Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

On behalf of the Chair of the Senate Economics References Committee, I present the final report of the committee on the GROCERYchoice website together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

I move:

That the Senate take note of the report.

When the Labor government came to power, one of their cries to the electorate—and probably a worthy cry—was that they were going to ease the squeeze on working families and be part of a mechanism to reduce the amount of money working families were then expending on groceries. In Australia we live in a nation that has the highest food inflation in the Western world, which is not something to be proud of; it is actually disgusting considering that we are one of the food baskets of the Western world. Through this process, the government believe that through an element of transparency consumers could become more discerning about where they could purchase their groceries from, and as such a GROCERYchoice website was suggested.

That is where the story comes unstuck, because like everything Labor touches it went to mud. It was an absolute fiasco. The GROCERYchoice website was, from go to whoa, a great metaphor for how the Australian Labor Party work. It is one of the reasons that we have to be so suspicious and circumspect about their grand visions in other areas, especially the proposed emissions trading scheme. The GROCERYchoice website, to give you just a few of the areas, brought in an issue where you could find out the price of groceries all right, but the price of groceries could be up to almost two months old—hardly worthwhile. It was ridiculed because it was open to ridicule. It was one of the most ridiculous concepts that ever had breath put into it. What became very peculiar was that, when the Labor Party were given the capacity to turn this into something that might actually have worked, they ran a thousand miles from it. They acceded to the lobbying that came to them from the major retailers and basically rolled over, and we scrapped the whole idea.

In the initial website we had the ridiculous issue of the regions, and I just want to give you some idea of the regions that they had. If you were looking for groceries, in the one region you could find Dalby and Charleville—or Kulpi, I imagine. I do not quite know how that worked when people wanted to go shopping. They could find the best deal, but the deal might be hundreds of kilometres away. Cairns was in the same region as Mount Isa. Another thing to note is how much this debacle cost. Of a possible appropriation of $12.8 million, the government appropriated in this farce $7.693 million.

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

With a $700,000 contingent liability.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

A $700,000 contingent liability. That money is now blown. That money could have gone to so many other, better causes: treatments for cancer, work on roads or a whole range of things. But that is the sort of cost that you now associate with the Labor Party. That is the completely inept sense of management that is so ably personified by GROCERYchoice. If you want to know how the Labor Party works, it is like this: splendid, soaring rhetoric, marvellous statements and a sense of an overwhelming desire to bring betterment. Then, when it comes to the point where the rubber hits the road, you get such things as GROCERYchoice.

I have no doubt that Senator Guy Barnett, who will be following up, will go through some of the intricacies, especially the queries in regard to Retail*Facts and exactly what happened there and how there remain serious queries on the actual process that the government has gone through in coming up with this fiasco. We did not ever really get choice. Australia still has to suffer the sins of having the highest food inflation in the Western world. The Labor party have sneaked away from one of their major election commitments, and this is what we are going to see now: a plethora of election commitments the Labor Party leave behind.

What are they going to do to ‘ease the squeeze’, to use their rhetoric, on working families? This seems to go hand in glove with their other statements. We see that the ACCC, under their guidance and instruction, has been completely and utterly destitute in pursuing the law in such things as section 46(1AA) of the Trade Practices Act, the Birdsville amendment. It is almost as if the ACCC are under instructions to do nothing. Where they do get involved, what we see is such things as GROCERYchoice. When is the Labor Party going to be part and parcel of the instructions to the ACCC to actually go in there and protect competition and bring about an outcome? When is the Labor Party going to be able to ask the ACCC to enforce the laws of this nation? When does that happen?

In 2007, with the introduction of section 46(1AA), we had the capacity to outlaw predatory pricing. As of this moment that we stand here there has not been one case that has gone to court. I think it was back in June that I asked the responsible minister in this chamber to tell me how many cases had been pursued under section 46(1AA). Since that time, what answer have I had? We are now in November and they have never even got back to my office. They have never responded. It goes to show you the sort of diligence about detail that is in the Labor Party: we asked a question on notice, they took it on notice and we got no response. This is the process that they follow in the Senate. It is a form of contempt. They do not want to get to the bottom of issues—and this is the party that we are going to make responsible for the emissions trading scheme, the CPRS.

Is the CPRS going to be a more dramatic and dynamic form of the GROCERYchoice debacle? How could we possibly, as a recommendation of their capacity, capability and diligence, give them the responsibility to divide such things as an emissions trading scheme when with GROCERYchoice, which was an absolute free kick in front of the post—Choice actually came out and was willing to take it on and go forward with it—they dropped the ball even when it was handed to them. They dropped it bang in front of the post. This is what the voting public has to recognise: the Labor rhetoric and the Labor delivery are vastly different animals. If you become part and parcel to it or if you sign up to say that you think that they are the mechanism of diligence, that they are the mechanism of capability, that they have the capacity to actually bring about an outcome—when you are thinking about that, think about GROCERYchoice.

