Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The Greens' Competition and Consumer Amendment (Divestiture Powers) Bill would, if passed, give the courts and competition regulators the power, where misuse of market power has occurred, to break up firms across the Australian economy. This would include firms in the banking sector, the energy sector and a range of other sectors including the supermarket sector. If passed, this bill would establish a framework whereby a company that is found to have misused its market power to inflate prices, to exploit supply chains or to keep out competition could be required to reduce their market power or share of the market by divesting assets.

Australia's economic frameworks have delivered a range of undesirable consequences. They are failing the Australian people. They are part of a global economic framework that is cooking the planet and rendering this planet incapable of supporting human life by breaking down our climate and destroying the ecological processes that sustain human life. They are also impacting significantly on humanity in other ways. In Australia, our economy is increasingly dominated by massive corporations that ruthlessly use their high and growing share of market power to price gouge everyday Australians while raking in billions of dollars in profits.

Folks will be familiar with the Greens making these arguments, but let's have a look at some of the other people who have made arguments that support this proposition. At Senate estimates earlier this year, the Governor of the Reserve Bank Ms Bullock, agreed with the proposition that some corporations are using a lack of competition and the cover of high inflation to increase prices above what would be required in order to meet increases in their input costs. That is an accepted definition of price gouging. Corporations raising their prices above and beyond what they have to to meet increases in their input costs is the very definition of price gouging. We have introduced this bill because we have listened to people through our communities who are struggling to afford essential products and services. Every day that this parliament fails to rein in the power of big corporations who are price gouging, more and more people get left behind. They have to skip meals; they fall behind on their rent; they fall behind on their mortgage payments; they delay vital medical appointments; they are unable to pay their power bills or their school levies.

Of course firms are price gouging across the economy, including in sectors like banking and airlines, but nowhere is this issue more stark and more impactful than in the supermarket sector. The duopoly of Coles and Woolworths holds a massive two-thirds share of the market, making Australia's supermarket sector one of the most concentrated in the world. In response to people struggling to afford essential food and groceries while Coles and Woolworths record billion-dollar profits, the Greens and, ultimately, this Senate initiated an inquiry, through the Select Committee on Supermarket Prices, into the price impact practices of the supermarket duopoly last year. We've heard from people, through that inquiry across the country, having to make impossible choices as exorbitant food and grocery prices force them to skip meals, go without healthy food and make impossible choices between paying their rent or mortgage and feeding their families.

I want to acknowledge Senator Cadell, who has been an active member of that inquiry, Senator Sterle, who's also in the chamber, and all of the other senators who are working cooperatively through the inquiry. We've heard, for example, from a Tasmanian, Danny Carney, whom I know all members of the inquiry will recall because he choked up in our hearings in Hobart as he spoke about his mum, who recently retired after a long career as an aged-care worker, and explained to the committee how, to get through retirement, she has calculated, after that long career as an aged-care worker, that she can only afford to eat twice a day. We also heard from university student Owen Gregory, who said that grocery prices are so high he can only afford to buy half the amount of groceries that he could five years ago. He told the committee that he and his friends can only afford to eat healthy food because they rescue discarded produce from supermarket bins. Along with evidence about the squeezing of consumers, we've had evidence of the supermarket duopoly using their market power to mercilessly pressure farmers and to exploit their workers.

Consumers, farmers, and workers are at breaking point. They need this parliament to take action. Across the board, witnesses to the inquiry called loudly and clearly for the introduction of divestiture powers to break up the supermarket duopoly. It is clear that we need these powers and it is clear that we need these powers now. That's why the Greens have introduced this legislation. We hope that, across the parliament, parties, senators and MPs will listen to everyday families. We hope they will listen to farmers, we hope they will listen to workers and we hope they will support our bill to put divestiture of powers into law.

When the Prime Minister was asked a few weeks ago about divestiture powers, he dismissed the idea as Soviet Union-style policy. Well, that well-known command and control economy, the United States of America, has had divestiture powers since the 1890s. The Prime Minister should make himself aware of that fact. He also should make himself aware of the fact that Ms Cass Gottlieb, the Chair of the Australian Competition and Consumer Commission, has agreed in Senate estimates that, if divestiture powers were introduced, they could increase competition in the supermarket sector and that, under economic analysis, this would bring down the cost of food and groceries in Australia. The Prime Minister also should educate himself about the recent report from the Australian Council of Trade Unions, led by Professor Allan Fels, that recommended that Australia should introduce a divestiture law to allow big business to be broken up if they misuse market powers.

Divestiture laws are not a radical or controversial idea. Along with the US, the UK has divestiture powers, interestingly introduced by Margaret Thatcher. The competition agencies of Ireland, Italy and the Netherlands have all recently used divestiture powers to require the divestment of supermarket assets in their countries in order to increase local competition in the supermarket sector and put downward pressure on food and grocery prices. So it's looking very much like Labor under Mr Albanese is out on a limb, backing in the billion-dollar profits of massive supermarket corporations over and above the interests of millions of Australians who are struggling to put food on the table.

Why could that be? Perhaps it's because Labor has accepted over half a million dollars over the last decade from Coles and Woolworths, not to mention the massive donations they get from fossil fuel corporations, big banks and the finance industry. In fact, in total, Labor has taken over $100 million from big corporations in the last decade. It's no wonder Labor is running interference for big business and for big corporations. They've trousered over $100 million in the last decade. That investment from the big corporations, from big business in Australia, is paying off in spades, because you've now got a situation where Labor is going to dig in and refuse to allow divestiture laws in this country because they want to protect the price gouging and the profiteering of big corporations. Make no mistake, price gouging, profiteering and concentrating market power is right at the top of the business model for big corporations. It's how they work. They want concentration of market power because it allows them to keep wages low, do over their suppliers and price gouge their customers.

