SUBJECTS: Unit pricing
LOUISE MAHER:
Chris Bowen is the Federal Assistant Treasurer, good afternoon.
CHRIS BOWEN:
Good afternoon Louise.
MAHER:
I don't know if you have ever done that, stood in front of the supermarket shelves and tried to work out which is the best buy in toilet paper?
BOWEN:
Well across the board it is pretty difficult I have to say Louise; toilet paper or other things. That's why we are introducing unit pricing. In other areas, often you have different units of measurement, you might have a tin which is 575 g and that's a certain price and then you have another tin which is 625 g of a different brand, and you are trying to work out which one presents you with better value - often you have a couple of kids in tow, it is all a bit hard...
MAHER:
But those examples are pretty easy, you just need to work out how much per gram.
BOWEN:
That's correct, or per unit either 10 g or 100 g. The issue with toilet paper, and we are on the big issues with toilet paper, the issue with toilet paper is - my preference is what I have put in the discussion paper, the draft code, is that we should have a unit price per sheet, there are some who argue that it should be per roll...
MAHER:
Do the big supermarkets think it should be per roll do they?
BOWEN:
Some have indicated that. Now I think the problem with that, as you indicated, if there is a different number of sheets per roll it doesn't necessarily provide you with the necessary information. My starting position is that it should be per 100 sheets, we're not just talking about toilet paper we are also talking about hand towels, rolls of paper towels that you get for the kitchen and things like that.
Look it is open for discussion; we are having a conference with the consumer groups and the supermarkets in the next couple of weeks. They will sit down with Treasury and all put forward their views, but it is also open for public submission, and people can put their views, not just about paper products but across-the-board. Because there are some complexities in this area, it is very important to do it, it will give consumers a lot more information but there are some complexities that we have had to think through.
MAHER:
Well, what are the other sticking points?
BOWEN:
Well there are some things which unit pricing is of no or little value, and we have had to put some draft exceptions in. For example supermarkets also sell books - well we wouldn't put a price per page that would be pretty silly - so we have exempted them and videotapes and things like that. So there are some exceptions and they are open to comment.
There are also different units of measurement. So for example, the base unit we have in there is per 100 grams, so you will be able to compare the price per 100 grams. Now with some products that just wouldn't work. Herbs and spices for example wouldn't work. They would need a lower unit of measurement because you get them in such small containers, if you had the price per hundred grams of saffron you would be looking at something astronomical, and it just wouldn't make any sense.
All those sort of things are in the draft, and are out for comment, we are not professing that we have all the answers right; but that is our preferred starting position. There might be somewhere that we need to be convinced that we have got it slightly wrong and we will adjust it, before we implement it finally.
MAHER:
So then why are we seeing in some supermarkets already, some products which already have a unit pricing?
BOWEN:
Well, some supermarkets have chosen to do it voluntarily, and good luck to them. They will still meet the code from the first of July, and it will be compulsory first of December markets over 1000 square metres in size.
MAHER:
So that would explain why it is in some supermarkets at the moment some products have the unit pricing but not all, and not all products in a particular range.
BOWEN:
That's right. It is completely voluntary at the moment, some supermarket stores have it, you might go to another suburb and they don't have it - they are rolling it out, they are dealing with different issues in different ways.
I was pretty keen to get a national mandatory standard so regardless of which supermarket you walk into; it is all done in a very similar way. Which I think makes a lot of sense. I have prescribed font sizes and things like that, I think that's best sorted out by the supermarkets themselves, but the basic structure needs to be the same across-the-board, and that's what having a national standard.
MAHER:
So sell the supermarkets which have introduced their own will have to scrap that, and go with the national standard once it is introduced?
BOWEN:
Well they will if there are any differences. Now I expect the differences at the end of the day to be a fairly minor and there shouldn't be any great costs for them in adjusting their systems. They have known since coming, we have been quite upfront about the fact for some time that this is coming; so they have had plenty of time to make sure that what they do complies with the system that we eventually bring in. As I say the code will be in place from the first of July, and it will be compulsory for supermarkets from the first of December.
MAHER:
OK, so from the first of December all the items, barring those that are exempt, should be unit priced in our supermarkets?
BOWEN:
That's right. In any supermarket that is greater than 1000 square metres in size, so small stores are out and often independent small IGA's are out - they can do it if they wish, and if they do it they have to comply with the code, so they have to do it the same way everyone else, but it is not compulsory for them to do it, for obvious reasons...
MAHER:
Because of the costs?
BOWEN:
The costs. If you are a small mum and dad type operation, the cost of implementing this is a much greater proportion as opposed to Coles and Woolies. That's why we have gone with the exemption of 1000 square metres.
MAHER:
Chris Bowen is my guest, he is the Assistant Treasurer, and we are talking about the unit pricing which the government is bringing in from the first of July - that it will be mandatory in supermarkets from the first of December. There is just some fine tuning going on at the moment with the supermarkets.
Maybe if you have a question you can call - 1300 681 666 or SMS 1992 2666. It is 3.12 on 666 Drive.
Do you agree or with Minister's way of measuring toilet paper for example, by the number of sheets rather than the number of rolls in the packet, that is what the supermarkets want, but the government reckons it's going to stick to the number of sheets in a roll.
What about the question of quality regarding the two ply and the three ply - you can't measure that can you Chris Bowen?
