We'll cap prices for essentials and break up the duopoly of Coles and Woolies
Coles and Woolies have some of the highest profit margins in the developed world. Grocery prices are out of control because these big corporations are ripping us off, and Labor and the LNP are doing nothing to stop them.
In just over two years, the price of cheese has soared by 27%, milk 23%, bread 24% and eggs 20%.
While Queenslanders are struggling to fill up the trolley each week, the big supermarkets’ profits have surged. Woolies made over $1.7 billion in profit and Coles $1.1 billion last year.
But Labor and the LNP are doing nothing to stop their corporate price gouging because they’ve taken millions of dollars in corporate donations from the big supermarkets. Coles and Woolies have donated $6.9 million to Labor and the Liberal/Nationals across the country in the last ten years.
The Greens refuse corporate donations so aren’t afraid to take on Coles and Woolies to bring down grocery prices.
The Greens will:
- Cap prices on a list of 30 essential items like bread, milk and nappies.
- Break up the Coles and Woolies duopoly to help shoppers, farmers and workers, legislating new powers for a newly created Fair Prices Authority.
- Stop dodgy supermarket behaviour like land-banking development sites & land covenants.
- Boost emergency food programs like food banks, emergency relief and food recovery organisations by tripling funding to $20 million per year.
The duopoly is ripping us off
Queensland and Australia have some of the most concentrated grocery sectors in the world. Between them, Coles and Woolworths control 65% of the market. In the UK, the top four supermarkets control the same share as Coles and Woolies alone, while in the USA the top four control just 37%.
Like so many other big corporations, Coles and Woolies use their monopoly power to rip off Queenslanders even while they squeeze farmers and shut out competition. Experts from Alan Fels to the ACCC agree that food is more expensive because Coles and Woolies are so powerful.
Cap prices for 30 essential items
To stop the spiralling cost of food in the short term, the Greens would cap prices on a list of 30 basic essentials like bread, milk and nappies.
Regulating prices has a long history in Australia, including after World War Two when all States implemented price controls to deal with runaway inflation and stop profiteering.
In France, the prices of 5,000 items are capped by the government, with mandatory price cuts where supermarkets’ costs go down.
The corporate profit-driven cost of living crisis means we need to draw on that legal power to stop Queenslanders getting ripped off.
How price caps would work
The Queensland Competition Authority (QCA) already regulates some government and private sector monopolies like electricity, railways and ports. Under the Greens’ plan, the QCA would become the Fair Prices Authority, with expanded powers and resourcing, and a mandate to protect Queensland consumers from corporate price gouging.
Who decides the list? The Fair Prices Authority would determine a final list of 30 categories of essential items like bread, milk and nappies, applying across Queensland. The 30 categories would be based on a representative list of basic essentials, similar to the “basket of goods” used to calculate CPI. The list would be open to public feedback, and would take into account cultural and dietary requirements as far as possible.
Capped price: Prices for each of the 30 items would be capped at 1 January 2024 levels, and would be indexed each year based on wages (average weekly earnings).
To combat “shrinkflation” on capped price items, the cap would apply on a unit basis, i.e. per kilogram or per unit rather than per package.
Supermarkets wishing to increase prices beyond indexation would need to apply to the Fair Prices Authority and show that their costs had increased.
Which supermarkets? The price caps would apply to all supermarket corporations with total sales of more than $3 billion per year in Queensland.
Which particular items? The Authority would require big supermarkets to offer at least one product in each of the 30 categories of essentials for sale at a capped price. I.e. one brand and size of nappies, one brand and volume of milk.