Massive corporations are motivated by growing their profit above all else, and they definitely don't give their money away for free, but they do give away a lot of their money to the Australian Labor Party, and those donations buy them influence with key decision-makers in the government. There's also a revolving door between the Prime Minister's office and the supermarket corporations. We learned last week that the Prime Minister's former chief of staff has been hired by Woolworths to guide them through the public scrutiny that they are currently facing. Political donations, the revolving door—it's a time-honoured story in Australian politics. Here we go again.

This is a fork-in-the-road moment for the Labor Party. They've got a choice: are they going to keep backing the big corporations, who are ruthlessly using their market power to do over their suppliers, their workers and their customers, or are they going to stand with millions of Australians who are struggling to put food on the table? When the BCA, the Business Council of Australia, came out this week and said that the sky would fall in if we introduced divestiture powers, no-one was surprised by that. Of course, they're going to fight for Coles and Woolworths to retain their market share, because both parts of that duopoly are members of the BCA.

It's time for this parliament to pass divestiture laws. It's time for this parliament to prioritise the needs of Australians over corporate profits. It's time for the Labor Party to stop standing in the way of divestiture powers in this country. Divestiture powers exist in most so-called free-market economies around the world. They are a standard part of the toolkit of competition regulators and courts in the UK, the US and many other countries. Until we have divestiture powers, mark my words, big corporations will continue to gouge prices, big corporations will continue to ruthlessly use their market dominance to do over farmers and suppliers, and they will continue to put the squeeze on their workers.

To the many people in Australia who are struggling to make ends meet right now and struggling to be able to afford healthy food: know that, if you are having to skip meals, if you're living off two-minute noodles and corn chips and buying less fruit and veg, and if you're having to decide between feeding your family and paying the rent, there is a solution, but know that the solution is not proceeding because the Labor Party has decided to side with big corporations over the interests of ordinary Australians.

If the Labor Party would support this bill, it would pass through this parliament; there is no doubt about that. If Labor supported this bill or introduced its own bill to create divestiture powers, it would pass through the parliament. This legislation is a minimalist model. It would require a firm to misuse its market powers before a court could grant a divestiture order. That is a very high and established threshold. The reason Labor's not going to go for this bill is not that the threshold is wrong or the way the bill is drafted. It is simply that the Australian Labor Party is making a political choice to side with their corporate donors Coles and Woolworths—to side with the supermarket duopoly in Australia. In doing so, it abandons ordinary Australians and farmers to their fates and abandons workers to be exploited, because there is simply not enough competition in the supermarket sector. The Greens commend this legislation to the Senate.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

I look forward to making my contribution to Senator McKim's private senator's bill, the Competition and Consumer Amendment (Divestiture Powers) Bill 2024. I want to thank Senator McKim for giving us the opportunity to set up the inquiry. There are a lot of things going on, as people know, and I'm enjoying working alongside Senator McKim. I might not agree with everything he's just said, but it has opened up avenues to the public that—and I'm not trying to be a smarty—I'm well aware of after almost 19 years on the Rural and Regional Affairs and Transport Committee.

I just want to go a little bit further into what's going on out there. It's a well-known fact—and I'm in Hansard many times, given my trucking background, having a crack at Coles and Woolies—that they treat the road transport industry as free storage while our truckies, particularly interstaters, sit in queues for two, three, four or five hours waiting to get unloaded. So, no, there's no argument there. The inquiry has done, I think, about three hearings now—we've been in Orange and Hobart, and we did one in Melbourne—and Senator McKim touched on the fact that we've still got a fair bit of work to do. When there is an inquiry going on into supermarket pricing, the first thing I hear when I talk to West Aussies—and I know it myself—is that, when you walk out of Coles and Woolies with two bags and there's 150 bucks gone, it doesn't take long to think, 'Where the hell did that go?' I'll be the first one to say there have been supply chain squeezes and challenges. We know that. But we know some of the products in these supermarkets—and I will say this: with the greatest of respect, $35 for a cut of meat, and it's not a good cut of meat. Crikey! There's some pretty expensive stuff. We've seen fruit and veggies go up and down, and we've heard all sorts of supply-chain reasons why, such as floods. I get all that; it happens every year. Coming from WA and running trucks going through the north, I know we have these challenges. And we know we have invasive pests. We've got to worry about all this sort of stuff; I've got all that.

What the committee has seen is not an eye-opener to me. I'm pretty sure it'd be an eye-opener to a few other people. But I've been clearly saying this: where I live in Western Australia, down Fremantle way, there are many choices within my area. I have a Coles, a Woolies, three IGAs and an Aldi, so we have choice. I know the argument comes out that there's no choice and no competition. I can't speak for the eastern states, although I know that at my little patch here in Kingston, where I live when I'm in Canberra, I can go to Coles or Supabarn. I've got to tell you that the private marketeer Supabarn has a very nice shop. I say this, and I will stand to be corrected: on a lot of the items on the shelves—we know these supermarkets stock up to 6,000 items—there is competition for us that live in the cities and in the suburbs but not so much for those in the regions or rurally; I get that. We have that choice. I'll go back to my patch, where I can go to Aldi, Woolworths, Coles or the three IGAs. The competition is there. We've got to think about this.

