliers are scared to make complaints because they’re scared of being dropped by the majors. So, we asked Craig Emerson, the former Competition Minister, to review the Food and Grocery Code and he’s come back with a recommendation to make it mandatory, which the government’s announced we’re accepting today. Now, that means that it’ll be a code with teeth, not a toothless tiger like was set up by the Liberals and Nationals, but a code which ensures that there are significant penalties, as you said in your introduction.
MCMANUS:
Okay, so are you actually going to follow through on it, though? How do you – because if a supplier complains and you’re saying that they should be able to complain without any repercussions. But if they complain, can’t the supermarket turn around and go, actually, we’re not really liking your product anymore, so that’s why we’re letting you go?
LEIGH:
The supermarkets have made clear that they’re willing to come on board with compulsory arbitration approaches and also we’ve announced that we’ll have anonymous complaints being able to be made through the Australian competition watchdog. We’ll have legislation in the parliament which will give teeth to this. But my real hope, Jo, is that this changes the behaviour of the majors and that we’re not stuck in court going through cases with big penalties at the end, but in fact, the behaviour just gets better. So we get a fair deal for farmers and a fair deal for families.
MCMANUS:
Is it going to see prices drop for the consumer?
LEIGH:
Well, a lot of what we’re doing is focused on getting fairer prices for consumers. You mentioned before the CHOICE price monitoring which allows people to shop around, get those savings and finding out just how much cheaper Aldi is than the majors. We’re also asking the competition watchdog to review supermarkets, to look at things like loyalty programs and make sure those prices are flowing through. We do recognise that this is a highly concentrated sector and therefore it needs a high degree of oversight.
MCMANUS:
Andrew, earlier this morning, David Littleproud, the leader of the Nationals, was talking about this issue. I’d just like you to have a listen to what he had to say.
DAVID LITTLEPROUD:
I offered that 18 months ago as a first line of opportunity to tackle what the supermarket is doing and tackle cost of living. This government was out of touch. I gave them that, I wrote to the government and said we would support them. It took the pressure that we put on in January for them to do something about it.
MCMANUS:
So, he’s having a crack at you for taking too long. What’s your response?
LEIGH:
David Littleproud is all hat and no cattle. They had 9 years in office and didn’t do this. It took a Labor government in order to actually get a mandatory code in place. We’re the party that’s backing farmers. You didn’t see that under the former mob.
MCMANUS:
Yeah, okay. That’s a fair call. Nine years to do something. That’s reasonable, I guess. Look, one of the things that we saw with the CHOICE quarterly report that was done last week – which, I know the federal government is funding this, which is a good thing, I think – that there was virtually no difference between the 2 majors, between Coles and Woolworths and yet there was a 15 – more than $15 difference with the Aldi basket. So, I think the Aldi basket was around the 51, 52 mark and Coles and Woolies were around 68, 69. Big difference. Surely that says to you, to anybody with half a brain, that there is some kind of collusion going on.
LEIGH:
Well, first of all, I mean, I don’t think the gap between Coles and Woolies is zero. What you saw –
MCMANUS:
Oh, it was 75 cents or something. It was nothing.
LEIGH:
So, you saw about a $1.50 difference there in Western Australia, $69.28 for Woolworths, $70.78 for Coles. You know $1.50 adds up for people doing a couple of $100 shops. We’re talking double‑digit savings over a year.
MCMANUS:
No, no. Andrew, come on, it’s basically the same. Let’s be realistic.
LEIGH:
Well, we are looking, Jo, to put power in the hands of consumers. The big bit of information that comes out of this, you’re quite right, Aldi, 25 per cent cheaper, but Woolies also a couple of per cent cheaper than Coles. That’s useful information to shoppers. You know, if you’re standing there at a supermarket with Woolies on one side, Coles on the other side, you’ve got the information in hand.
And that may well change in the next report. The reason we funded CHOICE to do this quarterly is we want to set up a kind of ‘Price Olympics’ between the majors and so we’re seeing them giving consumers a better deal each time around. This additional scrutiny is well beyond what CHOICE would normally be doing. Normally, they’d be doing this only every couple of years, and sometimes they’ve only made the information available to subscribers. That’s why the federal government has got a focus on it and the report has also shown some differences across the country, and one of the problems in Western Australia is that the prices are higher than you see in the east coast cities. So, that’s another piece of information that comes out. Those 2 majors, prices are quite close together in Western Australia, quite close together on the east coast, but both sets of prices are higher in the West.
MCMANUS:
Yeah, they certainly are. I mean, we’re not the worst, but we’re not good. And everybody is feeling this pinch at the supermarket, including farmers. I mean, as you quite rightly said, I was doing this program earlier this year and we were talking about exactly that, about farmers who were being ripped off. But listeners are responding to what you’re saying, Andrew. For example, this caller says they never had this problem under the previous government, hence no reason to implement this. Now, I don’t think that’s the case, but I’d like your response to it.
LEIGH:
When we came to office, inflation was 6 per cent. That’s what it’d been running at under the former government. It was over 6 per cent, it’s now 3 point something. We’re aiming to get it back in the target band of 2 point something. But inflation now is half of what it was when we came to office. And part of that has been the work that we’ve been doing as a government. We’re just 7 days away from the 1st of July, where every Australian taxpayer will get a tax cut, every Australian household will get $300 energy bill relief, 2.6 million low paid workers will get their third consecutive pay rise backed by the government. So, we’re aiming to ensure that Australians earn more and get to keep more of what they earn, alongside the important competition reforms we’ve got in place.
MCMANUS:
And when will we see this mandatory code become law?
LEIGH:
The current voluntary code expires early next year, so we’ll need to have legislation in the parliament to replace that or move on that swiftly.
MCMANUS:
So, it’s not going to happen until next year, is that what you’re saying?
LEIGH:
No, I’m saying our deadline is next year. We’re moving on it swiftly. We’re a government with a big legislative agenda, so it’ll be a matter as to how it stacks up with the other legislative priorities. But the supermarkets know very clearly what we’re going to be doing, and know that that mandatory code is here.
MCMANUS:
Ok, so we’ve got 2 weeks before the parliament rises for the winter break. Will it be introduced into this next 2 weeks of parliament?
LEIGH:
I don’t think we’ll have legislation introduced in this next fortnight. There’s a lot of bills to be dealt with here. We’ve only just brought down the announcement. It’s a matter of drafting the legislation, making sure we’ve got that absolutely right. But we’ll have it in place before the voluntary code expires. I hope that the anticipation of the mandatory code is going to lead to better behaviour straight away. I don’t think the majors need to wait until the mandatory code is in place in order to lift their game.
MCMANUS:
Yeah. Look, I appreciate your time this morning on the morning program.
LEIGH:
Thanks, Jo. Good to chat.