Treasurer Jim Chalmers says the voluntary food and grocery code of conduct to be made mandatory

The Albanese government has given its first ever indication that will make the code mandatory for Woolworths, Coles, Metcash and Aldi.

The Albanese government has given its first ever indication that will make the Food and Grocery Code of Conduct mandatory for its signatories, Woolworths, Coles, Metcash and Aldi. Photo by Asanka Ratnayake/Getty Images.

The Albanese government has given its first ever indication that will make the Food and Grocery Code of Conduct mandatory for its signatories, Woolworths, Coles, Metcash and Aldi, which will bring with it the threat of high penalties for the supermarket giants if they are caught misusing their market power to bully suppliers.

In his budget speech on Tuesday night federal treasurer Jim Chalmers highlighted the strains on Australian households spending at the checkout as part of his wider thematic of addressing the cost of living crisis, and he said the government would act – including switching the code of conduct from voluntary to mandatory.

“That’s why we empowered the competition watchdog to hold supermarkets accountable. Why we’re taking steps to make the Food and Grocery Code mandatory,” he told parliament.

In January the Albanese government appointed former federal Labor minister Craig Emerson to review the Food and Grocery Code and in his interim report, released in April, he recommended the code be made mandatory with penalties of up to 10 per cent of turnover for major breaches, to improve supplier outcomes.

Dr Chalmers now looks to have strongly signalled the government will accept that key recommendation.

A voluntary code of conduct that oversees the relationship and business interactions between food and grocery suppliers and the major supermarkets – namely giants Woolworths and Coles - has been in place for more than a decade, but if turned into a mandatory code would form a new and tougher cop on the beat.

It is also part of a wider regulatory crackdown on the major supermarkets, Woolworths and Coles, which included a Greens-led Senate inquiry on supermarket power and prices. In February, the federal government directed the Australian Competition and Consumer Commission to undertake a 12-month inquiry to investigate pricing and competition in the supermarket sector to ensure Australians are paying a fair price for their groceries.

It also funded consumer group CHOICE for three years to produce quarterly price comparison reports to empower Australian consumers to make informed choices about food and grocery purchases. The first report will be released at the end of June.

The 2024 budget papers reported that $8.9 million over four years from 2023–24 has been allocated to improve monitoring of supermarket pricing practices, through the ACCC inquiry into supermarket practices and tracking and the publication of supermarket prices by CHOICE.