I'll go back to what we've uncovered, which has been no surprise to us on the rural and regional affairs committee. As Coles and Woolies get battered and bombarded, what has come out of this is the issue for farmers in the horticultural and agricultural industries, and for those working in the fishing industry. It's a well-known fact in this nation that 70 per cent of our seafood is exported—we all know that—and 70 per cent is imported. We know that. We know it's the same for fresh fruit, but I can't remember the exact figures. What's happening here is that every single sector of the agriculture industry feels that they're getting absolutely squeezed. They've come up, but a lot of them won't say it; they rely on the likes of their farming organisations.

We hear all the stories, and Senator McKim mentioned one of them. Whether they're growing cherries, cucumbers or lettuce—it doesn't matter what it is—they say they are getting belted around by Coles. They are price takers—we know that—like the trucking industry. The growers are at the bottom of the supply chain when it comes to dollars. They have products that have use-by dates, so it's not as though they can put them in cold storage for six months and then wheel them out. They get the living daylights screwed out of them by the supermarkets. I'm not running a protection racket for Aldi or Costco, IGA or anything else; I reckon they're all the same. That's the evidence we've been taking. We all say, 'Oh, those poor farmers,' and we absolutely mean that. We've heard farmers say that, if a carrot has two prongs, it goes into the bin. It's good quality food. There's nothing wrong with it, but it won't make it to the supermarket shelves. If a cucumber has a little kink or an elbow, it goes to the bin. We've got a cost-of-living problem here, and we are seeing all of this food being thrown out; you hear about this.

I was leading the charge on the questioning—I know it wasn't just me—and my favourite line was, 'Do you get cost recovery?' There weren't many that stood up and said they got cost recovery. I think there were only one or two that were still supplying Coles or Woolies, and they were vocal. The rest—I won't use my normal language here—were frightened of opening their mouths. They'd been absolutely terrorised. It's not obvious, but what we've heard is that they'll get pushed to the back of the queue or the big supermarkets won't buy from them.

I want everyone out there to think about this, because there is a belief that supermarket prices will tumble if we have an inquiry. We know that is not going to happen. We absolutely believe in competition on this side, and we believe that competition is the best thing that could happen. We don't agree with the divestiture of powers—and Senator McKim has heard me say this—because I've done extensive work in America with the International Brotherhood of Teamsters. They have divestiture. They have six or seven big brands, and they've got that gorilla Walmart. I have to tell you, and I'm going to look to you for your support here, Senator Farrell: these monsters and gorillas—the supermarket chains in America—are not great employers. They are not fantastic supporters of their employees. Am I right, Senator Farrell? He's quietly trying to nod. I'll tell you: they're not. So we look at Coles and we look at Woolies. There are 150,000 people employed there. But we're going down this track.

This is what I believe we should be saying: 'Crikey! Our farmers, food producers and processors need to be able to get cost recovery.' I don't think anyone in Australia would ever expect anyone to work under—well, there may be some people; I have some arguments in here with the opposite side. Everyone should be able to get cost recovery. Think about this: what we should be saying is that we've got to get the prices up for the farmers and the food producers. Whether they come out of the profits of Woolies, Coles, IGA or anyone else, is neither here nor there, although that's where they should come from if the profits are that large. Now, help me out, everyone. While we're out there battering Coles and Woolies—we're not talking about IGA, Costco or Aldi, but we know they're dearer than Coles and Woolies—I don't know where this one's going to end up.

I would challenge anyone in this place to tell me that the National Farmers Federation—and this'll raise a few eyebrows—have done the right thing by protecting their members. The National Farmers Federation came to our inquiry. They are the be all and end all of the farming and agricultural industry, and how they love their members! They are the same people who joined hands with the Business Council of Australia, the Australian Chamber of Commerce and Industry, COSBOA, the Australian Industry Group—and those poor, struggling miners. I forgot about the Minerals Council of Australia. The National Farmers Federation hooked arms with them and put members' money into a $24 million campaign to thwart transport reform in this nation. I've know because I've been on this journey for a long time. I've always said to the farmers: 'You should stand up like we're doing with the transport industry. Stand up and get paid properly. Get cost recovery. Be viable, be safe, be sustainable and, God help us, you might get a little bit of profit.' So the National Farmers Federation, for me, hold absolutely not once skerrick of decency about them. They come to our meetings and talk about the poor farmers. When I ask them, 'Why did you think it was a good idea to throw money at stopping transport reform?' they have nothing to say. I know there'll be a flurry of letters coming to say they want to meet with me. I don't want to meet with the National Farmers Federation.

What we are saying very clearly is that every horticulture and agriculture industry in this nation is struggling financially. I look across, and there are some really good people on that side of the building who come in here with dirt under their fingernails.

Don Farrell (SA, Australian Labor Party, Minister for Trade and Tourism) Share this | Link to this | Hansard source

Name one.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

I'm looking at Senator Cadell. There he is. There you go. They come here with dirt under their fingernails and actually know that this is not the real world in here. The real world is outside.

We've got this conundrum where there is an expectation that somehow a Senate inquiry will bring down prices, but the Senate inquiry is bombarded with the opposite effect: that people have got to start getting paid. We hear day in and day out about family farmers walking off the land. Correct me if I'm wrong, Senator Cadell. It's no different from our trucking industry. There are three- and four-generation trucking families just shutting shop. Think about that. We've heard of three and four generations, with the great-grandfather, grandfather, father and son, and the next generation is saying, 'Don't want it.' And then we start talking about food security.

So, with the greatest of respect to my colleague Senator McKim, for whom and for whose work I have huge respect, I cannot agree that divestiture will sort this out. If you marry up the argument I'm putting together with what we see in America and the UK, we know that these are not fantastic employers. It's bad enough that our farmers are getting the living daylights financially screwed out of them, but, when we go to those other corporate gorillas like Aldi and Costco—don't leave them out—that's how they operate. Not only will they screw their workers down; but profits are the biggest thing. I really struggle to see where we're going to go with this.

