Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Manufacturing and Minister for Defence Materiel, Senator Carr. Can the minister respond to the claims today of the Australian Food and Grocery Council that supermarket practices are putting iconic local brands at risk?

Kim Carr (Victoria, Australian Labor Party, Minister for Defence Materiel) Share this | Link to this | Hansard source

I thank Senator Gallacher for his question and his concern about the future of the food industry in the current retail environment. Coles and Woolworths are amongst the most profitable supermarket chains in the world. While they employ many thousands of Australians, they have been very effective in the way in which they have operated. These two companies now control about 80 per cent of the supermarket retail sales. So we have a strong interest in ensuring that consumer options remain open, just as we have a strong interest in ensuring that the capabilities of our manufacturers are maintained. I have genuine concerns about the way in which our supermarket chains are treating our local suppliers. I continue to receive complaints from manufacturers about the way in which contract negotiations are conducted and contract terms are applied.

There are many ways in which these problems could be fixed, but there is absolutely no doubt in my mind of the consequences of doing nothing. We just have to look at what Heinz have been saying. Heinz have already shut a factory in Victoria and have restructured two others. Its chief executive in Pittsburgh, William Johnson, singled out Australia in November as having 'the worst operating environment that the company faces anywhere in the world'. Our supermarkets are increasingly using their home brands, they are increasingly eroding brand loyalty and they are forcing suppliers to operate on wafer thin margins. If a company the size of Heinz feels under pressure, imagine the position of many small and medium-size companies. Those companies employ hundreds of thousands of Australians, and imagine how they feel in those negotiations.

Complaints that I have received suggest to me that this is more than just a question of robust capitalism at work. It is critical that supermarkets operate on a fair and reasonable basis with their local suppliers. I welcome the Food And Grocery Council's statement. (Time expired)

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I have a supplementary question. Can the minister inform the Senate what action the government is taking to ensure local food manufacturers get a fair go?

Kim Carr (Victoria, Australian Labor Party, Minister for Defence Materiel) Share this | Link to this | Hansard source

I have referred the reports that I have received to the Australian Competition and Consumer Commission for a full and thorough investigation. Let me make this very clear: this is not a rehash of the 2008 process. As Chairman Rod Sims pointed out just last week, the issues on the table today have only come to light in the past six to nine months. We have seen an escalation in the amount of pressure being mounted on our suppliers. There are opportunities now for suppliers to speak up. We require their assistance in making sure that evidence of their claims is produced. Mr Sims has nominated this matter as a question of priority for this year. He has urged suppliers to bring their concerns forward now. I back that call on behalf of the government. The ACCC can protect whistleblowers. It can investigate and report on these matters in a way that does not compromise individuals. (Time expired)

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I have a further supplementary question. Can the minister advise what options could be considered to tackle the food industry's concerns?

Kim Carr (Victoria, Australian Labor Party, Minister for Defence Materiel) Share this | Link to this | Hansard source

I will be raising this matter next week with the Food Processing Industry Strategy Group that we have established. I do not want to pre-empt the outcomes of the ACCC inquiry. But while that work proceeds, we are actively looking at measures that we can take to encourage fair practice. We have played this role before. You can see, for instance, what we are doing within the resources sector, where we have brought major project proponents together with local manufacturers to work out areas in which their interests align. We have opportunities to follow that same approach in the food manufacturing sector. We want to talk about a code of conduct. We want to talk about how we can harness the $150 million allocated to the food industry in the carbon price package. We want to talk to workers in the industry, and the AMWU is here at the moment to discuss these matters with a range of politicians. We want to talk about programs that can boost the performance of local firms. We want to talk about a supermarket ombudsman. (Time expired)

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Mr President, I ask that further questions be placed on the Notice Paper.