SUBJECTS: GroceryChoice, petrol prices, razor gang
JOHN STANLEY:
The Assistant Treasurer Chris Bowen joins me now on line now. Good morning to you.
CHRIS BOWEN:
Good morning John.
STANLEY:
So how will it work from the middle of the year?
BOWEN:
Well what we are doing John is keeping this government website, but having Choice manage it on our behalf, they have a lot of expertise to bring to the table. And the result that choice wants to get to, is that they will have weekly updates, and they will basically all the items available in supermarkets and then you'll be able to pick and choose your own items to make your own basket.
That's their end result that they would like to get to over time. That won't happen overnight of course.
What we want to do is provide consumers with the best information possible, to allow them to make their choices.
STANLEY:
So how will they get the information, physically get the information on a weekly basis?
BOWEN:
What Choice has been talking to the supermarkets about is getting it directly off the supermarkets. Getting it downloaded to them. There is some more discussions to occur between Choice and the various supermarkets groups, but that is what they want to get to eventually.
STANLEY:
But it is a hard call. You are asking supermarkets to give information, for instance, about what they will be charging tomorrow for a loaf of bread, information that they might not necessarily want to give to their competitors.
BOWEN:
Well, it won't be prospective information, it won't be what we are going to charge tomorrow or next week, it is what they are charging at the moment and choice wants to get it to a weekly update.
Of course, before we had Grocerychoice John, there was only the yearly survey that was done by Choice. That was the guide that was provided to consumers, and that used to get a lot of comment if you remember - every year choice would put out their survey and people would comment on who is cheaper, Coles, Woolies or independents, ALDI etc.
GroceryChoice went for a monthly system, which if you like is 12 times better than a yearly system, but consumers still want more, and I agree with them and I want to give them as much as possible.
It became clear to me - because it was an election commitment to give the ACCC the website - it became clear to me that the ACCC is the regulator of business activities in Australia, and there was some conflicts, for example, I wanted to get specials up on the site and let people know where the specials were.
The ACCC pointed out to me ‘look we are the regulator, we have to sue people if they are falsely advertising, if we start advertising specials he would be a bit of a conflict’. And I think they are right about that. And when choice came up with this idea I thought it was a good way of getting through those conflicts and getting Choice who are a well respected organisation, everybody respects their views, to manage the site on our behalf.
STANLEY:
So how much will you be giving them to run the site?
BOWEN:
Certainly no more than it was costing us already. There was a budget allocation of $13,000,000, that's over four years, it's not $13,000,000 a year; it’s over four years. And I made it clear to Choice and they accepted early in the discussions that that was the budget and we would be able to provide any more.
They are confident with their expertise and contacts that they can provide the extra information for no extra charge.
STANLEY:
So having promised to put downward pressure on grocery prices, if at the end of this year they come out with a finding that in fact grocery prices have risen and they are critical of the government if the government has some role in that, you will wear that, there will be no capacity to influence them?
BOWEN:
No, certainly not and that is a very important point John. Choice is an independent body that means from time to time being critical of governments, and it will mean from time to time being critical of me. I expect them to continue to do that. This is in no way threatening their independence.
STANLEY:
You are giving them a fair bit of money, then it is a contract that then has to be renewed at the end of the contract, so doesn't that compromise them in some way?
BOWEN:
I don't think so. There are two points to make there, it is a fair bit of money but it is to provide a service, if the service was withdrawn and then the money would be withdrawn; they would be no better or worse off. And secondly they have done this sort of thing before, when the GST was introduced the previous government got Choice to monitor whether there was any rip-offs occurring. There was a transfer of funds, I don't think anybody thought that it threatened their independence then, and I don't think it will threaten their independence now. I think what it is providing is extra information to consumers, which they do very well.
STANLEY:
What about the small independent retailers. Will they be able to get involved in this if they wanted?
BOWEN:
Absolutely. They are in very important part of competition, and there is already of course information on the grocery choice website under the ‘independents’ category. Every supermarket under the independents category is supplied by Metcash on the mainland, all part of the same group. And that will continue, and they will be able to be involved, I would hope that they would welcome the extra information to their customers.
STANLEY:
So it will kick off middle of the year?
BOWEN:
Already Choice is taking over the website, from the first of February or the second February next year, you will see the new website, but then they will build it up until the first of July, and they will continue to add more information as they go.
STANLEY:
Okay alright, so FuelWatch has gone now has it?
BOWEN:
It was defeated in the Senate unfortunately John, it was a tied vote in the Senate and under the rules of the Senate it means it was defeated.
STANLEY:
You're not going to bring it back; you're not going to have another go?
BOWEN:
Well I would need to see some indication - I'm not going to waste Parliaments time - I need to see some indication from the Senators that they were seeing some sense. Of course FuelWatch has been operating in Western Australia for eight years, very successfully, under both Labour and Liberal governments. It is seen by consumers and small business in Western Australia as providing them with a lot more information.
The ACCC has been very concerned about what they call tacit collusion. As close to collusion as you can get with it still being legal in the retail petrol industry. And Fuelwatch was the mechanism to deal with that.
You know taxi drivers, constituents, say to me all the time John don’t you think there is collusion in the petrol industry. I say look I don't think there needs to be because they have all the cards, they have all the information, Fuelwatch was to give consumers the same information as the retailers have. So while Iam disappointed that it has been defeated in the Senate that is the system that we live in, that is democracy. And we have just got to move on.
STANLEY:
Prices have gone down now. Just a final one, you are the Assistant Treasurer - Lindsay Tanner saying this morning there will have to be another razor gang exercise to cut government spending so that you can meet commitments to pensioners in particular. How serious are those cuts going to be?
BOWEN:
We do this in a budgetary context and we have taken this very seriously John. I am a member of the expenditure review committee of the Ministry and we take expenditure very seriously.
There will be some very tough decisions to be made in the budget we do want to meet our commitments to pensioners and do as much as we can in other areas and that will require some tough decisions, and that's what being in government is all about.
STANLEY:
You will meet the commitment to pensioners?
BOWEN:
We made it clear, the Prime Minister, the Treasurer down, have made it clear that pensioners are doing it tough and we need a long-term solution for them and we don't see the bonus, this year the lump sum payment, as being the be all and end all. We have recognized all along that there is a lot more to do.
STANLEY:
Yes, there will have to be cutbacks somewhere else. So some group or someone is getting something, someone will be getting less as a result.
BOWEN:
Look John, everybody has a valid claim. We find in the expenditure review committee of Cabinet, every minister that comes forward with expenditure bids has as a very valid claim, and very worthy bids. And you can't fund all of them you have to prioritise, you have got to budget. If you funded everything, the economy would be out of control very quickly.
So that's why in government you have this process to look over minister’ spending bids and the community spending wishes, and sometimes that means cutting elsewhere, reprioritising. Saying ‘well hang on a second; we don't think that is as important as this new project’. And of course at the end of the day, we have to make a decision about how big the surplus and/or deficit is, that is required under the economic circumstances at the time. Then you’ve got to cut your cloth to suit and that mean taking some tough decisions along the way.
STANLEY:
Good luck and happy Christmas if we don’t talk before hand.
BOWEN:
It has been lovely talking to you through the year John and enjoy your Christmas.
STANLEY:
Chris Bowen, who is the Assistant Treasurer in the Rudd government.