I also know we've got former minister Craig Emerson heading up his inquiry. We've had the ACCC. We know something has to be done. What is that magic bullet? I'm looking for it. I hope it comes out. What we really want to know is: do the corporates like Coles and Woolies make that much of a profit that they can actually do the right thing and pass that profit back down the chain to the suppliers? I'd like to think that is the case. I don't know. We'll be asking Coles and Woolies that. But what if Coles and Woolworths come out and their profit isn't that huge? What conundrum does that lead us to while we're screaming about looking after our suppliers, our horticulture and agriculture industry. That ain't going to bring prices down.

Without being the bearer of bad news: it's not new to those of us on the Rural and Regional Affairs and Transport Committee. I sincerely stand here saying with my hand on my heart that I've been out there supporting the agriculture industry for nearly 19 years in this building and I'll continue to do it, but, by crikey, they need help, and the National Farmers Federation ain't the answer.

Hopefully, the state organisations might be able to do something, but they should take a leaf out of the road transport industry's book. The agriculture industry will say, 'Oh, we're diverse.' Yes, they are. There are many, many cogs to their wheel. So is the road transport industry. The road transport industry has 47 sectors. Think about that. I can name about 12 or 13 before I start getting wobbly and have to really start thinking hard. So we're not much different than the agriculture industry, but the road transport industry got its act together. The road transport industry united around this nation to say that enough was enough. Think about everything that gets onto the shelves: our meat, eggs, dairy, fresh fruit and vegies. They don't get there on the back of a horse; they get there on the back of a truck.

The road transport industry and the agriculture industry are intertwined with each other. The road transport industry starts off everything for the agriculture industry. We bring in the seed, the fuel, the machines and the fertiliser. The farmers do what they do fantastically and then we get there, the low loader or the tipper is gone and now it's on the back of a tautliner or a fridge. We are intertwined. If the road transport industry could get its act together to stand up and say, 'Enough is enough,' this is what the farming industry needs to do. And they need to find a new guru, because it ain't the NFF. To those who blindly think the NFF speaks for the farming industry, I'll throw the challenge out: the NFF have got no cred. They can't come into any inquiry and start crying and moaning about their members getting screwed down while they're supposed to be the gurus.

I certainly hope that puts another angle on the argument. I, for one, believe the prices that we're being charged in the supermarkets are horrific. There is no argument about that. How do we fix that? I thought I would throw in another layer of confusion and another layer of challenges. At the end of the day, Senator McKim, you are definitely right on one thing. The gorillas are making money: let's make no mistake about that. How much money they're making is what I would love to know, but I just don't want to leave any queries out there. We've got some big problems in this nation, and it's very, very easy for people, when they're getting screwed down, to want to screw down other industries. This is what I've heard all the way along: 'We're not making money, so you can't make money.' No, no, no. Flip that around and start thinking about it. With productivity in this nation, we can bring prices down, I can tell you, and it starts with the road transport industry.

Ross Cadell (NSW, National Party) Share this | Link to this | Hansard source

I don't think Senator Sterle in that last speech made things more complicated at all; I think he made it easy. In terms of his reference to the issues the road transport industry had and bringing legislation into this place to fix it, this is exactly what Senator McKim seeks to do now. I think it has become crystal clear. We can all stand up and talk about the problems we hear on this committee. We can hear about the farmers and about the consumer costs, but it takes someone to come up with an answer, and that is what this bill is.

The Competition and Consumer Amendment (Divestiture Powers) Bill 2024 comes in with a big answer that can be a big stick to these people when they do it wrong. It's not the whim of a person. It's not because we feel like doing something today. The provisions only apply with a court appeal relating to abuse of market power or unconscionable conduct. What sort of business would be fearful of being held to account under those provisions? They are activating everyone they can to come out and say: 'No, this is horrible. This is the worst thing in the world.' The supermarkets are out there. They've got BCA, and they've got all these people out there. That's because they are fearful that they are partaking in this unconscionable conduct and abuse of market power; otherwise they wouldn't fear it so much. I notice Bran Black from the BCA said, 'The short point is the powers are an impediment to businesses growing. When the businesses don't grow, they don't hire staff.' Let me tell you, with these businesses having 67 per cent of the market share, we don't want them to grow. That is the point! Bran has got it: you have too much power. And this bill—I know the Greens don't like nuclear—is the nuclear button for when they go too far.

There'll be other things. There are other things we can do. This committee is great at looking at them. We're hearing from them; we're getting into it. But this needs to be there in supermarkets, and I would say this broad power is good enough anyway. We have an air industry where 90 per cent is controlled by two big operators. Believe it or not, live plants come under the grocery code, and Bunnings has 70 per cent of the market. If you want abuse of market power, forget the testimony that comes out in our committees. How about the testimony that doesn't come there from the producers and the processors who are too scared to talk? That's because they have two customers who are on the chopping block and they fear that, if they say something, their own businesses will be there. You don't need any evidence other than that. If people are too scared to talk about unconscionable conduct, it is happening and retribution will happen.

We hear about how this is the worst thing in the world. I think Senator McKim raised Soviet style communist power—things like that. There are OECD countries with some form of divestment power and in the United States there are violations under section 2 of the Sherman Act. Under the German Competition Act, Germany can do it irrespective of the legal conduct. They can do it on the whim; they have the power, as do France, United Kingdom, Austria, Canada, Estonia, Iceland, Israel, Italy, Japan, Mexico, Portugal, Slovenia and Spain. We are one of the few that doesn't have this power.