Where does GROCERYchoice leave the independents now? Where does it leave the consumer? The consumer is sitting back, still waiting. The Labor Party’s soaring rhetoric has passed and what has the consumer been left with? The consumer in Australia has been left with the highest food inflation in the Western world and a government without any capacity, any desire or any motivation to do anything about it. When we look at the farming sector, are the farmers getting a better deal? No, the farmers are not getting a better deal. The farmers are still being screwed down to the bare minimum in dairy prices. Shops are basically being overtaken by imported products. Australian products are being moved off the shelves, farmers are being screwed down, consumers are being done over—and where are the Labor Party on this?

What have the Labor Party done about all of this? They used soaring rhetoric to get themselves elected and then we had the absolute debacle which was GROCERYchoice. It is the greatest metaphor for what this party are, but we are about to see the next stage of it. The next stage of this metaphor, of the debacle of Labor Party management, will be the emissions trading scheme, the Carbon Pollution Reduction Scheme—whatever you want to call it. That is chapter No. 2, and chapter No. 2 will be the same. It will just come in pictures and have about 5,000 times the extent of what we had with GROCERYchoice and infinitely more effect. I look forward to using this to drive a nail through everything that the Labor Party do from this point forward. (Time expired)

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I would also like to take note of the report on the GROCERYchoice website, and from its beginning to its conclusion it was an $8.4 million shocking waste of taxpayers’ money. It was an absolute disgrace—

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

It was obvious from day one.

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

It was certainly obvious from day one, Senator Bushby, that this government had not got their hands on the tiller where they should have been. The GROCERYchoice initiative was characterised throughout by waste and mismanagement. The GROCERYchoice website was designed to fulfil a hollow election promise to put downward pressure on grocery prices, yet Labor knew full well that that would never be achieved. Despite that, they went ahead and established the GROCERYchoice website. Now this report confirms that it was an absolute debacle, a litany of waste and mismanagement throughout the process from go to whoa. They knew that they could not achieve their ends, despite the fact that they had made that hollow promise before the election. They should have said after the election: ‘We misled the public. We apologise for that. We will not ahead with wasting taxpayers’ money to set up a GROCERYchoice website.’

The ACCC website was poorly designed. They collected data in 61 regions—can you imagine—across Australia. Some of them covered tens of thousands of square kilometres and bore no resemblance to real-world consumer shopping patterns. The difficulties in making like-for-like comparisons across fresh produce and different private-label products also undermined the website’s effectiveness. In Tasmania, for example, there were three regions. They were comparing on this website supermarkets in north-east Tasmania in Launceston, St Helens, which is two hours away, and Scottsdale, an hour away. How absurd is that? There is no reality to it.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

Senator Boswell interjecting—

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Indeed, Senator Boswell is right; there were even more absurd examples in Queensland.

The website also raised questions about the legitimacy of the tender process run by the ACCC, and I will come to that shortly. It was a shocking waste of taxpayers’ money, clearly demonstrating the government’s apparent disregard for obtaining value for money. Public funds should not have been spent in the way that they were, as GROCERYchoice has provided little information of use to consumers. That was confirmed by the number of hits on the website. They started off at over three million hits in August 2008, and how many were there by April 2009? There were 61,000 and the number was going down. How absurd! You could see that the consumers were talking with their feet and they had no interest in accessing the information on this fiasco of a website. The total cost to date of this failed experiment is directly $7.7 million with an estimated contingent liability of $700,000—although this may vary, depending on the deliberation over the government’s unilateral termination of the Choice contract.

We do not know and I do not know whether Choice will be taking the matter further in litigation against the government as a result of that unilateral termination. The status of any possible further litigation by Choice or, indeed, other contractors—and there were many contractors—remains unclear. So the government have clearly never learned their lessons from the failed Fuelwatch experiment. They should have learned their lessons but they have not. Recommendation 8 of the report is set out on page xi—there are eight recommendations—and I hope the government listens, reads and learns from this shocking experiment. We have recommended in this report that the government learn from this episode of waste and mismanagement and ensure that such inappropriate and careless spending does not occur again in the future, noting that now more than ever value for money for the taxpayer should be a priority. Are you aware of those costs? It is in the report: $73,000 worth of taxpayers’ money was spent on legal costs for a range of different purposes. The profligate spending of this government has got totally out of hand.

