Greens supermarket bill will drive up prices: big business

The Business Council of Australia has warned families will pay more on supermarket bills, not less, if ‘extreme’ Greens legislation allowing courts to break up large companies is passed.

Big business has warned families will pay more on their supermarket bills, not less if “extreme” Greens legislation passes through parliament. Picture: AFP Photo/William West

Big business has warned that families will pay more on their supermarket bills, not less, if “extreme” Greens legislation allowing courts to break up large companies passes through parliament.

The minority party this week is set to introduce a bill in the Senate that would insert divestiture powers into Australian competition law, which it says is aimed at “smashing” the dominant position of supermarkets Coles and Woolworths.

The plan would allow the ACCC to apply to the courts to force firms to sell off assets if they are found to be using their market power to reduce competition or gouge customers.

In an unusual pairing, the Nationals have said they will back the legislation, saying the huge supermarket chains have been unfairly treating farmers.

Business Council of Australia CEO Bran Black, in an opinion piece for The Australian, said there was a valid discussion to be had on supermarket pricing amid intense cost-of-living pressures.

“But, in trying to fix it, we are at risk of making it worse if we don’t act carefully and based on evidence – especially for Australians in regional areas who rely on well-run businesses with the reach to bring them the food and services they need,” Mr Black said.

While the Albanese government has indicated it has no plans to support the Greens’ bill, business groups are concerned there remains some potential for it to pass through parliament.

Mr Black said the proposed legislation “turns a positive effort to make life more affordable for Australians into something that will potentially make what we buy more costly, and harder to provide to areas outside our large cities”. He said a series of competition reviews had not backed divestiture laws, and warned of unintended consequences.

“The Greens will tell you it is just about the supermarkets, but if you read their proposed law it is clear that it will actually capture all businesses,” he said.

“Investment and jobs are at risk if a court could break up a business, given the extent of the unanswered questions this proposal raises. The powers are an impediment to businesses growing. And when businesses don’t grow, they don’t hire staff.

The big supermarket chains have come under pressure as cost of living pressures have intensified. Picture: Asanka Ratnayake/Getty Images

“Not only that, but if we push for smaller, broken-up businesses we punish our regions. That’s because with a nation the size of ours, it takes extraordinary logistics effort and capabilities to get them the fresh food and specialist services they deserve … Australia is a country with a unique need for businesses with a wider reach.

“And so, in a cost-of-living crisis, laws like this may make things worse.”

A survey showed new orders lodged with Australian manufacturers have had the worst start to the year since the GFC, outside the pandemic.

The latest ACCI-Westpac Industrial Trends report found a sharp deterioration in industry conditions in early 2024 after a weak end to last year. A net 13 per cent of respondents reported a decline in new orders, the survey showed, which Westpac senior economist Andrew Hanlan said “was likely exaggerated by a slower-than-usual return from summer holidays”.

Still, the survey also showed profit expectations weakened further, with a growing share of manufacturers predicting profits to fall in the year ahead.

The survey is further evidence of the economy’s sharp slowdown at the end of last year and into 2024, despite last week’s blockbuster jobs number that highlighted the extraordinary resilience of the labour market.

Monthly inflation data on Wednesday and retail trade figures on Thursday will shine further light on whether the Reserve Bank has done enough to slow growth, after a number of economists said the unexpected drop in the unemployment rate to 3.7 per cent in February, from 4.1 per cent, suggested rate cuts may not come until 2025.

Federal Treasurer Jim Chalmers. Picture: NCA NewsWire/Martin Ollman

With Jim Chalmers emphasising that the May budget will reveal a shifting focus away from taming inflation and to supporting growth and investment, ACCI chief executive Andrew McKellar said the Greens’ divestiture legislation was “a further demonstration of their economic illiteracy”.

Mr McKellar said the Albanese government’s two-year competition review taskforce was already carefully considering a range of issues aimed at improving the nation’s competitiveness.

Three major competition reviews over the past three decades have found the economic costs of a divestiture power outweighed the benefits.

Greens economic justice spokesman Nick McKim last week said the divestiture legislation “isn’t a controversial or radical proposition”.

“The UK has this power, and the US has been using it for well over a century,” he said. “The competition agencies of Ireland, Italy and The Netherlands have all recently required the divestment of supermarket assets … to increase local competition.”