We hear numbers on margins from over there when we're talking about Costco but people who are too scared to come in and be sworn in as witnesses, so we can't rely on these things in our report. We heard from someone who is a controller of a pantry section, an area manager of a supermarket, say they require a 40 per cent margin in the pantry section. In the fresh food section they have told me—privately—they want a 100 per cent mark-up average across their firm. They are big margins.

Interestingly, we threw Costco into the bin. I have a processor who supplies a number of supermarkets and who supplies Costco. They went to Costco with a pricing proposal to make a 25 per cent margin on one of their products and Costco actually said, 'No, we will take 18. We give our customers between 16 and 18 per cent mark-up on this,' because they have a different business model. But that is the mark-up others are having.

I note in the ACCC review that he has power to go back and ask for two-to-three years of data—market share, margins, all these sorts of things—but has asked for five and the supermarkets will probably give that. Why? Because they have been increasing their margin for 15 or 20 years, and five years of data will not show the picture. They will show five years and say, 'Our margin has only slightly increased.' Go back 15 or 20 and they will say they have been hitting the farmers, hitting the Australian consumers bit by bit by bit. The supermarkets are addicted to increasing their margins, to taking the money and to screwing over everyone they deal with.

This has just become visible in the last few years when the suppliers and the processes can give no more. They're at their wits' end; they have no margins. We have farmers up there shaking. I was in an incident in Bathurst. I'm not proud of what I did up there. I have two guys in pig suits downstairs because I have a farmer upstairs shaking, scared about giving evidence, another one talking about 100 years of his farm and him being the last generation and another guy who walked off their farm. We have people who want to make stunts, people who want to say things that are identifying the problem but not coming up with a solution.

This bill is our solution. It is not perfect. No-one here is saying it is perfect. But, to be clear, politicians stand on the fence sometimes. Where a vote might come to today might be problematic to get this through, but I would stand on that side if this came to a vote today and support it irrespective of what the parties would do, and that is why we are here. So when Senator Sterle talks about the way they fix the trucking industry, this is just the same; it is a legislative fix to a real problem.

When we hear all these stories from a supplier, we can shoot the NFF down as much as we want but we cannot shoot the New South Wales farmers down. Their engagement is real. When they came to Orange they told horrible stories about real things like trucks being turned around after they delivered their goods because the produce didn't meet a standard—too big, too small, the wrong colour, not straight enough. We hear of consumers in Tasmania dumpster diving to get a meal because they can't afford things anymore. Once again, when we see this margin in the middle growing and growing over time, the costs getting bigger on one end and the returns getting smaller on the other end, the supermarkets never lose. They're like the casino of Australian commerce. The supermarkets never lose. I think we start with a bill like this with great powers to reflect great wrongs, and then we get down to the other things that come through in the minutia.

We talk about having arbiters for disputes with supermarkets when we go through it. But guess who appoints them? The supermarkets. If I'm fearful to give evidence about what's happening, am I going to go to someone who's appointed by the supermarket and complain about it? Probably not, because I want to be able to sell next week's crop or next month's produce. We need independent arbiters. We need proactive arbiters who go out and do audits so that growers have cover for talking to them and are not punished for talking to them. We need transparency on prices, we need transparency on margins and we need to know historically how they have increased over time while they've been screwing the farmer, screwing the processor and then getting the consumer at the far end.

Another amazing example of someone who was too scared to talk related to their olive oil. In 2012 it was $25 on the shelf and in 2022 it was $25 on the shelf. Today it is, I think, $45 on the shelf, because they've been held down so long they can't get margin. The word that supermarkets keep coming up with is 'mitigate'. 'Your costs have gone up? Mitigate.' 'Don't look at what the Australian standard is on what Australian fruit and vegetables cost. The Brazilian index on juice has only gone up 17 per cent but you're asking for a 25 per cent price rise. Mitigate.' What they're saying is, 'Buy overseas. Don't support Australian industry and don't support Australian farmers.' It is a fix. They are addicted to squeezing every cent.

There's a great boxing phrase that I learnt once about Don King, the great boxing promoter. 'A true humanitarian,' goes the phrase, 'he only wants the first 26 cents out of every quarter you earn.' That is what the supermarkets are like. They want to get everything out of you. If it's not supplying goods that perish in five days but having to supply pallets for 28 days so the supermarkets don't have to pay pallet hire. With regard to paper bags, back in the day when I used to go up to the Broadmeadow Nineways and do some shopping with Mum and Nan, we brought everything home in paper bags. The supermarkets had to start charging for plastic bags because that was an environmental responsibility. Now we've changed back to paper bags but they'll keep charging. In fact they'll charge a little bit more because there's somewhere else they can get you. That is abuse of market power.

On this side in my party we have not always recognised the threat that says when we have gone away from some single desks or trading blocs. I'm not here to defend the legacy when we are wrong, but clearly we threw growers and producers under the wheels of the truck back in the day and we see the error of that now.

If these people are truly scared of having to sell off a Big W or a Liquorland or something like that, because they do the wrong thing they will act better. If they are scared that their boards will be answerable when they lose these things, they will act better because power only likes power and only responds to power. Coles and Woolworths have 66 per cent of the market. We can talk about all the others stores, but they aren't in the same league. And the other guys, to try and compete, have to participate in some of the very same things we hate, just to try and compete with the big guys.

All of the talking points of the BCA and of the big businesses on this are wrong. They are trying to protect the status quo and they are trying to protect the size of businesses that we see as the problem. The only way to get cheaper prices and a better supply chain is to minimise that gap in the middle, minimise those margins and make better practices. It is the only way, because you can't have everything. I can't get my farmers and people of New South Wales getting better money for their produce, and consumers being able to get a better deal unless we squeeze these margins.