I would like to refer to some of the other recommendations, including the shocking waste of money with respect to the appointment of the data collection company. There was a $2.7 million differential between two companies that put in a tender, and the ACCC took the tender of the company which made the higher bid. It appears that at least $2.7 million could have been saved if the government had been more flexible and kept its eye on the ball. They had a launch date for the website which was arbitrary politically motivated. They set the date but if they had been willing to be a bit more flexible they could have saved up to $2.7 million. Come on. Will the government learn the lesson?

The report takes the ACCC to task, and it should be noted that we have recommended an Auditor-General’s investigation into the tender process undertaken by the ACCC on the data collection contract for the GROCERYchoice website. Let us make sure the Auditor-General gets to the bottom of whether the $2.7 million differential could categorically have been saved. The committee thinks there is merit in an inquiry. The ACCC should take more care in the future to monitor and assess the performance of contractors that undertake data collection on its behalf. The documents allowed for audits and in-field checks to take place but they did not occur.

The minister at the conclusion was the Hon. Dr Craig Emerson MP and the committee recommended that he and the government generally reveal their plans for an industry operated grocery price data website. The committee also recommended that the government note the unfair manner in which its contractual arrangements with Choice were prematurely terminated by Minister Emerson without affording Choice a right of reply and ensure that such unprofessional and discourteous conduct does not occur again. I am sure Choice would support that recommendation.

We made some reflections on the inappropriate conduct with independent retailers, and I notice Ken Hendrick from the National Association of Retail Grocers of Australia is in the gallery today. The committee recommends that both the government and the ACCC note that the operation of the GROCERYchoice website was ‘prejudicial and unfair to independent retailers’.

Additionally and specifically the committee recommends that the ACCC apologise to the Tasmanian Independent Retailers for unfairly comparing independent retailers to major chain supermarkets in its price surveys for the GROCERYchoice website, thereby disadvantaging smaller operators and contributing to undeserved negative press in the Mercury on 7 August 2008.

More details are set out in the report. I do not have time now. But the committee recommended that the ACCC also investigate any potential breach of the Trade Practices Act in relation to the role played by the Australian National Retail Association in negotiations with Choice on the GROCERYchoice website. Further details are set out in the report.

At this juncture I want to say a big thank you to the Senate Economics References Committee secretariat, particularly John Hawkins and Meg Banfield. You have done a sterling job in the time available and pulled together a report. I want to thank the other members of the secretariat and also the chairman of the committee, Senator Alan Eggleston. I know Senator David Bushby and Senator Joyce have strong views in support of this report, as does Senator Mary Jo Fisher with her personal interest. We had hearings in Melbourne, we had them in Canberra—in fact, we had two in Canberra—and we have been very thorough in those investigations. The budget allocation to the ACCC for the GROCERYchoice website was $12.86 million over a four-year period, and that is how much money they were prepared to waste on such a fiasco and such a shocking experiment. Fortunately or unfortunately, they have only wasted about $8.4 million to date, it would appear.

The website was launched on 6 August 2008 and in less than a year it was terminated. The question is this: will the government learn from this experiment in waste and mismanagement? It has not learned from the Fuelwatch experiment. Will it learn from this? This report is comprehensive. It has made recommendations. We are asking the government to read them, respond to them and learn so that the waste and mismanagement can be expunged from the Australian Labor government’s processes. (Time expired)

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

GroceryWatch, which was renamed GROCERYchoice, was a dog from day 1. It was government spin trying to make it look like they were doing something in tackling the overconcentrated grocery market that we have. It was just a front to not deal with the real issues of competition in the grocery sector in Australia. To be absolutely frank with you, it was an $8 million farce and an embarrassment to the government. Quite clearly, when they changed ministers they realised they were in trouble with this issue. From memory, they made the announcement on a Friday night. I do not think Choice was even aware of it. It was a debacle creating it; it was a debacle even getting rid of it. Quite clearly the government was trying to have a front so they could say they were doing something. But they did not address the real issues and the competition in the grocery market at all and still have not.

That was GroceryWatch. I would have thought you would have learnt from Fuelwatch. You had GroceryWatch, what is the next one—Boatwatch? Watching the boats come in—is that the next one you are going to have? What a farce; what a front. Seriously, you folks have to get beyond believing the spin yourselves and start to realise the Australian people want genuine reform that actually brings better competition—more competition, not less. In the grocery area, we still have overconcentration of the market and GroceryWatch was never going to deliver the goods, just like Fuelwatch did not. Let us hope you do not get caught up in something called Boatwatch—that would be an absolute farce.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I will be brief. I was a part of this inquiry as a member of the committee. I will not cover the ground that some of my colleagues have raised but I think it is important that the Auditor-General does look at the tender process. I was concerned that Informed Sources, who have a track record of providing robust and independent advice and monitoring of prices to both the former government and this government, were not adequately considered for the tender even though their tender process was some $2½ million dollars cheaper than the Retail*Facts tender.

