SUBJECTS: ACCC Grocery inquiry, GROCERYchoice website, Foreign Investment
SIMON BEAUMONT:
Joining us on the program now is Chris Bowen, the Assistant Treasurer and the Minister for Competition Policy and Consumer Affairs. Minister good morning to you.
CHRIS BOWEN:
Good morning to you.
SIMON BEAUMONT:
I'm looking at the copy of the website this morning, GROCERYchoice, and I know that in my area, up where I live, it says an anonymous basket of goods in Perth North – if I go to Coles it'll be $159.01, Woollies $157.20 and independents $166.44.
Does that tell me anything Chris? Is that going to change where I go shopping?
CHRIS BOWEN:
Well, it's up to you Simon. What it does is provide a snapshot for people. A lot of us get in the habit of shopping at the same supermarket time and time again. I'm no different. You go to somewhere if it's convenient et cetera. But if you think about changing supermarkets, this would provide a guide for you if you shop at, in your case Coles, and you might think 'where should I go? I might check out Woolworths', if you have a look at this website. Then you'll go, potentially once, and check it out and see if it suits you in terms of convenience, customer service, quality and your purchasing.
SIMON BEAUMONT:
So it doesn't, it doesn't change where I go shopping. It certainly wont bring prices down – this is FuelWatch again Chris, is it?
CHRIS BOWEN:
Well it's very different to FuelWatch. These are different issues for different problems. In fuel we have a very different problem to what we have in groceries. In groceries what we have is sustained increased prices and this is not designed to bring prices down. I do think you'll have a lot of monthly commentary, by the way, on which grocery store is cheapest in different regions from your good self and your colleagues, commenting as these figures come out once a month and that will concentrate the minds of those do their pricing.
SIMON BEAUMONT:
Now Chris, with respect, we won't comment on the prices if they don't mean anything, if they lack detail, which at first viewing them seem to do, they do lack detail. Why would we talk about them?
CHRIS BOWEN:
Well because a lot of people are commenting this morning, for example, on the fact that in our 61 regions, 52 of them Coles – under these baskets – have the cheaper goods. In the 40 regions that Aldi exists in, which is not widespread, it's not outside the eastern states, but they're trying to expand, in the 40 markets that Aldi present in they are cheapest in all of them.
So that's a guide for people to say well if I'm thinking about changing my purchasing patterns, it's a bit of assistance. Can I say, the GROCERYchoice website is one thing, there are lots of things arising out of yesterday's inquiry, this is just one of them.
We have a range of recommendations which we're pursuing; unit pricing is another one which will give consumers a lot more information when they're at the supermarket. Freeing up the planning rules so they're not anti-competitive and people can't gain them to try and keep their competitors out, is another big one. And we have a range of recommendations out of the report we released yesterday; the report finds that the competition in Australian grocery market could be a lot more vigorous. It's says it's workable, which means it gets by day to day, but it could be a lot more vigorous and consumers would, in the words of the ACCC, 'significantly benefit from more competition'.
I must say, that's where the action is – more competition. If we had more Aldi's or more other competitors in Australia then consumers would be better off.
SIMON BEAUMONT:
We don't have Aldi's in Perth and we've spoken to them this morning; there are no plans at this stage for Western Australia. I note that, on the issue of competition, the ACCC found that the two big chains represent 70% of all packaged goods and 50% of all fresh food sales. That would be a lot higher in Western Australia.
We're concerned over here that the level of competition is not there and surely that means that prices stay up at the whim of Woollies and Coles.
CHRIS BOWEN:
Oh there's no doubt that more competition means that there's more people trying to get our dollars as consumers and yes that would put downward pressure on prices, this is what that's all about. It's about saying to the existing players in Australia 'what can we do to get out of your way so you can expand?'
Now Aldi came to me, for example, a few months ago and said 'we're thinking of expanding into the other states, but because we're foreign owned we've got all these restrictions about when we develop our land, can you free that up?', so we did. We freed it up as they requested.
The planning laws is another one, you've got existing retailers who can say 'we object to this development on traffic grounds, environmental grounds and amenity grounds', and they admitted to the inquiry that that's all nonsense, it's just going to affect their business. Well that should all go and these are the sorts of things we've go to work through COAG to try to free up the planning system to that that barrier to entry comes down. A lot of these people are thinking about coming in, Costco, for example, which is a big American chain, has been trying to come in to the Australian market for a long time. It's found all these obstacles. They have a business model which requires a big block of land, they're sort of, if you like, a Big W and Woolworths combined, with a bit more of a department store, but they have very few range of goods, but they're a lot cheaper. They're coming into Melbourne, but they need 13,000 square metres per site so there are real planning constraints there, which we need to work on with them.
So we really do need more competition, we need it more vigorously, that means getting more people into the sector.
SIMON BEAUMONT:
Alright Minister, thanks for your time this morning.
CHRIS BOWEN:
Pleasure.