Kevin Hogan (Page, National Party) Share this | Hansard source

I move:

That this House:

(1) notes that:

  (a) the disparity of petrol prices between regional and rural areas compared to city prices is not explainable and must be investigated; and

  (b) allegations of misuse of market power, unconscionable conduct and the use of unfair contract terms by the large supermarket chains Woolworths, Coles and Aldi, must be investigated; and

(2) calls on the Government to:

  (a) request the Governor-General to establish a Royal Commission into the supermarket and petrol retailing sectors; and

  (b) draft terms of reference that will investigate all facets of the major operators of the supermarkets and petrol retailing industries, including but not limited to, business practices, conduct and culture with regard to:

     (i) misuse of market power;

     (ii) unfair contract terms;

     (iii) unconscionable conduct; and

     (iv) pricing collusion.

In 2008, there was a major ACCC inquiry into the power of supermarkets. This was followed by a Productivity Commission inquiry and two Senate inquiries. Fines were issued, a voluntary Food and Grocery Code of Conduct was adopted and the effects test legislation has been enacted. This is because it is well-known and documented that there are serious issues in relation to the major supermarkets. I say that things have not changed. The problems are systemic. It needs a royal commission.

Allegations of bullying, intimidation and unfair contracts are rampant. Suppliers won't make complaints for fear of retaliation. As we found out in the Woolworths action in the Federal Court last year, what the ACCC finds to be unconscionable behaviour, the court can declare is perfectly legal. As the ACCC's Rod Sims said at the time:

If you're a supplier subject to arbitrary demands, it's very hard to make future investment decisions in the face of financial uncertainty.

One supplier of a well-known grocery item from a different state from me told me that one supermarket wanted to run a special one item of theirs at cost price. When the supplier declined, the supermarket pulled 13 of the supplier's lines. They also lost priority shelf space for three months in retaliation.

Another was forced into administration after supplying fresh products for 30 years. A number of years ago, he tried to negotiate a price increase after his costs, including labour and power, had jumped 14½ per cent. He was told he had to keep his costs down. The suppliers said that the only way he could do that would be to pay under award wages, and he was not prepared to do that. A couple of months later, they received a call instructing them to accept a price cut across all their lines of between five and 30 per cent. It was the end of their business.

Many suppliers have also told me agreements are only verbal and are often ignored. The closest thing they get to a contract is the last delivery order, and the quantity of any order can be massively cut just hours before it is to be shipped because the supermarket has found a cheaper supplier. This leaves the supplier footing the bill of wasted produce. The extraordinary time it takes to negotiate with the supermarket to sell through its doors and the buy-in cost means moving to rival supermarkets can be prohibitive. In effect, each supermarket is its own single market, and the supplier is punished if it is not compliant. Those are just some examples. I could quote many more. The pattern, though, is that the supermarkets are bullies; they act like bullies, they are bullies to their suppliers, and it is not okay.

In the royal commission I have called for, I also want to look at Australia's retail petrol market. Why is there such a large disparity between pump prices in the capital cities and those in a regional community like mine? It is not unusual for there to be a 20c to 30c per litre differential between regional and city prices. This is not explainable by transport costs or any other cost input. In fact, in my region for the last five weeks, it has been 40c higher than in the capital city two hours ago. With very little public transport options in the country, and the longer distance travelled, it's a huge impost on people and regional economies.

As a member of the Standing Committee on Economics, I asked the head of the ACCC, Rod Sims, about this when he appeared before the committee in August 2016. Even he couldn't give a satisfactory answer as to why regional petrol prices are so much higher. It in fact seems to be one of the seven wonders of the world. There have been inquiries into this that have also not got to the bottom of why, which is why the royal commission needs to investigate this as well. People living in regional Australia, bringing up families, should not be gouged simply because of where they live.

The examples I have mentioned only skim the surface, but they do point to systemic problems. The behaviour of both threaten many small and medium-sized businesses in my community, because petrol is a serious cost input—and also if they are having to negotiate with the major supermarkets. I ask this House to take the lead on ensuring true and fair competition to support the aspirations of the largest employer of Australians—the small business sector—and to stop the rip-offs occurring at the petrol bowser for people living in regional Australia.

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