I think there was a real issue there and the answers given by the ACCC pointed to a real concern about the tender process. I accept that the ACCC officials did their best to answer those questions, but they conceded that there was no problem with Informed Sources. They had a perfect track record in dealing with these sorts of issues and they had the capacity to deal with them. They were never let down previously by Informed Sources and yet for some reason they felt that they could not do it or could not train people up in time. That really concerned me. Also, the issue of a potential conflict of interest for Retail*Facts is very concerning. I think it is important that the Auditor-General does look at this in the context of whether we can improve tender processes and ensure a greater degree of transparency.

I thought GROCERYchoice was an idea worth having and giving a go. I think the government’s intentions were not bad in having greater price transparency, but I think it is fair to say that the Choice organisation was torpedoed by a lack of cooperation by Woolworths and Coles and that that indicates a very unhealthy level of market concentration in this country by the big two supermarket chains. That is something that we need to address both in terms of geographic price discrimination and other reforms.

Ultimately, we will need to look very closely at the issue of divestiture of the retail concentration that Coles and Woolworths have in this country, because it is at an unprecedented level of concentration in the marketplace. No other country in the OECD—I think no other country in the world apart from a completely controlled economy, such as North Korea’s—would have that level of concentration in the marketplace. They are the sorts of things that need to be addressed. The fact that GROCERYchoice was needed in the first place points to that concentration. That it did not work, again, points to the level of power of Coles and Woolworths and it also points to some fundamental mistakes that were made in the process. That is why I think we should learn from what happened here. It will be for the benefit of taxpayers and ultimately for consumers if we can have a great degree of price transparency in the grocery market.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

I have just received this document and I want to make a few remarks. GroceryWatch and Fuelwatch were cases of rhetoric outreaching performance. They were cases of Labor Party polling, no doubt, that showed that people were concerned with grocery and petrol prices. They said: ‘There is the polling. That is what our focus groups are saying—what are we going to do? Will someone come up with an idea around the cabinet table? Any idea will do, we have to do something, we made a promise, we made a commitment—what do we do?’ I do not know who came up with this but he should have got the prize for the most incompetent minister. He should have been sacked on the spot for coming up with such a ridiculous concept as GroceryWatch.

I have spent 15 years of my life as a manufacturer’s agent. I used to call on these retail stores and I understand, probably to a greater extent than most people in the Senate, the pressures of prices. I have understood them for a long while. The only way to make the best prices available is competition. You cannot put some system in such as GroceryWatch that will tell people what prices are available and what the best prices are. Those prices could fluctuate four or five times a week. They could change on a daily basis. Both Woolworths and Coles—and I could imagine Ken Hendrick in the gallery—would have people running around different stores monitoring each other’s prices. If the prices go up or down they are monitored and adjusted, and that is competition.

The independents are in there now with a bigger share of the market. Aldi now has a share of the market and the prices are going to be adjusted by competition. But this was an $8 million dollar gimmick. The Labor government had come up with something. They had to do something to show that they had the answers. They never had the answers. They didn’t even have the question right. Their polling showed them that they had to do something—‘Let’s just spend $8 million and we can say we tried; we’ll have to say something to the battling families, to try and appease them somehow.’ What a ridiculous way to spend $8 million.

But there was not only that. There was Fuelwatch. That came to a similarly disastrous end. What it showed me was that there is a lack of business acumen in the Labor Party. When you look around, you can understand that. Every Labor Party person in here, bar one—I think it is the senator from South Australia—has worked their way up through the Labor Party. They have started as union reps, they have gone through university and then they have been selected by the Labor Party to finish their degrees. Then it is a case of, ‘If you want to come in, we’ll find you an office somewhere, we’ll find you a place to start’—and by the time they get to the pointy end, where they have sorted the sheep out from the goats, they give those people some sort of a leg-up into government. That is how it happens in the Labor Party.

Judith Troeth (Victoria, Liberal Party) Share this | Link to this | Hansard source

Order! Senator Boswell, the time for this debate has expired. Do you wish to seek leave to continue your remarks?

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

I do. But I would not have thought I had been speaking for 10 minutes.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

The total time for the debate has expired. You may seek leave to continue your remarks.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

I seek leave to continue my remarks.

Leave granted.

Thank you. I thought I had 10 minutes, but I thought that five minutes went even faster. But let me continue—

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

No, Senator Boswell. You do not understand: the total time for the debate has expired, but you may seek leave to continue your remarks at another time.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

I do understand, but I thought you might be a bit lenient!