Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Hansard source

The coalition shares the frustration of Senator McKim and others over Labor's inaction and incompetence in this critical policy area. The Treasurer, Dr Chalmers, and his assistant competition minister, Dr Leigh, have been missing in action, constantly exposed as being on the back foot, and Australians are paying a very high price as both suppliers to our supermarkets and consumers at the checkout. But that is where the common ground with Senator McKim's private senator's bill and the coalition ends, because we see this for what it is: an ideological and symbolic attack on big business in Australia.

This bill has been designed, as Senator McKim's Senate inquiry was, to attract wide publicity and deliver a very narrow outcome. This issue is too important to fall victim to culture wars in this place. It is also an overreach which, in many cases, fails to stack up against the evidence. What is needed here is a comprehensive and well-planned package of reforms that will change the supermarket sector for the better in the years to come. That is not Senator McKim's bill, and that is why the coalition will not support it.

The bill is modelled on recommendations of the Greens initiated Senate Select Committee on Supermarket Prices and the ACTU inquiry into price gouging. It would amend the Competition and Consumer Act so the ACCC could apply for a court order where it believes a corporation has abused its market power by price gouging. The court could impose orders under section 76 of the Competition Act, which includes a maximum civil penalty of $50 million. Senator McKim made significant claims when it comes to justifying his bill in both his second reading speech and the bill's explanatory memorandum, and they are claims worth putting to the test. Senator McKim said:

Wherever you look, massive corporations … are profiteering from people's pain and making the cost-of-living crisis worse.

He added:

The share of income going to big corporations has never been higher …

Senator McKim also said:

Lack of competition allows corporations to take advantage of their dominant market power to hike prices above what would be required to meet increases in their input costs.

And, most notably, he told the Senate:

Banning price gouging should not be radical or controversial.

But I think it's important to test those claims with what others say. What do others think of these claims? Do they support Senator McKim's view on what he refers to as 'price gouging' by Australian companies? The answer on almost every measure is no.

Firstly, grocery prices have largely followed economic pressures, including inflation. In her 24 September media conference, reflecting on data published by the RBA earlier this year, the Governor of the RBA, Michele Bullock, said:

… leave mining to one side—profit margins haven't expanded. What that was telling us was that as costs were going up, on average businesses were just passing on the costs but they weren't any more than passing on the costs.

The interim report of the ACCC's supermarkets inquiry, which was also released last month, concluded:

Grocery prices have significantly increased over the last 5 years, with price rises in all categories of grocery products.

…   …   …

This growth is largely in-line with inflation in other goods and services …

It noted:

Operating costs for suppliers and supermarkets have likely increased substantially between 2020 and 2023. Factors cited … as driving increasing operating costs in this period include rising interest rates, higher energy and transport costs, changing labour market conditions and legislation, and insurance costs.

Secondly, Australian grocery prices have increased less than those in similar countries. Before the Senate Select Committee on Supermarket Prices, the Chief Executive Officer of the Australian Food and Grocery Council, Ms Tanya Barden, gave evidence, saying:

… while we have seen a significant uptake in food and grocery inflation in Australia, it is still below other markets around the world. Countries like the UK have incurred far higher rates of increasing food and grocery prices than we have in Australia.

And, thirdly, supermarket profits are in line with comparable domestic and international corporations. The Australian Financial Review, in an article headlined 'Why it's a dangerous time to make a big profit in Australia', on 23 February this year, cited:

Analysis from the Australian Shareholders' Association published on Friday, made the salient point that with annual sales of $63.4 billion last financial year, Woolies' $1.6 billion profit represented just 2.5 per cent of sales and a return on capital at the middle of the range for Australian firms.

"Coles, Metcash, Wesfarmers, and JB HiFi had higher [return on capital], and Harvey Norman, Myer and Endeavour had lower ROC. Profit was not out of line with the size of the company," the analysis concluded.

The interim report of ACCC's supermarkets inquiry found:

When profitability is considered with reference to a company's return on capital, Coles and Woolworths do not appear significantly more profitable than international peers.

It's the rising costs and inflation, issues that both sit at the feet of the Anthony Albanese Labor government, and its poor economic mismanagement and its disastrous energy and industrial relations platforms that are hurting Australian households. This may be the one thing that the coalition and Senator McKim can genuinely agree on. In the bill's explanatory memorandum, he correctly observes:

Since the Labor Government came to power in 2022, the cost of essentials including rent, food, power bills and mortgage repayments has skyrocketed. Wages have not kept up, making it even harder for millions of people to make ends meet.

The coalition could not have said it better itself. Labor is the real reason Australians are struggling to pay their grocery bills after 18 months of household recession. Inflation data from the Australian Bureau of Statistics confirms inflation is still homegrown, still too high and still too sticky. Despite the Albanese government having had three budgets to get this under control, its policies have made matters worse for Australian households. In fact, the final budget outcome reveals Labor is taxing more and spending more than any government in Australia's history has. Labor has performed—