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Labor Government Pledges to Crack Down on Supermarket Price Gouging
Prime Minister Anthony Albanese has announced that a re-elected Labor government will legislate to prohibit supermarket price gouging by the close of the year. This commitment represents the first major policy initiative of the campaign, aimed at addressing rising living costs.
Implementing ACCC Recommendations for Price Transparency
The Prime Minister stated on Sunday that Labor would implement the recommendations from the Australian Competition and Consumer Commission (ACCC) to enhance transparency regarding supermarket pricing, promotional offers, and loyalty schemes. These measures are designed to give consumers more clarity on how prices are set and changed.
Taskforce to Define “Excessive Pricing” and Enforcement Regime
Furthermore, Labor will establish a dedicated taskforce to advise on the introduction of an “excessive pricing regime” for supermarkets. This regime, once defined, would be enforced by the ACCC. The taskforce will comprise experts from Treasury, the ACCC, and other relevant market and regulatory bodies.
Potential “Heavy Fines” for Supermarkets
Albanese indicated that supermarkets could face substantial financial penalties for engaging in price gouging. He clarified that the ACCC would be responsible for determining the most effective model to define and identify instances of price gouging, ensuring fair and consistent application of the new regulations.
“People are aware when they are being overcharged, and we are determined to take action against supermarkets,” Albanese stated during an interview on ABC’s Insiders.
“We intend to ensure that [supermarkets] are aware they are under scrutiny.”
Proposed Timeline and Details of Pricing Regime
The newly formed taskforce is expected to deliver its findings and recommendations to the government within six months, outlining a proposed course of action. However, specific details regarding the precise nature of the pricing regime remain under development.
Coalition and Greens Respond
The Coalition has criticised the timing of Labor’s announcement, with energy spokesperson Ted O’Brien dismissing it as a “marketing stunt.” However, James Paterson, another Coalition spokesperson, indicated the opposition would support legislation to make price gouging illegal.
“The reality is, this policy is an insult to Australian citizens. This marks their fifth inquiry or review into supermarket prices. If it were a viable solution, why has it taken three years to act?” Paterson commented on ABC’s Insiders.
Both the Greens and the Coalition have recently urged Labor to adopt divestiture laws, which would involve forcibly breaking up major supermarket chains as a punitive measure against price gouging.
Paterson argued that the opposition’s proposed targeted divestiture laws would be a more effective approach to address the issue of supermarket misconduct.
“If [supermarkets] are abusing their dominant market position, if they are suppressing competition, we could employ divestiture as a last resort – a powerful deterrent,” he stated.
Opposition Calls for Stronger Penalties and Audits
Nationals leader, David Littleproud, outlined the opposition’s plan to impose immediate fines of $2 million and empower the ACCC to conduct unannounced audits of major supermarket operations. This strategy aims to introduce a stronger deterrent than further reporting mechanisms.
“Continuing with reporting alone will yield the same outcomes. We must change the prevailing culture, and the only effective way to achieve this is through a credible deterrent, which the Coalition will implement,” he asserted.
Examining International Models for Excessive Pricing Laws
Current Australian competition laws are designed to prevent companies from misusing market dominance but do not specifically address excessive pricing. It is understood that Labor will examine existing excessive pricing legislation in the European Union, the United Kingdom, and 30 US states as potential frameworks for their proposed reforms. This comparative analysis will inform the development of Australia’s own excessive pricing regime.
Government Commitment to Consumer Protection
The assistant minister for competition, Andrew Leigh, emphasized the need for stronger consumer safeguards, stating: “It is time Australian consumers received the same level of protection against excessive pricing as consumers in other nations.”
ACCC Report Highlights Supermarket Profitability
This announcement follows the ACCC’s final report on its supermarket inquiry, released on March 21st. The report highlighted that Coles, Woolworths, and Aldi are among the most profitable supermarket chains globally.
Grocery Price Increases and Profit Margins
The ACCC report also found that grocery prices have increased considerably in the past five years, primarily attributed to rising business costs. However, the report also noted that supermarkets have concurrently increased both product prices and their profit margins throughout this period.
ACCC Findings on Profit-Driven Price Hikes
According to the ACCC, this indicates that “at least a portion of the increases in grocery prices have resulted in increased profits for supermarkets,” suggesting that factors beyond just business costs are at play in the rising prices consumers are facing.
ACCC Recommendations for Enhanced Transparency
The ACCC has recommended that the government mandate Coles, Woolworths, and Aldi to publish all pricing information on their websites and facilitate data access for online price comparison tools, empowering shoppers with greater price awareness. Further recommendations include measures to improve transparency for suppliers in their dealings with supermarkets.
Budget Allocation to Support Suppliers
Reflecting these concerns, the recent budget included an allocation of $2.9 million over three years aimed at “supporting suppliers in negotiating with major supermarkets,” strengthening their position in the supply chain.
Treasurer’s Assurance to Australians
Treasurer Jim Chalmers affirmed Labor’s commitment to fair pricing, stating the government would ensure “Australians are not being exploited.”
“We are committed to securing a fairer deal for families at the checkout and a better deal for farmers at the farm gate,” he added.
Cost of Living Focus in Election Campaign
With the cost of living emerging as a key concern in the upcoming election, Labor is presenting this announcement as a central component of its broader strategy to address these pressures. This strategy also encompasses measures such as tax cuts, energy bill rebates, and reduced medicine costs, aiming to provide comprehensive relief to households.