BOWEN:
No, you can't. It is not designed to deal with quality, only consumers can work at what provides the best quality. I am not going to institute a big government bureaucracy to tell people what is best quality. And at the end of the day it is a matter for of choice, you may prefer a particular brand of a product, and I might prefer a different brand and it all comes down to personal choice. But what we can do is make it easier to you to compare costs and then you can shop around, and you can try the different types and if you find that quality is similar, cost is not always similar and that will give you the opportunity to drive your dollar further.
There are several studies from overseas where this has been up and running for some time, in Europe in particular and in some States of America, there can be very significant saving for consumers out of this.
MAHER:
A question from a listener. Couldn't suppliers provide the unit prices, rather than the supermarkets? That would mean it would cost less for everyone to do it and it would be possible then for the smaller retailers to be able to afford it?
BOWEN:
Well the thing is, prices can change, and supermarkets can change their prices...
MAHER:
It needs constant updating...
BOWEN:
Yes, that's correct. You do need to have that done at the supermarket, otherwise, you could have a recommended unit price on a product, but it may not bear much similarity to the real unit price. So it needs to be done at the supermarket level.
MAHER:
Alright, we have a caller on the line, Louise, hello Louise?
BOWEN:
Hello Louise.
CALLER LOUISE:
I love the idea of the number of sheets per roll being measured, because I deliberately buy the bigger [inaudible] of rolls, purely because they last for longer. There are more sheets per roll therefore they last for longer. I'd love to be able to compare them.
MAHER:
Well there you go. That is what you will be able to do isn't it Chris?
BOWEN:
That's correct. My preference is - and I would need to be convinced otherwise - that it is per 100 sheets. And the thing is Louise, as a general point - I'm guilty of this as well - people often think that 'I'll buy the bigger one because it represents the better value'. That's not always the case. When shopping in the supermarket, I often buy the bigger bottle of soft drink because I think well this will provide better value.
When you have unit pricing in, it's often not the case. Often the smaller unit provided better value and we being, frankly, misled, by thinking that there is better value with the larger product when often it isn't.
MAHER:
That's right, then you may want to be thinking about the packaging. Maybe less package; you may be doing more for the environment by buying less packaging...
BOWEN:
Again, that's a matter for people to make their own decision on. We are focussed on giving them all the information that we can, so that they can make those decisions in an informed way as possible.
MAHER:
Alright, Jackie, hello?
CALLER JACKIE:
Hello Louise. Sorry, I just have to turn my radio down. My recommendation is to do a unit price per 100 sheets, just like we get a unit price per 100 grams.
MAHER:
Okay, why do you think that would be better than counting the number of sheets? It's pretty much the same isn't it?
CALLER JACKIE:
I just thought that would be easier when different sorts of toilet paper rolls have different numbers of sheets on them.
MAHER:
Okay, Chris Bowen?
BOWEN:
Well, I think your caller is basically saying the same thing, whether you say 'per 100 sheet' or 'per sheet', it really is the same information. Of course, there aren't always sheets on the hundred, you might have say 225.
MAHER:
That's right.
BOWEN:
But per 100 sheet is probably the easiest way to do it. As I say, there are some complexities in this, which we are working through. People are perfectly welcome to give their feedback.
MAHER:
Okay, George has a quick question for us, hello George?
CALLER GEORGE:
Hi Louise, with soft drinks I'm pretty sure it was, if you are buying the cans by the carton, to have a price per litre is fairly ridiculous. What you want to be to compare is a dozen carton, an eighteen carton or a two dozen carton or thirty carton, especially when they are in different shops. I think the price per litre would be irrelevant there, whereas I think it would be relevant if you were buying loose cans or bottles?
MAHER:
Assistant Treasurer?
BOWEN:
Well the base measure for liquids is per 100 millilitres. We do have some variations, milk for example, where you tend to buy it in bigger bottles, it's per litre. I think the price comparison by per 100ml or per litre will always be relevant, because they are basic units of measurement, and regardless of whether you buy cans or bottles, to have a true comparison in value; you need to have it in per 100ml or per litre as the case may be. So again, that's my preferred option, my starting point; I think there may be some difficulty in doing it per can or per carton, because again, cartons vary in size and cans vary in size. I just think that per 100ml or per litre is generally, the simplest way to do it.
MAHER:
And just quickly on that subject of size, Lee, hello?
CALLER LEE:
Look, my question is, the size of the toilet paper sheet size has already diminished over the years, does that mean now that the manufacturers will have to have a standard size? Or will they be able to decrease the size of a sheet and increase the number of sheets on a roll?
MAHER:
That's a good question. Assistant Treasurer, has that been taken into consideration? The different sizes, perhaps, of toilet paper sheets?
BOWEN:
In terms of the size of the sheets, that's an interesting question, it's not something that is covered by unit pricing. I'm not sure if there is an Australian Standard on toilet paper, to be completely honest. But it would be 100 sheets; the other way it could be done, if we are talking about length, is per metre, which I guess would deal with your caller's issue. You eventually deal with the total amount of paper in the product.
So again [laughs] these are the sorts of issues we are thinking through and that we will need to come to a conclusion on in the not too distant future, in order to get it implemented and rolled out across the country.
MAHER:
And did you ever think when you put your hand up for election Chris Bowen that you would be on the radio talking about the cost of toilet paper?
BOWEN:
Well I can't confess to you Louise that it was the reason I got into politics. But nevertheless, it is important, in terms of people's weekly budgets, and unit pricing is something I'm quote proud of. A lot of groups have been calling for it for a long-time in Australia. A lot of government have resisted the need to do it. I'm very pleased that we are getting along and doing it.
MAHER:
Good luck with your final negotiations. Thanks very much for joining us.
BOWEN:
Thanks Louise, always a pleasure.