ALAN JONES:
I spoke earlier this week to Nic Moulis, the Chief Executive of the Australasian Convenience and Petroleum Marketers Association about what I regard as a farcical cave in by the ACCC to accept voluntary undertakings by Coles and Woolworths to cease making fuel saving offers, that is ‘shopper docket discounts’, that were wholly or partly funded by any part of their business other than fuel retailing.
The ACCC is supposed to be investigating these fuel saving offers, because they lessen competition. Now if you heard that Woolworths and Coles were entering into a business of voluntarily cooperating on anything, you’d smell a rat. But under this ridiculous agreement, Coles and Woolworths may still offer discounts on fuel, including discounts in excess of four cents a litre. But from 1 January, we’re told all fuel discounts, including those offered by the supermarkets must be funded from within their fuel retailing organisation. Hello? Who monitors that?
One thousand small, independent petrol retailers have been driven out of business over the last four years by this shopper docket fiasco. It’s anti-competitive, it’s predatory pricing and there is legislation in the Parliament on the statute books to address that and it’s never been exercised. It was called the Birdsville Agreement. Barnaby Joyce “The arrangement that two competitors would agree to limit a discount” – that’s what’s happened. Think of it – two competitors have agreed to limit a discount is in itself collusive.
With shopper docket discounts it’s simple. The competitor with the greatest ability to cross subsidise wins. And the bloke, who can’t recover his discounts on some other product, can’t offer the discount. The market is stuffed. Shopper dockets should not exist. Now I’ve spoken to Bruce Billson when he was in opposition and I think this bloke has got a fair bit going for him because he knows the scene and is committed. And I said as recently as November last year, he was the hope of the side. The only thing is, the rhetoric in opposition sifted from the reality in Government. I said last week that he went soft when he swallowed the line that Coles and Woolworths were going to again voluntarily accept a new code of conduct.
The supermarkets were going to be more transparent about shelf space allocation - this was last year before the shopper dockets fiasco. I’ve seen too much to swallow this rubbish and I said to Bruce Billson then “you know better than to welcome this draft food and grocery code of conduct by Coles and Woolworths and the Australian Food and Grocery Council, because this mob just belt up the suppliers.”
The poor bugger that grows the crops or makes the milk or the butter or the whatever.
And as for balancing relationships between the retailer and supplier, forget it. And as for the industry ‘collaboratively working together to achieve an outcome which regulates the way suppliers and retailers interact’ – forget it. The supplier is ripped off. He is a price taker – that’s why the government was changed.
Small business voted overwhelmingly because of what they’d heard from Bruce Billson.
The poor bugger that’s growing fruit and vegetables and milk is still getting bashed up. He’s now the Minister – Minister good morning.
MINISTER BILLSON:
Good morning Alan to you and your listeners.
ALAN JONES:
Now you were the hope of the side, are you letting down the side?
MINISTER BILLSON:
No we’re going like cut cats to bring about the kind of changes that you’re describing and some of our early actions represent what’s the most decisive, positive step while the more complex work of revisiting the laws, that some of which you touched on Alan that haven’t lived up to their billing. In some cases they have been the hunting dog that won’t leave the porch – they’ve sounded great but haven’t achieved their goals. That will take longer as it goes through the proper processes of working out what changes are justified and can get passed by the Parliament. In the meantime we are using the toolkit that we have - some of the measures we have are not perfect, but are certainly a step in the right direction. They represent the most decisive and practical steps that we can take now.
ALAN JONES:
Okay well hang on. Now there are thousands of small businesses around Australia, this is going around Australia, listening to you now. You’ve been there since September - tell me what you’ve done to make the life of the small businessman better now than it was in August last year.
MINISTER BILLSON:
What we’ve done in the area of competition – we’ve got the franchising changes being worked through the Parliament and through the regulatory impact process to make sure that those franchisees and franchisors that may start with a good, mutually supportive relationship but that can turn quite quickly because of the dependence that a franchisee has on a franchisor. We’ve already drafted those changes. The areas of the shopper dockets – a voluntary undertaking to keep those discounts to four cents a litre so that Nic Moulis and those independent retailers of petrol that are so important to ensuring that the big players are kept on their toes…
ALAN JONES:
There should be no shopper dockets; there should be no shopper dockets. Why have Woolworths and Coles got exemption from the Trade Practices Act and no one else? And how can you guarantee that the four cents a litre discount that they are offering, is recovered from the fuel retailing business and not from the cabbages and the apples and everything else in the supermarket? How can you guarantee that’s happening? You can’t!
MINISTER BILLSON:
Well yes we can, because that’s what’s required of them under the undertaking and if they do something different then they have broken that undertaking and that’s enforceable in the courts.
ALAN JONES:
How? How do you prove that the four cents that Woolworths are offering as a discount for petrol – how do you prove that that is being funded from their fuel retailing revenue? How does the watchdog prove that? You cannot.
MINISTER BILLSON:
The watchdog can demand information about the business, about the margins they are operating under and as Nic Moulis and many others at the time that the four cents a litre undertaking was given, thought that was a very positive step because it ensured that smaller businesses could actually compete.
ALAN JONES:
Bruce, Bruce. Why do Woolworths and Coles. Why? Why have Woolworths and Coles got an exemption from the Trade Practices Act and can practice discounting of petrol calling ‘shopper dockets’ in order to run 1,000 small businesses out of business and you’re the Minister for Small Business.
MINISTER BILLSON:
Because the current law allows them to do it.
ALAN JONES:
Change the bloody law.
MINISTER BILLSON:
And that’s exactly the process that’s being worked through.
ALAN JONES:
So you’re going to eliminate shopper dockets?
