Ali Moore:
If you have noticed or experienced even a bit of price gouging – a bit of shrinkflation at the supermarket, you know that thing where you pay the same or maybe more, but the actual size of what you’re buying is less? I really want to hear what you have experienced, and so does the federal government.
The government is moving to make supermarket price gouging illegal, and they’re releasing their draft legislations so we can get an idea of how it works and we can give some feedback. Dr Andrew Leigh is Assistant Minister for Productivity, Competition, Charities and Treasury. Dr Leigh, hello. So tell me Dr Leigh, how do you stop price gouging? What’s in the bill?
Andrew Leigh:
Well, the bill will have a broad prohibition against charging excessive prices, and it’ll be up to the courts to determine whether the supermarkets are charging excessive prices. They might look at things like the cost of the goods plus a reasonable rate of return for the seller, or else they might compare what’s being charged in the supermarket to what’s being charged in other markets.
Our big 2 supermarkets have two‑thirds market share, which is big by international standards. And so Labor believes that they need to face appropriate scrutiny on the prices they’re charging Australians.
Moore:
But for that to be anything other than just good intentions, won’t you actually have to have an enforceable cap on a rate of return?
Leigh:
What we’ve got is multi‑million‑dollar penalties, which will apply if the supermarkets do the wrong thing.
Moore:
But what’s the wrong thing? I guess my point is, what is a reasonable rate of return? If a piece of legislation doesn’t dictate, you know, what the highest rate of return should be, who’s to judge ‘reasonable’?
Leigh:
They’ll take account of what’s being done in the UK and European Union where these sorts of prohibitions have existed for a while, and also regulatory guidance from the competition watchdog – the ACCC. We want to make this a broad power which is future‑focused rather than locked into the particular circumstances we find ourselves in today. It’s a broad power with big penalties. If supermarkets do the wrong thing, up to 10 per cent of their turnover.
Moore:
And will those powers go very specifically to things like unit pricing so that you can tackle things like shrinkflation?
Leigh:
Well, we’re tackling unit pricing separately through a review of the Unit Pricing Code and looking at the clarity of labels on the shelves, whether it should be extended to other contexts, whether there’s a kind of apples‑with‑apples comparison. Shrinkflation has been damn annoying for many Australians for many years, and we’re doing something about it.
That’s alongside the other work we’re doing: CHOICE’s quarterly grocery price monitoring, an additional $30 million to the ACCC to monitor the supermarkets, and every supermarket merger coming before the Treasurer automatically under our merger laws that passed last year.
Moore:
But I haven’t had a chance to have a look at the bill. I mean, how specific is it if it just sort of talks about good intentions but doesn’t give very specific powers? I just go back to the issue of how do you stop this?
Because, you know, looking at what happens in the UK in terms of reasonable rates of return, that’s sort of irrelevant to our market isn’t it? Because we work in a different economy. There’s a different structure. So, how do you make that legislation tough enough with sufficient powers to actually be able to target the supermarkets?
Leigh:
Ali, we’ve thought hard about this and looked at a range of different options. Our judgement is that the best way of holding the supermarkets to account is by having a broad prohibition on excessive pricing which can be enforced by the courts. Penalties of up to $10 million, 3 times the ill‑gotten gains or 10 per cent of turnover.
So, that’s the prohibition that will come into force when we have the regulations through, hopefully by the end of this year. It builds on work that we’ve done to ensure that supermarkets are looking after farmers, through making the Food and Grocery Code mandatory last year. And this new prohibition will sit within that Food and Grocery Code.
Moore:
And is there a lot more money for the ACCC to fight those cases legally?
Leigh:
We’ve given the ACCC a lot more money in terms of its supermarket work. We recognise the priority this is for Australians. We’ve held a supermarket inquiry, the first in 16 years, which has come back with a range of recommendations that we’re acting on as well. So, we’re moving on a whole range of fronts to make sure that supermarkets are pro‑competition, from paddock to pantry.
Moore:
So, what are you hoping to – you’ve released this draft legislation – what are you hoping to hear from consumers? What sort of feedback are you looking for?
Leigh:
We’re keen to get the sense from consumers as to how they feel about these proposals. We want to hear from shoppers, we want to hear from supermarkets, we want to hear from suppliers. Consultation is short and sharp. It’ll end on November 3. People can go to treasury.gov.au to have their say.
Moore:
And when do you expect the legislation to – you finish the consultation on November 3 – when do you plan to put the legislation through parliament?
Leigh:
We’ll move very quickly to get this through. This is exposure draft legislation out now alongside an explanatory statement. We’re serious about getting this done quickly because we know the cost‑of‑living pressures that many Australians are under and that our big supermarkets, having a lot of market power as they do, need to be appropriately held to account.
Moore:
Andrew Leigh, do you do the shopping in your family?
Leigh:
My wife and I sort of split it but yes, I’ve found myself walking the aisles of Coles and Woolies both in the course of the last week.
Moore:
And have you picked up a packet of something and found that it just weighed a little bit less but cost a bit more?
Leigh:
Oh, yes. You notice this shrinkflation going on all the time, and that’s certainly why we’ve cracked down on it. Yeah. I think it’s important as a parliamentarian to do your own taxes, to do your own shopping, to be out there as much as possible experiencing the world as your constituents do. If you wall yourself off from it, then you’re a less effective representative for the people who put you into parliament.
Moore:
Dr Andrew Leigh, just before I let you go, you are Assistant Minister for Treasury. Of course, there’s a relatively important meeting that’s going to go or will start at about 3 o’clock in the morning, our time, tomorrow morning. That would be between the Prime Minister and the US President. So, a little bit of nerves, I don’t know, in the government just hoping that all goes well.
Leigh:
Well, I think this is really not a threat, but it’s an opportunity to deepen our ties on trade, investment, defence co‑operation, AUKUS and maintaining peace and stability in the Indo‑Pacific region. The Prime Minister and the President have spoken on multiple occasions and caught up briefly in New York, so I’m really optimistic for a strong and productive meeting between the pair.
Moore:
Well, we shall wait and see. Dr Andrew Leigh, good to talk to you. Thank you.
Leigh:
Thanks so much. Ali.
Moore:
That’s the Assistant Minister for Productivity, Competition, Charities and Treasury.