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Example list of 30 basic essentials which the Fair Prices Authority could cap: |
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Bread |
Rice |
Tinned tuna |
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Breakfast cereal |
Pasta |
Minced meat |
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Rolled oats |
Instant noodles |
Hot roast chicken |
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Milk (dairy and non-dairy) |
Stir-through pasta sauce |
Tofu |
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Vegemite or equivalent |
Beans (tinned) |
Nappies |
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Cheese |
Tomatoes (tinned) |
Dishwashing liquid |
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Butter and non-dairy spreads |
Frozen peas or mixed vegetables |
Laundry detergent |
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Eggs |
Ice cream |
Toilet Paper |
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Yoghurt |
Baby formula |
Shampoo |
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Instant coffee |
Cooking oil |
Menstrual products |
Given the higher natural and seasonal price fluctuation, the price caps would not apply to fresh produce.
Break Coles & Woolies’ duopoly power
The Greens would smash the duopoly power of Coles and Woolies and make food cheaper by passing a law to allow the Queensland government to break up the big supermarkets.
Breaking up the big supermarkets would mean lower prices, more supermarkets and more choice for shoppers.
It would also give farmers and other suppliers a chance to bargain on a more even footing with grocery chains, instead of the “take it or leave it” treatment they currently get.
How we would break up the duopoly
Where supermarkets have more than 20% market share across one of the seven key regions of the State, the Fair Prices Authority would recommend to the relevant Minister that they be broken up under newly created legislative powers. The Minister would have the power under the Greens’ new laws to make a legally binding decision.
This would require a supermarket chain to sell some stores to a competitor, a local co-operative or a new entrant until they reach a market share of 20% or less within the relevant region. It would also mean big supermarkets could not buy up smaller or independent grocery stores.
The sale of stores would take place under supervision by the Fair Prices Authority, and stores would remain open while the sale progresses.
The Fair Prices Authority would monitor market share by total sales across the seven key regions: (1) Far North Queensland, (2) Central Queensland, (3) Darling Downs & South West Queensland, (4) Greater Whitsunday, (5) North Queensland, (6) South East Queensland and (7) Wide Bay Burnett.
Exemptions and special considerations would apply for community stores in remote communities, including building on the current State government subsidies for freight costs to make prices affordable.
Stop dodgy supermarket behaviour
Recent inquiries by the Senate, the Queensland Parliament and other agencies have uncovered repeated allegations that the big supermarkets are using dodgy tactics to shut out competition.
Evidence suggests that Coles and Woolies engage in land banking, buying up future development sites zoned for major supermarkets and keeping them empty for years. This prevents competitors from entering new markets and reduces options for shoppers. Woolworths owns 16 development sites around Queensland directly, with more owned by external developers associated with Woolworths. Coles has not disclosed its land bank of sites1.
Big supermarkets have historically used “restrictive leases” which excluded competitors from opening stores in the same shopping centre. The federal ACCC has addressed these restrictive leases via court proceedings2, but they remain legal. Some evidence suggests that supermarkets are now using “restrictive covenants”. These covenants can be placed on the land title to prevent competitors using that land in future, even if it is sold.
The Greens would ban all legal practices which deliberately shut out competition in the grocery sector, including banning supermarkets and associated developers from holding development sites for more than four years, banning restrictive leases and banning restrictive covenants.
Triple emergency food aid
Our plan would make groceries cheaper for everyone, but for those in crisis the Greens would also triple funding for emergency food aid, increasing funding from $3.3 million per year to $10 million per year. This would support organisations like Neighborhood Centres and local community organisations to hand out more supermarket vouchers, food parcels and help with utility bills.
We would also allocate $10 million per year to food recovery, distribution and relief services like Foodbank Queensland, OzHarvest and SecondBite.
Expand the Greens’ real-life free meals program
As the cost of living crisis escalates, Greens MPs have been responding by creating our own free meals program on the ground. Greens representatives in Brisbane have given away 53,250 free meals in the last year alone.
The more Greens MPs that are elected in October, the more free meals programs we’ll be able to run across Queensland.
Sources:
1 Qld Parliamentary inquiry on Supermarket Pricing, Report page 27 and QoN to Woolworths, pp 5-6.
2 ACCC submission to the Senate Select Committee on Supermarket Prices, p6.