Transcript – Interview with Alan Jones, 2GB
Subjects: Food and Grocery Code, competition, small business
Alan Jones: Barry O’Farrell rightly wanted to ban discounts which offered more than 50 per cent off alcohol purchases at Coles and Woolworths. But it didn’t happen. Nathan Rees said at the time, the former Premier, that there was no question the alcohol lobby and supermarket lobby exerted undue influence in this area of public policy making. Woolworths employed Barry O’Farrell’s former Chief of Staff as its Director of Corporate and Public Affairs.
A report by KPMG in June last year, ‘last year’. I am using last year because this government in Canberra have had a year to get on top of this, found Coles had cut the prices of more than 6,000 grocery items by an average of 10 per cent since it’s down down campaign began in 2010. Woolworths then did the same but were Woolworths paying for the discounting? Not in your life! The KPMG report found the suppliers were being charged 20.4 per cent more than they were, more than they were in 2009 by Woolworths and Coles, to pay for the shelf fees, the rebates and the promotions. 20.4 per cent and that’s over a year ago.
It was clear that suppliers had paid Woolworths and Coles over $4 billion in fees just to get their goods placed on the shelves. This is criminal behaviour, its blackmail. The report, this is 12 months ago and it’s got worse, found the profitability of the suppliers, the manufacturers, the poor little battlers trying to sell their widgets at Coles and Woolworths because they have 80 per cent of the market. The people that provide the milk, veg, meat and canned foods to stick on the shelves at Woolworths and Coles, their profitability was significantly lower than any of their international peers.
The ACCC last June blocked Woolworth’s supermarket at Glenmore Ridge and found that to allow the new store would give Woolworths, which already had two supermarkets in nearby suburbs, a monopoly. Hello this is happening all over Australia. What’s Canberra done? Absolutely nothing! I’ve got a letter here from a bloke in Port Macquarie which says Woolworths did a deal with Crown Lands to buy a large piece of land on the foreshore of Port Macquarie CBD. There was no community consultation, no expression of interest, the Council objected to the sale but the Council said they needed to have the final say on what happens. But Woolworths own the former Food for Less supermarket site right next to the plaza car park, which is Crown Land.
The local council met with representatives of Crown Lands, a State Government outfit, and were told the State Government was selling the plaza car park to Woolworths. They already own the site adjacent and why are they buying it all up? So that no one else can open up on the area. There were no expressions of interest. We don’t know what someone else might have paid for the land. Woolworths got it on a silver platter. Basically they traded this in in Port Macquarie on the Food for Less site fears. Where are we going? Well I’ve got to say Bruce Billson is the Minister. Bruce Billson good morning.
Bruce Billson: Good morning to you Alan and your listeners.
Alan Jones: Are you awake or asleep?
Bruce Billson: I am very awake and what I liked about your introduction Alan is you pointed to many of the concerns that I have and that the government has, then suggested nothing has happened and then went to a list of what has happened, the court actions…
Alan Jones: Well you’re not responsible for that. You haven’t taken them to court.
Bruce Billson: Well we put the rules in place to make sure…
Alan Jones: Oh come on these are the old rules.
Bruce Billson: Correct and the ACCC was running out of money. We put extra funding into the ACCC…
Alan Jones: Bruce, Bruce, pardon the lingo, you have done bugger all. You’ve taken no one to court. They’ve still got the 80 per cent power, they’ve still got the shopper dockets, they are still out there warehousing land so that other people can’t buy it. They are still getting interest rates entirely different from small business. They are still getting rental rates entirely cheaper than small business. We’ve still got small business paying money four times the cash rate. You said in Opposition, Alan, I am your small business man. Small Business will be better when Bruce Billson is Minister.’ You tell me one small businessman out there today that’s better as a result of you being the Minister.
Bruce Billson: Well the franchising businesses, they are better. All of those relying on the ACCC to do its work, with it now properly funded and taking full use of the law. The small business people that are unhappy about some of the issues you’ve raised that aren’t addressed by the current law, are pleased we’ve got on and done exactly what we said we were going to do by extending unfair contract terms protections for small business, by doing the root and branch review of the competition law, by making sure…
Alan Jones: Excuse me Bruce – unfair contract terms for small business. So small business have got a pot of money under the table here to be able to take Woolworths and Coles to court because the contracts are unfair. Small business suppliers, Bruce let me tell you in the real world, the suppliers, the producers are being screwed to the point of extinction and the KPMG reports are there. What are you doing to stop the bullying and the blackmailing tactics of these monopolists which are driving the little bloke out of the market. What are you doing?
Bruce Billson: We are making sure the commission has the funds it needs to take enforcement action, which it has done on some of the unconscionable conduct, you saw cases in May. The money is there to prosecute that case. You saw the decision yesterday regarding the par baked bread, that has been pursued. There is further action being taken, please let me finish Alan. There is further action being taken where there are other examples, where like you, I also receive accounts of where small businesses aren’t able to exercise their free will because there is an over bearing and imbalance in market power when they are dealing with major players like the supermarkets.
