Patricia Karvelas:
For more on this, I want to bring in the Assistant Minister for Competition, Andrew Leigh. Andrew Leigh, lovely to speak to you.
Andrew Leigh:
Likewise, Patricia. Thanks for having me on.
Karvelas:
Now, a lot of Australians would probably fear – perhaps a little disappointed – that the report doesn’t suggest price gouging has occurred given people’s lived experience and worry that business as usual for the big 2 will occur after this. Is that a fair assessment?
Leigh:
Well, the report’s pretty harsh on the majors. I don’t think they’ll like it, but I think a lot of Australians will. It shows very clearly that the big supermarkets are among the biggest in the world and that they have increased their market share in the 17 years since we last had a supermarket report.
It shows too, that there’s a bit of high‑low pricing going on where the majors take it in turns to put items on special with a sort of seesaw pattern, which looks pretty suspicious to me.
The report makes very clear that the government’s approach of a mandatory Food and Grocery Code has been the right one, that we are on the right track with working with the states and territories on planning and zoning, and that we need to continue our action in tackling shrinkflation where the majors have become Olympic champions.
Karvelas:
The report says it’s not a duopoly, it’s an oligopoly. But Coles and Woolworths are among the most profitable supermarkets in the world. Does it concern you that they are that profitable? Does that demonstrate something about what’s going on here?
Leigh:
Absolutely, Patricia. I want families to get a fairer deal at the checkout, and I want farmers to get a fair deal at the farm gate. And that’s why we’ve got the mandatory Food and Grocery Code, the work we’re doing on shrinkflation, but also why we fund CHOICE to do quarterly grocery price monitoring, so people can see where they’re getting the very best deal.
And it’s why we’re providing $3 million for training for suppliers, particularly those fresh produce suppliers so they can take advantage of Labor’s new mandatory supermarket code when it comes into effect next month.
Karvelas:
The ACCC did find that both Coles and Woolworths have a limited incentive to be competitive on prices, so without serious intervention or a serious kind of a big stick – something that they feel fear or fearful about, how does that actually change?
Leigh:
Yeah, I think that’s a really astute question Patricia. We’ve seen over the course of the last 17 years the rise of Aldi, but we’ve also seen the fall in Metcash. And as a result, we’ve seen the big 2 supermarkets actually increase their combined market share.
What the ACCC recommends is we look hard at planning and zoning in order to create the opportunity for a new player if it was to come in to be able to start up. People will remember Kaufland made an attempt to enter the Australian market, and that would have brought welcome competition. We also have Costco and Amazon as potential competitors, and the report makes clear that we need the right competition settings to allow new competitors to pressure the majors in order to keep prices as low as possible.
Karvelas:
The regulator has also recommended the supermarkets provide more transparency in their negotiations with fresh produce suppliers. They found that there’s a bargaining imbalance, right? That’s essentially what their conclusion was. So, what does transparency there look like? Like, how would transparency be achieved?
Leigh:
Yeah, so what’s going on Patricia is that the fresh food suppliers are required to sign an annual contract, but then week to week they’re engaging in auctions around what the prices will be. And the ACCC has said that there ought to be price transparency as to what the prices are that come out of those auctions.
And so farmers can say ‘well, I’m not getting a great deal from Coles, I’m going to go to Aldi or to Woollies’. That gives them greater power, and alongside the additional funding for supplier training and the new anonymous complaints process they’ll be able to make through the ACCC under Labor’s new mandatory supermarket code, that will help tilt the scales in favour of suppliers. Because let’s be honest, for too long, the supermarkets have been stacking the shelves in their favour.
Karvelas:
The ACCC said it had been unable to stack up claims that the big 2 were sitting on parcels of land to keep out competition. That’s been talked about as land banking. So, are you certain that they’re not doing this?
Leigh:
There’s a lot of sites that are being held. I think the draft report referred to about 100 sites which are being held, and so that’s certainly something we need to keep an eye on. And that’s why we’ve set up this work with the states and territories through getting National Competition Policy back on track.
The Commonwealth has put aside $900 million into a productivity fund, which goes to things like ensuring that states and territories have competition front of mind when they’re doing planning and zoning.
That hasn’t always been the case, as you know Patricia. But getting a competition lens across decisions like this makes sure that consumers get the best deal. We’re holding the supermarkets in check so Australians get the best deal at the checkout.
Karvelas:
Now, this report has landed, obviously, at the 11th hour before an election so we’re not going to get, sort of law reform before the election. There are very different policies being offered by you and the Coalition on this.
David Littleproud, who is the Nationals leader and has really been pushing for divestiture powers, addressed this today and said that this is a report that’s been delivered that’s essentially politically palatable to you. I just want you to respond to that criticism that this is a report that essentially lets the government off the hook.