I commend this bill. It is a difficult thing for this side of the chamber, because it is not perfect, but it's as close as we get. I look forward to working on the committee going forward until 7 May, which I think is the reporting date, to potentially work on what we can do to adjust this, adjust other things and put in other mechanisms so that we have something that gets these supermarkets very accountable to the Australian people and very accountable to their growers. I am very pleased to be a part of this. It is probably the most enjoyable and valuing thing I've done since I've come to the chamber. We don't just want to stand up and point out problems; we want to come here with solutions. This is one. Thank you, Senator McKim. I would support this bill.

Tammy Tyrrell (Tasmania, Jacqui Lambie Network) Share this | Link to this | Hansard source

I also want to thank Senator McKim and his gorgeous staff that worked hard and long on the Competition and Consumer (Divestiture Powers) Bill 2024. We've all heard the catchphrase, 'Down, down—prices are down,' but the only thing going down is trust in the major supermarkets. Duopolies are bad for the market, believe it or not. Australia's supermarket scene is a case in point of that.

The Senate Select Committee on Supermarket Prices kicked off at the start of this month, and the evidence has been damning. We've seen people shake because of nerves and cry because of fear, all while being thankful that their voices are finally being heard. Successive governments have stood by while the big supermarkets, Woolworths and Coles, indulge in ever-increasing market power. There has been inquiry after inquiry, report after report, yet no-one has come up with anything other than maintaining the status quo. Not this time. Something's going to change.

It's obvious that it's not just the major supermarkets giving Australians the raw end of the deal; it's also big businesses, like Bunnings, that are leaving hardworking Australians high and dry. Right now, we pretty much have a situation where full-grown adults are bullying kindergarten children. The power imbalance is too skewed, and the supermarkets aren't picking on someone their own size. Under the guise of inflation, the supermarkets have jacked up prices, worsening the cost-of-living crisis for so many Australian families.

In Hobart, we heard from Louise, a single mother of eight children, who works in child safety and completed a bachelor's degree and honours. Louise said she's often faced with the impossible decision: food or doctor; food or the power bill; food or uniforms for her kids. The cost-of-living crisis isn't just a catchcry; it's a reality. But, precisely at this time, when so many Australian families are doing it tough, the supermarkets should do what they can to help not hinder families.

While the supermarkets' profits go sky-high, it's also Australian farmers who struggle to make ends meet in a world of increased costs. Some fruit and vegetable growers haven't been given price increases in 15 years. How is that so? The big supermarkets flex their muscles, using tactics to keep their purchase price low while making the customer pay. Farmers pride themselves on feeding their country, but even they are saying farming just isn't the industry to be in anymore. Family farms are going under because kids have seen their parents struggle and they're steering clear of a future in the industry. Parents are actually encouraging their children not to take up farming. They're telling them to go find something better.

Between what the farmers get paid and what the consumers pay, there is a big gaping hole and a bucket of cash lining the pockets of the major supermarkets. Because the major supermarkets have a duopoly, it's difficult to find other buyers to take on produce, so farmers feel obliged to enter into contracts with Coles and Woolies. If they don't, who will they sell it to? Farmers are still using the weight of the supermarkets' word as supply agreements. In many instances, there's no written agreement. What contract have you had by text that you can stand by in a court of law? This makes it hard to plan for future investments in the business, stagnating growth and innovation. While people are starving, farmers and community groups tell us that perfectly fine produce is being thrown out. These strict rules are taking quality produce off the shelf and putting it in the garbage bin.

This divestiture bill is to pull into line those corporations who use dodgy tactics to exploit others to their own gain. How we got to this point can be blamed on government inaction. They've given Woolworths and Coles a free pass. We are told that they are big employers or that millions of Australians are shareholders. Yes, they are big employers, collectively employing more than 310,000 people. That's more than half of Tasmania's entire population. Yes, there are many Australians who are shareholders, directly or indirectly through superannuation. And, yes, the size of the business is mammoth, with Coles and Woolworths each bringing in more revenue than the entire GDP of Tasmania. But no business should be able to hide behind the facade of being a big employer to duckshove the standards that the community expects of it.

In Tassie we have seen Woolworths and Coles grow too big for their boots. The expansion strategies of the big two supermarkets have been aggressive. There's a Coles or Woolies for every 8,000 people. Tasmanians aren't spoiled for choice though on where to shop. The big supermarkets have a hold on the market in Tasmania, and it makes it hard for other players to enter the market. That's why we need these divestiture powers. The supermarkets are dabbling in so many things to cement their market power. Their pricing tactics, purchasing tactics and tactics for acquiring property all reek of attempts to limit competition.

The Prime Minister said, 'We're not the old Soviet Union,' when ruling out divestiture powers. I wonder if the Prime Minister intended to call the United States, the United Kingdom and the European Union offshoots of the Soviet Union? I suspect not. All these countries have divestiture powers and the sky has not fallen in. The reality is this is an entirely sensible approach. All it means is that the ACCC can obtain a court ordered divestiture where an abuse of market power has occurred. It extends the current divestiture power that can only be obtained where a breach of merger laws has occurred. This will not affect corporations that do the right thing. Placing checks and balances on our free market isn't something to be afraid of. That's why I'll be supporting this bill. It's obvious that Woolworths and Coles have gone unchecked for too long. It's time for them to have a reality check.

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

The Competition and Consumer Amendment (Divestiture Powers) Bill 2024 that my colleague Senator McKim introduced today is a solution. It is something that would help address the outrageous price gouging by the big duopoly, Coles and Woolworths. Coles and Woolies control supermarket prices in Australia.

