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Could there be a more obvious diversion?

By Graham Young - posted Thursday, 11 April 2024

Former Labor Minister Craig Emerson's Interim Report of the Review of the Grocery Code of Conduct is the latest attempt by the Albanese government to avoid blame for the cost-of-living crisis.

Australia is 18 months from the last possible date for the next federal election, so expect a lot more blame-shifting, but hopefully none as absurd as this one.

The government and various allies in the Green/Left establishment have been screeching for over 12 months now about supermarket "price gouging."


This is a ridiculous claim, as Coles and Woollies make only about 2.5 cents for every dollar of stock they sell. But even if it were true how would you solve it?

A rational policymaker would try to induce supermarkets to contract margins and cut costs. That would involve introducing more retail competition into the sector to force margins down; encourage productivity improvements from staff and equipment; tougher negotiations with landlords for cheaper rents; and stronger negotiations with suppliers for lower cost of goods.

But no, that is not what the interim report is suggesting. Rather Mr. Emerson implies he wants retailers to pay their suppliers more and everything else to stay the same.

How does that lead to lower prices?

In fact, the absurdities keep multiplying as the review won't materially change the situation for major retailers at all.

The significant recommendations of the review are that:

  • The Food and Grocery Code of Conduct should be mandatory and apply to all retailers with turnover of $5 billion or more.
  • Maximum penalties for breaching the code should be 10 percent of turnover (so greater than $500 million on the basis of the turnover criteria).
  • There should be a complaints process for suppliers, as well as confidentiality.
  • There should be a resolution and mediation process for disputes, with supermarkets encouraged to pay up to $5 million to resolve disputes.
  • Minimum standards that can't be contracted out of.

The funny thing is that all the retailers with a turnover of $5 billion or more already agree to abide by a voluntary code that offers almost all of these things, just without the absurd maximum fine.

A binding code voluntarily entered into is as good as mandatory, unless one of the parties decides to withdraw, and there is no sign of that.

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This article was first published in the Epoch Times.

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About the Author

Graham Young is chief editor and the publisher of On Line Opinion. He is executive director of the Australian Institute for Progress, an Australian think tank based in Brisbane, and the publisher of On Line Opinion.

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