Alan Jones: Bruce you swallowed hook, line and sinker last November and I told you this.
Bruce Billson: You did.
Alan Jones: The voluntary code of conduct. You swallowed it hook, line and sinker last November. By now we are 19 June and everything I said would happen has happened, that is nothing. Absolutely nothing because it’s still being ‘reviewed’. Nothing has happened at all and yet we’ve got all of these reports which tell us. The ‘deep down down’ or whatever the bloody hell the campaign is, with all of these grocery items, they’ve been reduced and who’s paying for the price reduction in the supermarkets? It’s the supplier, they are being screwed. What are you doing to stop this bullying, blackmailing, predatory behaviour?
Bruce Billson: Let me go through it again. There is court action underway, there is currently a draft amendment of a law to give smaller businesses faced with take it or leave it contracts, unfair contract term protection that is available and many of your listeners have made submissions to that process. The code that you spoke about, that you and I spoke about, which was a step in the right direction and not perfect but was acknowledged to have some holes, was a step forward which sought to ban retrospective and unilateral variations in contracts, payment for shrinkage and wastage which is where someone might shop lift something and then the suppliers are expected to pay for it. That code is being prepared. It wasn’t able to be introduced because parts of it affected the legal remedies available to small business. It’s been redrafted and it’s been put…
Alan Jones: Na na na. We had a code last November which you said oh hey isn’t this good! Aren’t these good boys!
Bruce Billson: No I think I said it’s a step and a constructive step in the right direction.
Alan Jones: And we are still reviewing the thing.
Bruce Billson: No we have reviewed it and we found that there are parts of it that are inconsistent with the law and actually, in some areas, would limit the powers of the smaller business.
Alan Jones: But it doesn’t apply now. On Thursday 19 June it still does not apply.
Bruce Billson: Correct. It doesn’t apply now because it had to be changed Alan because there is no point having a code that you can’t actually implement.
Alan Jones: Oh for god’s sake just do something, just do something. We’ve got Jamie Oliver; Jamie Oliver has now entered the scene because Woolworths have been charging fruit, potato and vegetable suppliers a 40 cent per box fee to cover the cost of the Jamie’s Garden advertising campaign. The suppliers, bigger suppliers, were paying $100,000 a week to cover the cost of the campaign. Growers are being squeezed so hard that they receive $15 from Woolworths for a crate of carrots which costs them $14 to produce. Deduct the five per cent marketing levy, the 40 cents per box for Jamie’s garden levy from that and the carrot grower is losing 15 per cent on every crate of carrots sold to Woolworths. Who do they turn to?
Bruce Billson: Well that’s why they have gone to the ACCC, that’s why the Commission is getting that information to see if the behaviour has been unconscionable, if there has been duress or some undue influence where the big business, in this case, the supermarkets have taken advantage of the smaller party. These are the areas where the law needs to be implemented by the commission but we also need to look at where the gaps are in the law, that you and I have talked about before Alan. We need to look at where positive and direct action is being taken to plug those holes, to make sure where there is this duress and imbalance in market power where a small business can’t exercise their free will and how they get access to remedies? In some areas the law is there and the Commission implements it. In other areas Alan, the law doesn’t cover some of the conduct and that’s why we are seeking to strengthen and enhance the law…
Alan Jones: But you’ve had 12 months mate.
Bruce Billson: And we are making good progress Alan….
Alan Jones: Oh come on!
Bruce Billson: You would be as appalled as I would be if someone came straight out and said here is the answer without actually doing the surefooted, proper leg work….
Alan Jones: Mate the work has been done for you. A KPMG report commissioned by the Australian Food and Grocery Council has found that suppliers are paying $1 in every four they earn. 25.7 per cent of their gross sales to Coles and Woolworths to cover Coles and Woolworths costs of promotions and rebates and discounts.
Bruce Billson: While the supermarkets margins have grown, you and I know where the squeeze has been.
Alan Jones: Well what are you doing about it?
Bruce Billson: Well I’ve just outlined a number of those things Alan. As frustrated as you are, this is important work but we’ve got to get it right. Let’s not shoot the only team in town that’s prepared to take these issues on. All of the issues you have identified, action has already been taken using the existing laws through the courts now that the Commission is not broke, which it was when we inherited the responsibility after the election. It was running out of cash Alan, it had no money but we are getting on with…
Alan Jones: Well we are running out of time…
Bruce Billson: Well we are getting on with it and I am looking forward to having a chat with you again to keep you updated on the positive action that is being taken because we need to re-energise enterprise in this country.
Alan Jones: Oh you are dead right. Alright Bruce. Talk to you later.
Bruce Billson: Thanks Alan.
Alan Jones: Bruce Billson, the Minister for Small Business.