We have heard my colleagues Senator McKim, Senator Cadell and Senator Tyrrell outline in some detail the power the big supermarkets have. I'm not going to continue to outline that solution, which is a real solution. The fact that we have support from across the parliament for this is a solution.

Jess Walsh (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Senator Rice, could you resume your seat for a moment? I've noticed that your shirt has a slogan on it. I can't read it, I don't know what it is, and that's fine, but I would ask you to cover it up again before resuming.

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

The shirt says, 'Stop the poverty machine'.

Jess Walsh (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Okay.

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

Alright; I will button up my shirt.

Jess Walsh (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Senator Rice. You have the call.

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

The sentiment of 'stop the poverty machine' is what I want to focus on. Poverty exists in our society today. People are suffering from inadequate income support and from the price gouging of the major supermarkets. We have a huge problem here in Australia; people are literally starving. Where people cannot afford to eat, they are choosing, on a daily basis, whether they are eating, paying their rent or paying for their medications.

This bill that we are talking about today is part of the solution to address this problem, to improve life for ordinary Australians. What I want to do with my time here today is just share one more story with you about somebody who is just struggling so much. They're an ordinary Australian, one of the many who have written to my office saying, 'This is my reality.' This is from a constituent of mine called Peter. Peter says: 'How are people on income support payments like JobSeeker, people who are expected to live on the meagre rate of $55 a day, supposed to keep up with the current price gouging of these supermarkets?'

Peter forwarded me an email that he had sent to the government about the recent indexation of JobSeeker that Labor had tried to claim as a cost-of-living measure. Peter said: 'Today we know that, due to indexation, JobSeeker and other payments will be increased by about 96c per day. This is hardly adequate. It's better than nothing, but it comes from a very low base. This increase of 96c a day is little more than a loaf of bread per week. Choice found the average cost of a loaf of bread to be $4.45. I will deliberately use food terms, as many on income support are on or below the "breadline". Choice say that a packet of white sliced bread used to cost $3.40 on average but now costs $4.45, the cost of white sliced bread has gone up 41 per cent since 2019, bread from Coles went up 37 per cent on average, bread from Woolworths went up 56 per cent on average and bread from IGA went up 37 per cent on average.

The reality is that many are actually skipping meals. Charity after charity report the difficulties of meeting the cost of living. Those on average incomes are struggling. The reports across the community sector are uniform. I was on JobSeeker in the past while waiting to be assessed for the Disability Support Pension. I ate once per day. That meal did not include quality cuts of meat and fresh fruit and vegetables but consisted of eggs, tinned soups or pasta. The maximum rate of JobSeeker for a single person is $762.70 per fortnight. An older Australian aged over 55 years and on support for nine months is entitled to $816.90. These figures include allowances excluding rental allowance.

From previous discussions with your office'—this is presumably Minister Rishworth's office—'the Prime Minister's office and relevant ministers' offices, replies typically pointed out that rental assistance is available. I have been told ad nauseam that the Labor government increased it, even though this rental assistance bears absolutely no realistic relationship to rent. One response from a Labor minister mentioned the availability of financial counselling. That reply was condescending and patronising. The problem is that rates of JobSeeker and Youth Allowance are too low. The Department of Families, Fairness and Housing, in its December quarterly report, indicated that rents in Melbourne had increased on average by $15 a week. Ninety-six cents does not even come close to meeting this.

The Economic Inclusion Advisory Committee last year recommended real increases, and this was largely ignored. Unemployment and poverty come with other impacts: loss of hobbies, pursuits, social interaction and self-esteem, diminished self-worth and increased physical and mental health problems. Most of our social lives are built around food and drinks. We go out for coffee; we have a beer. These simple pleasures are difficult for our most vulnerable. Again referencing Choice, even instant coffee is hard. The price of instant coffee at Coles and Woolworths has gone up 18 per cent since 2019. Prices have gone up by approximately 79c per hundred grams. That's almost all of one day's indexation rise.

People on JobSeeker are not working. They are not doing well now. The amount of JobSeeker is not enough to provide basics. The amount is so low it's likely to negatively prejudice job seeking. If they are ill or hungry, or skipping food or medical care, they'll not do well in an interview or a test. Employers increasingly use a range of tests. There needs to be a substantial increase to all income support payments, and people need real assistance now.'

There are a number of solutions that have been put forward by the Greens and have a lot of support around this parliament. These divestiture rules are one solution that would stop the price gouging of supermarkets and enable people like Peter to afford to eat just that little bit more. When we couple that with increasing income support to above the poverty line, to above $88 a day, then we'd be in a situation where people like Peter—millions of Australians like him—would actually be able to feel that they've got a future in this country. They would feel that they are supported by this parliament. They would feel that they have the opportunity to get their lives back on track. There are a combination of things we need to be doing, and it is abundantly clear to anybody looking on that what we're doing at the moment is not working. With the price gouging of supermarkets and the absolutely poverty payment rates of income support, people are just suffering. They are more than doing it tough. They are more than struggling. There are people literally starving in Australia today.

We are a wealthy country. It is absolutely unacceptable that we should have such poverty in our country today. There are solutions that we can put on the table and that we could legislate for. One of those is to have divestiture powers so that Coles and Woolworths don't have the power over people that they have at the moment. The other is for this government to play its part and increase income support to above the poverty line to break the poverty machine and make sure that all Australians have the opportunity to live their best lives.

