‘Not good enough’: Albanese warns supermarkets to lower prices

Prime Minister Anthony Albanese has warned supermarkets to pass savings on to consumers, declaring that a new review would explore all options on the table, including significant government intervention, to bring grocery prices down.

“Our farmers are providing produce at cheaper levels, but that isn’t being passed on to consumers and it’s not good enough,” Albanese said on Sky News on Tuesday night. Federal Labor seeks to make cost-of-living relief its central policy goal ahead of the next election.

Amid rising anger across the political spectrum about high food prices, Albanese announced that former Labor cabinet minister Craig Emerson will lead a review of the Food and Grocery Code of Conduct.

The review will examine whether there should be a shift away from the current voluntary industry-led regulatory scheme, which was established by the major supermarket chains, in favour of stricter government mandates.

“The voluntary Code of Conduct that is currently run by industry, this will be an examination of whether further mandating is actually required,” Albanese told the ABC on Wednesday morning.

“Because we know that when we have seen a reduction in the cost to supermarkets, that hasn’t been passed on in an appropriate way to consumers. And we want to make sure that happens.”

Craig Emerson in 2009, when he was consumer affairs minister. Credit: Danielle Smith

The Coalition this week accused the major supermarkets of imposing “extraordinary” retail mark-ups on the food they purchase from suppliers while Treasurer Jim Chalmers said the government was committed to ensuring supermarket consumers were not being ripped off.

After the previous political year was dominated by the failed Voice to parliament referendum, Labor is determined to show voters that it is focused on tackling high inflation and other cost-of-living pressures.

The government said in a statement that it will “use all available levers to ensure businesses are passing on lower costs to their customers” and “look at every option to make sure Australian customers get the best possible deal”.

Emerson – who served as competition, trade and small business minister during the Rudd-Gillard years – said he would approach the inquiry with an open mind, but noted he had a long-standing passion for creating a more competitive economy.

“I’ll look at the facts and follow the evidence,” Emerson, a trained economist, said in an interview with this masthead.

As a minister, Emerson pushed for changes to state planning laws to encourage greater competition in the retail sector and an end to lease contracts that prevented rivals such as Aldi from opening a store in the same shopping centre as an existing Coles or Woolworths.

However, Emerson, who comes from Labor’s centre-right faction, has traditionally opposed populist policies such as price caps mandated by the government and oversaw the scrapping of the Rudd government’s much-hyped Grocery Choice price-tracking website.

Albanese said: “We have been clear: if the price for meat and fruit and vegetables is going down at the farm gate, then families should be seeing cheaper prices on supermarket shelves too.

Anthony Albanese says farmers are providing produce at cheaper levels, but that isn’t being passed on to consumers.Credit: Dion Georgopoulos

“Supermarkets have a duty to make sure they’re providing affordable options for all Australians, especially when they’re making savings on their own costs.”

Saying that cost of living had been a key priority for the government, Albanese added: “If there are further steps that are needed, then the government will not hesitate to take action.”

The government announced it was already moving to amend the code ahead of Emerson’s review by making the complaints process more independent and easier for suppliers to navigate.

The Food and Grocery Code of Conduct was established in 2015 to improve standards of behaviour in the sector, with a focus on the conduct of retailers and wholesalers towards their suppliers.

The code is voluntary and businesses can withdraw by writing to the Australian Competition and Consumer Commission (ACCC).

The government said it was considering shifting to compulsory requirements and independent consumer complaints handling.

The government said it was also looking at strengthening consumer rights in circumstances where market dominance leads to unfair pricing and unacceptable service standards.

Agriculture Minister Murray Watt said the government had “been making clear for many months now that retailers should start dropping their prices to reflect the reduction in prices farmers are getting for their produce”.

“Farmers deserve a fair price for their hard work and some of the prices supermarkets are charging just don’t pass the pub test,” he said. Watt added that retailers did not have to wait until the review was completed to start reducing prices for consumers.

Nationals leader David Littleproud this week labelled Coles and Woolworths the “worst corporate citizens in this country” and called for the ACCC to launch an investigation into alleged price gouging.

Littleproud pointed to the discrepancy between cattle prices dropping by 60 to 70 per cent in June while supermarket beef prices fell by only 8 per cent.

Meanwhile, melon producers were getting paid $1.50 a kilogram, yet supermarkets were charging over $5 a kilo, he said.

Nationals leader David Littleproud says supermarkets are the worst corporate citizens in Australia.Credit: Alex Ellinghausen

Queensland Premier Steven Miles announced this week he had written to Coles, Woolworths, IGA and Aldi, asking their chief executives for a meeting to explain “why the gap between what farmers get for their produce and what customers pay at the checkout is getting wider”.

A spokesman for the Australian Food and Grocery Council was not available for comment.

Woolworths said in December that prices for its meat, fruit and vegetable categories were falling and noted that Australian food and grocery inflation was lower than headline inflation. “We are very aware of the pressures facing many Australian families,” Woolworths Group chief executive Brad Banducci said at the time.

Coles said last month that fresh food sold at its stores had experienced deflation of 2.3 per cent during the July-September quarter and that the company was “always exploring ways to reduce prices on the products we sell”.

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