MINISTER BILLSON:
No, what we will be doing is eliminating, what I think, is a strong case to eliminate the exemption that’s available to related businesses to do the kinds of things that are happening with the shopper dockets.
ALAN JONES:
No but why don’t you say the Trade Practices Act applies to everybody, including Woolworths and Coles and the shopper docket thing, which is anti-competitive, it’s predatory, it’s designed to run little petrol retailers out of business so that one day under Bruce Billson’s ministerial control – we’ll have Woolworths and Coles controlling all the petrol outlets in the country. That’s the aim of the exercise.
MINISTER BILLSON:
Well that’s what we are trying to avoid because….
ALAN JONES:
Well change the law!
MINISTER BILLSON:
And that’s exactly what we just said Alan…
ALAN JONES:
So I asked you - will you eliminate shopper dockets, will you eliminate the exemption?
MINISTER BILLSON:
We have the exemption which we are concerned about on the table for the root and branch review of the competition laws because we don’t think it’s serving a pro-competitive, pro-consumer purpose which were introduced by a previous Parliament…
ALAN JONES:
I can’t get the answer – yes or no? Will you eliminate the exemption that these two companies have to the Trade Practices Act and abolish shopper dockets? Yes or no?
MINISTER BILLSON:
I won’t abolish shopper dockets because I think some of them at the right price…
ALAN JONES:
Hang on do you understand that Woolworths are here offering a discount to petrol and Bruce Billson has got a little petrol retailing outlet up the road. Bruce Billson can’t even buy his petrol for the price that they are offering it, under the shopper docket regime. So of course the motorists are going to go in here for 65 litres he’s going to get $2.40 or whatever. But we’re running and the figures are there. You know them - in opposition you argued about it. A thousand little blokes out of business! How many more are going to go out of business under Bruce Billson?
MINISTER BILLSON:
Well with the four cent limit, that is within the margin of the way in which smaller operators can compete and provide value to their motoring customers. That’s why the four cent limit is there. The bigger issue Alan, which is the one you’ve touched on quite insightfully, is this exemption that exists for related business arrangements of the kind you’re describing.
So if you and I were running a petrol retailer and David was running a supermarket and David said ‘if you spend certain amounts of money in my supermarket, I’ll give you a discount at Bruce and Alan’s petrol station’ – that would be breaking the law. Except the current law Alan allows related businesses to do that. I think that is a ridiculous provision in the law. These shopper dockets should be obliged to go through the same process – even for related businesses if they were being offered by unrelated businesses to prove the case that they are in the consumer benefits. If they can’t prove that, then they shouldn’t be allowed to do them and that’s where the law needs to be changed Alan.
ALAN JONES:
Bruce my little battlers here are all shaking their heads you see. People listening to you are shaking their heads. This is not the answer we thought we were going to get. Let me tell you this – Woolworths and Coles. I talked to you last year about KPMG finding that Coles had cut the price of more than 6,000 grocery items by an average of 10 per cent since its ‘down down’ campaign began in 2010. And that forced Woolworths to do the same. And I said to you ‘were Woolworths paying for the discount?’ and the answer was no. Because the KPMG report found that suppliers were being charged 20.4 per cent more than they were in 2009 for shelf space and all the rest of it. 20.4 percent more and that came to $4.19 billion the suppliers were paying in excess to fund the ‘down down’ campaign. What’s Bruce Billson doing?
MINISTER BILLSON:
Well that’s where the code that you talked about comes in. Where those price pressures, that the supermarkets claim to be offering customers, shouldn’t come by squeezing the supply chain.
ALAN JONES:
Yeah but how do you stop it? Are you stopping it?
MINISTER BILLSON:
That’s where the code comes in.
ALAN JONES:
What a voluntary code? You believe in a voluntary code? It’s like going to the criminal who beats people up and saying ‘look we’ll come to an agreement with you but please don’t belt anyone else up.’
MINISTER BILLSON:
That’s mischaracterising the code. The code is an ‘opt-in’ code. Once a supermarket chain signs up to it, it is enforceable, it is mandatory. It’s the ‘opt-in’ issue that’s the only voluntary part. Major supermarket chains have said they’ll participate.
ALAN JONES:
Have you spoken to suppliers because they’ll tell you that nothing has changed. Nothing. If you want your stuff Bruce Billson and you are a little farmer out there, on the shelves you’re going to pay through the neck to get it. They are price takers - nothing has changed. We’re running out of time and I want to ask you one question, that I’ve asked you a million times. You know the cash rate for money is below three per cent, round about three per cent. Now you must be talking to small business, they have been charged by banks 10,11,12 per cent, four times the cash rate. What are you doing about that?
MINISTER BILLSON:
Yep that’s why they have too much margin, a lack of competition – like what you were describing earlier - the smaller banks are out of the market place and the margins that the bigger banks have been able to charge have been very difficult and very specific about who they will lend to. This has pushed up the cost of finance for small business. That’s on the G20 agenda. We’ve got some measures to improve competition, to make sure smaller businesses can get access to affordable finance. That is absolutely right how you’ve characterised it, but that is a symptom of the concentration that small business lending and the big banks. We need smaller competitors and other options available Alan.
ALAN JONES:
Okay well we need to talk often and again but can I just say to you - I don’t want something developing where by in September last the voters changed the horse, but they didn’t change the jockey.
MINISTER BILLSON:
Much has been changed and we’ll stay in touch because I know of your interest and I’m grateful for the pressure you keep bringing to bare Alan. This is very crucial work and we are red hot having a go at changing this competitive environment so businesses that are efficient, regardless of whether they are big or small, can compete, can prosper and can employ Australians.