21 March, 2024:

There's no doubt that the cost of living is one of the biggest issues facing Australians today. We've seen price hikes for fresh produce and petrol, for groceries and energy and for insurance and rents. It seems like, every time we visit the supermarket, the same basket of shopping costs more, and, no, it's not just your imagination; the packet sizes and quantities are getting smaller too. It has raised the question in many people's minds about whether the two big supermarkets, which control 65 per cent of the food market, are acting as a duopoly. Last month, Woolworths announced its half-year results. Before one-off costs attributable to its New Zealand operations, its operating profit was $929 million. In the midst of a cost-of-living crisis, it is this rise in the profit margin that worries me.

Woolworths' Australian food business increased its profit margin to 6.1 per cent in the six-month period to December, up from 5.8 per cent a year earlier. The equivalent profit margins at the grocery divisions of UK chains Tesco and Sainsbury's are 3.8 per cent and three per cent respectively. I know international comparisons are complicated, but consider this: according to a recent Guardian Essential poll, 72 per cent of people are buying less in response to higher costs and 76 per cent are opting for cheaper products or brands. We're seeing increasing profit margins at the same time demand is waning. That is not a sign of a properly functioning market.

The other sign is the rockets and feathers syndrome: prices shoot up like a rocket but come down much more slowly. It's the same with electricity prices and insurance. We've seen price rises far above inflation. This week the Australian Energy Regulator released its draft default market offer, which proposes the maximum amount of retailers can charge for electricity. It said the majority of households can expect price cuts of 0.4 to 7.1 per cent. As more cheap renewable energy comes into the system, we should see further falls in power bills. I will be urging the regulators to keep a sharp eye on electricity providers. They must pass on these cuts in wholesale power prices to consumers.

What else can be done? There are several inquiries currently underway that focus on the behaviour of our supermarkets. A big part of the problem in Australia is that many of our industries are very concentrated, such as airlines and supermarkets. This results in only muted price competition. We need to consider whether our competition laws need an overhaul. The ACCC chair, Gina Cass-Gottlieb, has said the ACCC does not have the tools it needs to see and prevent all anticompetitive mergers, and it means that harmful mergers may be taking place under the radar. We need to listen to the ACCC and consider new powers not just to deal with takeovers but to ensure we stamp out behaviour designed to limit competition.

There is also a proactive role for governments, particularly around encouraging new entrants into the Australian market. As former ACCC chair Rod Sims said, a lack of competition has profound impacts on our economy beyond higher prices. It can slow productivity gains and hinder wage growth. In the supermarket sector, the government could help new entrants find sites and use Austrade to help them build supply networks.

I also highlight the need for more transparency on the activities of lobbyists. Every time the government has proposed changes to the competition laws, it faces a blizzard of opaque lobbying from business groups, supermarkets, airlines, banks and others who enjoy the riches of duopolies. Consumers don't get a look-in. The government should immediately adopt the private member's bill on lobbying put forward by my colleague the member for Kooyong.