Chalmers puts supermarkets on notice as government works on cost-of-living relief

Treasurer Jim Chalmers has put major supermarket chains on notice that they need to pass on savings to customers as he confirmed the federal government is working on a new package of cost-of-living relief for the May budget.

Chalmers released figures showing wages rising at their highest levels in 15 years, with the biggest benefits flowing to the nation’s lowest-paid workers, but said the government had more work to do this year to tackle stubbornly high inflation.

Treasurer Jim Chalmers says Labor has delivered on its promise of higher wages.Credit: Alex Ellinghausen

He said grocery prices were a regular topic of conversation between him and Australian Competition and Consumer Commission chair Gina Cass-Gottlieb, and he expected to speak to her about the issue in the coming days.

“We’ve said that for some time, when the price of meat and fruit and veggies comes down for supermarkets, it should come down for families as well,” he said.

“This is why we’re having a fresh look at the grocery code, it’s why we’re having a fresh look at our competition laws, because we want to make sure that people who are already doing it tough enough get a fair go in the aisles of our supermarkets right around Australia.”

The federal government is reviewing the supermarket code of conduct over concerns about the gap between food prices charged by big supermarkets and those paid to farmers, while a separate Senate inquiry will examine alleged price gouging by Coles and Woolworths.

Nationals leader David Littleproud called on Sunday for the government to go further by establishing a competition commission investigation into the “extraordinary” mark-ups on food by major supermarkets.

“We saw it with the beef prices where we saw a 60, 70 per cent reduction at the farm gate, but only an 8 per cent reduction at the checkout, and the same’s happening with fruit and vegetables – melon producers getting paid $1.50 a kilogram, yet [supermarkets are] charging over $5,” Littleproud told Nine’s Weekend Today.

When the Senate inquiry, initiated by the Greens with support from Labor, was announced in December, a Woolworths spokesperson said the company was working with suppliers to “sensitively manage economy-wide inflationary pressures”.

“We know Australians are feeling the strain of cost of living and we are working to deliver relief in their weekly grocery shop,” the spokesperson said at the time.

Coles said last month that the company was “always exploring ways to reduce prices on the products we sell”, noting it also faced inflationary pressures.

At a press conference last week, Prime Minister Anthony Albanese said he had asked the Treasury and Finance departments to develop cost-of-living policy proposals for cabinet to consider in the lead-up to this year’s budget.

“Our priority will be to provide cost-of-living relief whilst taking pressure off inflation,” Albanese said.

Chalmers said on Monday that the government had three economic priorities for the year ahead: “cost-of-living relief which takes some of the edge off inflation without adding to it; strengthening our economy by investing in housing and energy and skills; and thirdly, getting the budget in better nick.”

Speaking at his first press conference of the year, Chalmers added that “if there’s more that we can responsibly do to help people deal with these cost-of-living pressures in the budget, then we will obviously consider that between now and then”.

He said the economy faced significant challenges including high interest rates, global conflict, persistently high inflation and natural disasters such as the floods in Queensland.

“The human consequences of this heavy weather are what matter most,” said the treasurer, whose electorate of Rankin covers the southern suburbs of Brisbane. “But there will be consequences for our economy and for our budget as well.

“We will get a clearer picture of the economic and budget consequences of these natural disasters in the coming months.”

Chalmers released Treasury data showing aggregate wages grew 4 per cent in the year to the September quarter, the fastest annual growth since 2009.

“We’ve seen the fastest wages growth in 15 years, and what these new numbers show is that people on the lowest pay are getting the biggest percentage increases,” he said.

“Wages growth is absolutely central to our cost-of-living plan, and these new numbers show that we’re making welcome and encouraging progress. But we’ve got much more work to do throughout the course of 2024.”

Opposition Leader Peter Dutton said Australians did not believe the economy was improving.

“Families are doing it tough at the moment. People are struggling to pay their power bills. They’re struggling to pay their insurance premiums, they’re struggling to fill the car, and they’re struggling to pay the prices at the checkout because they know the prices of everything have gone up – in big part because of the government’s disastrous energy policy,” he said.

“I think the treasurer is either completely out of touch with the local community and the Australian people or is trying to hoodwink them, or maybe both.”

Independent economist Saul Eslake said the government deserved credit for not spending more of the windfall gains from rising natural resources revenue, and for its past cost-of-living policies related to electricity and childcare.

Noting that inflation was set to continue declining, he said: “The government needs to avoid doing anything that slows the pace at which inflation is falling.”

He said the government could assist taxpayers by redirecting the stage 3 tax cuts to lower-income earners and removing tariffs on imported goods.

Shadow treasurer Angus Taylor said wages were still struggling to keep pace with inflation.

“What counts is the purchasing power of Australians’ pay packets and that’s going backwards,” he said.

“We’re breaking records in the worst way possible – record-breaking collapse in disposable income, record-breaking collapse in living standards. Australians have been hit with a triple whammy of higher prices, higher mortgage repayments and higher taxes.”

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.