Leigh:
Well, that’s a shocking slur on the independent ACCC which worked hard on this report. David Littleproud’s, of course spitting in the dummy. Because this report has found what every other serious competition report has found. The Harper Review, the Hilmer Review, the Dawson Review, the Emerson Review – none of them recommended divestiture powers, and this report does not either.
The difference between David Littleproud and Labor is we’re interested in solutions that work. He’s interested in slogans. The mandatory supermarket code which Labor put in place was voted against by the Liberals and Nationals.
David Littleproud and his mates set up a voluntary toothless code of conduct and that’s what they wanted to continue. It took Labor to put in place a code with multi‑million dollar penalties over the votes of the Liberals and Nationals.
Karvelas:
He says that without that big stick and without the sort of fear of divestiture that we’re not going to see big change. Could he have a point?
Leigh:
He’s all hat and no cattle. The fact is the divestiture powers are very rarely used around the rest of the world, and a big stick that sits in the shed isn’t going to have very much impact on what you do.
Really, we’re focused here on the measures that will make a difference for Australians. Measures which will help achieve results, like getting food inflation down to about half what it was when we came into office. Food inflation was running at 5.2 per cent when we took office Patricia. We’ve managed to get that down quite considerably.
For the first time in a very long time, we’ve managed to get these additional powers for suppliers, which they just didn’t have under the Liberals and Nationals who took a hands off, laissez faire approach to this. It’s taken Labor to step on the side of the farmers and the side of the families to get both a better deal.
Karvelas:
I want to ask you just a couple of other questions because we’ve got a Budget coming and you have an economic hat, not a sort of farmer’s hat but an economic hat after your last hat comment, I want to talk about structural reform of the budget.
Every day there’s another spending announcement, and some of the spending may be very worthy. So I don’t want to have a debate about whether the spending is worthy or not, because I think cheaper medicines people would probably want delivered. But there seems to be no strategy for paying for it. Are we going to see that strategy on Tuesday?
Leigh:
No look, I think that’s really unfair on Jim, Katy and the team that have worked to put this Budget together. The deficit that you’ll see is significantly smaller than the deficit that we inherited from our predecessors. And that follows 2 surplus Budgets where we have made difficult decisions in order to get spending under control to crack down on the rorts and waste that we inherited from the Liberals and Nationals.
This is a Budget which is fiscally responsible, which aims to make investments for the future, which contains a big focus on dynamism and competition because we understand we need to get productivity going again.
Ultimately, it’s that economic growth in the economy Patricia which will allow us to work towards paying down debt. That’s the very best way of managing to grow the economy. And I know that a pro‑growth progressive like Jim Chalmers is always thinking about those issues.
Karvelas:
Sure, growth is very important – no one would dispute that. But you have to make some tough decisions. Are they being put off until after the election? I mean, I would ask this to any Coalition people too.
It seems to me that there is no serious discussion about the way that the budget looks in the years ahead. And we are clearly spending more than we’re taking in.
Leigh:
No, look, I don’t think that’s a fair critique. If you look at what we did in multinational taxation for example, no government has taken more action on multinational tax than ours. We closed the debt deduction loophole. We put in place a floor on global company tax. We’ve put in place transparency measures like country‑by‑country reporting.
All of this is aimed at increasing the tax take and making sure multinationals pay their fair share, which also has a competition benefit too because then Aussie small businesses aren’t going up against multinationals with one hand tied behind their backs. So, that’s been an area of serious tax reform for us.
Of course, changing the personal income tax cuts so every taxpayer got a tax cut, but within the same budget envelope was a key decision we took last year, opposed by the Liberals and Nationals but ultimately in the interest of the Australian people.
Karvelas:
Just finally, big tech have been lobbying the Trump administration to put tariffs on us for our approach to, you know, making them pay in our country. What’s your message to big tech? Are you prepared to take them on?
Leigh:
We certainly have been. The social media minimum age laws that were passed through last year were a marker of that. And the News Media Bargaining Code ensures that those platforms which benefit financially from great journalism make a financial contribution towards it.
You know, these are sensible measures which don’t seek to curtail the platforms that many of us use and benefit from, but which recognise that in a modern economy we need the rules to advance, to keep pace.
Karvelas:
Do you expect that big tech will, you know, some of these bosses –Elon Musk – there are others will insert themselves into our election campaign?
Leigh:
I certainly hope not. I think we ought to be running an election which is free of foreign interference and one which is a contest of ideas. Now of course Patricia, I hope that in every single election, you don’t always see it, but we need to remember that goal and that the Australian democracy really is an extraordinary creation. We’re great democratic innovators, and part of that democratic innovation is ensuring we can have a contest of true ideas and strong policies.
And, you know, I really hope the Liberals and Nationals actually start coming up with some of those policies, because I think it’s good for the nation when we have competing policy portfolios, not just a government with a big agenda and strong ideas against an opposition with hot air and a bunch of slogans.
Karvelas:
Andrew Leigh, lovely to speak to you. Thank you.
Leigh:
Likewise, thanks Patricia.