The increased market concentration and reduced competition in Australia's economy is in the government's crosshairs, with a two-year review of competition policy settings to be undertaken.
Announced on Wednesday by Treasurer Jim Chalmers, the establishment of a Competition Taskforce in Treasury aims to help build a more dynamic and productive economy.
Dr Chalmers said greater competition was critical for lifting dynamism, productivity and wages growth, putting downward pressure on prices and delivering more choice for Australians dealing with cost-of-living pressures.
"Australia’s productivity growth has slowed over the past decade, and reduced competition has contributed to this, with evidence of increased market concentration, a rise in markups and a reduction in dynamism across many parts of the economy," he said.
"We need to ensure our competition policy settings are fit for purpose in the face of the big shifts underway in our economy, so we can make the most of digitalisation, the growth in services, the net zero transformation, while supporting our nation’s most vulnerable."
The announcement has been welcomed by agriculture lobby groups, who say concentrated markets and supply chains have long been a 'handbrake to the economy'.
NSW Farmers president Xavier Martin said you need only look at the Coles profit of $1.098 billion and Woolworths profit of $1.62 billion, both announced this week, for a clear example of market concentration.
Repeating calls for action from the federal government, Mr Martin said it was very disappointing that every one of those dollars came out of an Australian’s pocket at a time when families were struggling to make ends meet.
“Families are facing huge cost-of-living pressures while farmers are getting paid cents on the dollar for their produce, and the two biggest companies in the middle of the fresh food supply chain are getting fat,” Mr Martin said.
“Farmers have been consistently telling us they're not getting paid anywhere near what the food they produce is retailing for, so it’s hardly surprising Coles and Woolworths are turning such eye-watering profits.
“This is yet another great example of why the Australian government needs to implement the ACCC’s recommendations to not only support the farmers who grow food, but help reduce prices for families buying that food.”
Mr Martin said while the competition taskforce was welcome news, there also needed to be an analysis of supply chain profits, with a focus on markups and price gouging.
“No-one is saying Coles and Woolies can't make a profit – it's just the size of those profits during a cost-of-living crisis that is the issue,” he said.
“The entire reason the ACCC came to be in the first place was to protect the consumer, and it’s about time these recommendations were taken seriously.
"We’re increasingly hearing from members that they believe retailers are continuing to exercise market power to capture super profits, simultaneously taking advantage of producers and consumers in the process, and it’s long past time something was done about it.”
A step in the right direction and a key opportunity to act on competition reform, the National Farmers' Federation says it's essential this review delivers more than hot air.
"We need action and a government that’s willing to put its money where its mouth is," NFF president Fiona Simson said.
"The review must deliver practical outcomes on a range of policy issues, including unfair business practices and access to justice mechanisms, mergers and acquisitions, the capability of the ACCC, and systematic barriers to entry in the Australian economy.
"Our food supply chains are controlled by a handful of organisations with significant market power, putting farmers and consumers at a disadvantage.
“For long-term business productivity and food affordability, we need effective competition policies that ensure small businesses and consumers get a fair go in the Australian economy.”
The taskforce's review process will involve targeted public consultation, and provide continuous advice rather than a formal report, so progress can be made over time.
It will be supported by an expert panel with members including Grattan Institute CEO Danielle Wood, and former ACCC chair Rod Sims.
Initial issues to be considered by the review will include:
proposals put forward by the ACCC around merger reform, as well as other competition law issues
options for coordinated reform with states and territories, to be progressed through the Council on Federal Financial Relations
non-compete and related clauses that restrict workers from shifting to a better-paying job
providing advice on competition issues raised by new technologies, the net zero transformation and growth in the care economy.