Perin Davey (NSW, National Party, Shadow Minister for Water) Share this | Link to this | Hansard source

It's really important and I want to make sure that we get on the record our position on this bill and on divestiture laws. It is no secret that the Nationals have been calling for divestiture powers for quite some time. My leader, David Littleproud, was calling for it as recently as February. But it is also very important that we get it right, that we don't rush divestiture powers through and that we take the time to ensure they are fit for purpose. Let me make it clear that most like economies around the world have divestment powers in their legislation. They are a mechanism to ensure that big corporations, particularly big corporations that have monopoly-like scenarios, do the right thing and don't misuse their market powers and that if they do and if they are found to be misusing them there is a mechanism in law whereby action can be taken.

Divestment powers are supported within our economy. In particular, the former ACCC commissioner Alan Fels says granting the watchdog powers to call for the breakup of corporate giants would act as a big stick against anticompetitive behaviour. He makes it clear that the existence of the power is a huge stick that is needed to make sure some parts of the Competition and Consumer Act work more effectively on big business. Section 46 of the act currently prohibits companies with substantial market power from taking advantage of their power by inhibiting rivals. But what we know and what we are increasingly hearing through the Senate committee inquiry into supermarkets is that section 46 is not working. It is not strong enough to ensure that companies with substantial market powers don't inhibit their rivals.

We are hearing stories of the large corporate supermarkets effectively land banking. They are buying blocks of commercial land to prevent rivals from opening up competing stores.

We are hearing stories of supermarkets requiring suppliers, particularly suppliers in fresh food areas like horticulture, to sign exclusivity contracts to provide a set amount of product, but they do not have similar requirements in reverse. So we're hearing stories like those of a supermarket going to a supplier and saying, 'You must supply only us. You can't supply us and your local farmers market. You must supply only us with a product of a set aesthetic, size and quality, and we want, say, 10 tonnes a month.' So the grower goes and plants enough to produce the 10 tonnes a month with enough wiggle room so they all meet the strict quality requirements, but then, at the end of the month, the supermarket says, 'I only need five tonnes, and I'm only going to pay you for five tonnes.' But that supplier can't then go and sell the other five tonnes elsewhere, because of the exclusivity contract, and that's not fair. How is that not taking advantage? How is that not undertaking actions that inhibit rivals?

So I agree with Mr Fels when he says that section 46 of the Competition and Consumer Act is relatively ineffective and has very minor penalties or fines. Most big businesses don't take too much notice of it. They sort of factor it into their business models. 'If we get a little fine through section 46, so be it. That's just the cost of doing business.' That's not good enough. That is why the Nationals have been calling for big stick legislation. It's why we have grave concerns about the fact that three of the big supermarkets control over 74 per cent of the grocery market. They are the market. They dictate prices, and they put pressure on suppliers. But we're also seeing that, when they dictate the price to the suppliers and the farmers, that doesn't translate to the check-out. When meat prices go down at the marketplace, they don't go down at the check-out. Has anyone gone to buy a lamb cutlet lately? I love lamb. It's my favourite meat.

The ACCC needs powers to properly investigate as part of a dedicated inquiry. They need the powers to be able to call witnesses and compel witnesses, and they need the powers to recommend harsher penalties. That's what the Nationals have been calling for. We'd like to see increased penalties, scaling up, and we want to see divestiture powers. We want to be able to force supermarkets who do the wrong thing to be forced to sell off a component of their business—for example, forcing Woolworths to get rid of BWS or Coles to get rid of Liquorland.

What I don't agree with is the current scare campaign by the Business Council of Australia, who are running around saying that, if we introduce divestiture powers, all the regional towns will lose their supermarkets and it will negatively impact on the regions. That's not how we're talking. If we design a proper model for divestiture, which is what the Nationals are working on and what we are currently talking to our opposition counterparts about, it's about designing a model where the ACCC can properly investigate and recommend actions and, where it is found that a market power is not operating in the best interests of suppliers and consumers, an application can be made to a court to enforce divestment. That does not automatically mean that the divestment will occur in a regional area.

The other day, I heard the case study of the town of Cooma. A number of years ago, there was only one supermarket brand in that town. There were a couple of supermarkets, but they were both the same brand, and they had bought up a lot of the commercial land to prevent rivals entering that market. In those circumstances, the court could recommend that that brand would have to divest themselves of either one of their supermarkets or the commercial land that they'd bought up to enable a rival and to enable more competition.

It might be that the recommendation or the action taken by the court is to have divestment of a small business unit within the large business. What it won't be is, 'Get rid of 20 per cent of your stores and we're going to leave it to the market monopoly provider to decide what 20 per cent of those stores are,' which is what the BCA's claims are. 'If you tell Coles or Woolies to get rid of 20 per cent of their stores they're only going to close down stores in regional areas.' I don't believe that for a second. That is a scare campaign being conducted by people who don't want to see Australia have a big stick to hold market monopolies to account, like in other similar economies around the world.

Just yesterday in this chamber we heard Senator Penny Wong talking time and time again about the fuel efficiency standards. 'Why is Australia lagging? Why is Australia the only Western economy not to have fuel efficiency standard? We need to keep up with the rest of the world.' Why doesn't she apply the same thinking to divestment powers? Why is Australia one of the only Western economies not to have divestiture powers for big corporate market operators?

We in the Nationals understand that horticulture farmers and other suppliers to the big supermarket are struggling. We heard examples such as watermelon farmers selling their produce for $1.50, and it being sold for upwards of $5 in the supermarkets. We heard last night from melon growers that their costs of doing business are going up and up—

Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Senator Davey, I'm sorry to interrupt, but time for this debate has ceased. You will be in continuation. Pursuant to order, I call on Minister Watt.