SUBJECTS: ACCC inquiry into grocery prices, inflation
CHRIS BOWEN:
G'day, hello. Everybody ready?
During the election campaign, the Prime Minister announced that the ACCC would be tasked under a Labor Government to hold an inquiry into grocery prices in the grocery sector in Australia.
Cost of living pressures in Australia are significant. Australian working families and retirees, in particular, feel the pressure at the checkout.
The Government wants to ensure that all Australians get a fair go at the check-out.
Accordingly, today I've written to the ACCC giving them the terms of reference for an inquiry into the grocery sector in Australia.
While inflation has been low in Australia over the last few years, food inflation has been higher than the average. And there's considerable evidence to suggest that Australia – Australian food inflation has been higher than the world average. And of course, that affects working families and all Australians everyday as they go to the supermarket.
I've released the terms of reference for the inquiry. This inquiry will follow grocery prices from the farm gate to the checkout. The ACCC will be holding hearings at a variety of locations across the country.
The Government will receive the ACCC's report in 6 months time. In addition, it's appropriate that we have more transparency in grocery prices in Australia. It's appropriate that consumers have more information.
The ACCC will be developing a basket of grocery goods and will have periodic surveys of the prices of those goods in locations across the country. The ACCC will be establishing a dedicated website, which will be linked to the ACCC website, which will publish those prices on a regular basis.
I've asked the Chairman to report back to the Government by the end of February on that survey, on the goods that should go into that survey and how he will be implementing that website and I've asked him to ensure that website is up and running as soon as possible.
I'd encourage all Australians to make a submission to the ACCC inquiry if they feel that they have a contribution to make and I'd encourage all interested parties to attend hearings and give evidence as appropriate.
Happy to take any questions.
JOURNALIST:
What kind of goods would you imagine to be in this basket?
BOWEN:
Well if you look at the staple goods that the average Australian family would buy on a weekly and daily basis: bread, milk, eggs, fruit and vegetables.
That's something I have asked the ACCC to report back on, because it is important to get the balance right in that basket and they will be coming back to the Government by the end of February and we will be making an announcement from there.
JOURNALIST:
Would you be expecting to find collusion between supermarket chains, exorbitant prices?
BOWEN:
Well, that's a matter for the inquiry. Australia does have arguably a more concentrated grocery industry than you would find elsewhere in the world. It's appropriate that we have this inquiry and get to the bottom of grocery prices. To get to the bottom of what actually has caused Australian food and grocery prices to rise more than it has elsewhere in the world and I look forward to getting the inquiry's results in six months time.
JOURNALIST:
Will you be looking at chains like Woolworths and how they're sort of stamping out other competition in the market?
BOWEN:
That's one of the issues the inquiry will look at. It will be looking specifically at competition issues. It will be looking specifically at the concentration in the Australian grocery market and on what the Government approach to that should be.
JOURNALIST:
What if you do find monopoly?
BOWEN:
Well, that's a matter for the inquiry. I'm not going to pre-empt the inquiry's decision and I'm certainly not going to pre-empt any decisions the Government may make on recommendations that might arise out of the inquiry.
JOURNALIST:
At the time of the announcement during the election, it was thought that an inquiry won't make much of a difference. Do you think that it will or is this just going to end up saying 'well yes we have more expensive foods because of whatever'?
BOWEN:
Well, there's two important things. Firstly, it's important that Australian consumers know that they're getting a fair deal – and the inquiry will help in that.
The inquiry will put all the information on the table; will hear evidence from supermarkets, from consumers, from any interested party, and all the information will be on the table.
The other important thing is that we need to make sure that the market is working competitively – that the market is putting downward pressure on prices and Australian consumers need to know that. And that's what the ACCC will be reporting back to the Government on. How is the market working? Is it working efficiently? Is there enough downward pressure on prices through competition? That's what the inquiry's got to get to the bottom of.
JOURNALIST:
How concerned are you that consumers are being ripped off?
BOWEN:
Well the Australian Government, of course, wants to ensure that people are getting a fair go at the checkout. The inquiry will tell us exactly what's happening in the Australian market. Clearly Australian food prices have been going up more than they have been elsewhere in the world. That's something this inquiry needs to examine and report back to the Government on.
JOURNALIST:
We saw yesterday producer prices particularly tame compared with what people were expecting, especially in the other agricultural areas like horticultural products. What does this say about the prices we're seeing on the shelf and consumer prices more generally?
BOWEN:
Well I don't think we can put too much store in one particular set of figures. These things need to be taken on a monthly and yearly approach rather than just one set of figures.
But what we do need to do is make sure that the inquiry gets to the bottom of whether the Australian market is working competitively and to ensure that Australian working families, retirees, individuals across the board, are getting a fair go at the checkout. That's what Graeme Samuel will be doing with the ACCC in this inquiry.
Any other questions?
JOURNALIST:
Is this inquiry only going to look into the supermarket giants?
BOWEN:
No this inquiry will be examining the grocery sector in it's full gamut: from the farm gate to the checkout counter: independents, large grocery chains, convenient stores – all the methods of delivery of groceries in this country.
JOURNALIST:
Can I ask about what we've seen happening in the markets in the last week or so? The Rudd Government has talked a lot about tackling inflation, inflationary pressures and in fact, inflationary pressures are there, we know; but has the Government, is the Rudd Government and Treasury looking at how to tackle the possibility of stagflation – given that we are seeing the markets…
BOWEN:
Well the Prime Minister very clearly laid out how we're dealing with inflation yesterday. He very clearly laid out that we believe it's appropriate that we have a fiscally conservative setting in our budget parameters going in to this year – that that's the way, one of the ways, that we'll be dealing with inflation.
Inflation, there is no doubt that inflation, the indicators are that inflation is a serious issue throughout the economy this year we'll be having the budget parameters appropriately set to keep inflation – to put downward pressure on inflation.
JOURNALIST:
I've just come from the Stock Exchange, where the boards there are completely red – what confidence should investors have in the Rudd Government's strategy?
BOWEN:
Well as the Prime Minister said yesterday, we need to ensure that the budget is in surplus to put downward pressure on inflation.
The markets are in a turbulent situation around the world, it's not just in Australia as you would've noticed.
But Australians investors and consumers can have confidence that we will be embarking on a fiscally conservative approach as we outlined in the election campaign, as we will continue to do, to ensure that, as far as the budget parameters are, there's downward pressure on inflation and downward pressure on interest rates.
Okay? Thanks very much.