Will supermarket breakup powers lead to lower prices? Regional and remote WA shire leaders aren’t convinced

Shire leaders in the Kimberley worry food security could be at risk in regional and remote areas of WA if a Coalition government enacts its proposed supermarket break-up policy. Opposition Leader Peter Dutton this week outlined plans for divestiture, allowing the Australian Competition and Consumer Commission to force supermarket giants in breach of competition laws to sell off stores — a measure the Labor Government opposes but the Greens support. The Australian Retailers Association says any forced divestments would unnecessarily disrupt established economies of scale and have “unintended consequences” for consumers. And the bosses of Australia’s supermarket duopoly already indicated at a Senate inquiry in April that regional and remote stores would be first on the chopping block. They say regional customers enjoy the benefits of Statewide pricing because of their broad reach. Broome shire president Chris Mitchell said regional towns like his — which has both Coles and Woolworths stores — already experience pressure on its food supply, especially at the peak of the tourist season. “There is the issue of food security — the supermarket shelves empty quickly enough during the busy season or when trucks are unable to travel from down south,” Cr Mitchell said. He said smaller retailers would find it difficult to keep the shelves filled amid high demand if bigger supermarkets were sold off. And the town would be in dire straits should supply routes be severed in natural disasters, as was the case in last year’s floods, he said. The floods inundated the Kimberley region, causing massive supply chain disruptions and cutting off many communities from essentials and the outside world for weeks. “We would run out of food very quick if we just had one major supermarket,” Cr Mitchell said. The shire president said he welcomed any policy that would decrease grocery prices, but said he was “not sure how one of the big two being forced to close would help competition and bring prices down”. “Groceries aren’t cheap here, but travel to any of the big cities and you’ll be surprised how things are equally expensive even without the transport costs,” he said. It’s a sentiment echoed by Coles boss Leah Weckert, who told April’s Senate inquiry that consumers benefited from Coles’ reach and that a divestiture law could force prices up because there would be fewer stores for the same operating costs — with rural and regional stores most at risk. Outgoing Woolworths chief executive Brad Banducci told the same inquiry divestiture laws created some uncertainty, but that ultimately it wanted to hold itself to a higher standard. Port Hedland Mayor Peter Carter also remains dubious about the proposed powers, but said he would always support policies that helped lower the cost of living for his constituents. “Port Hedland is one of the most expensive places to live certainly in WA — if not the whole country,” he said. “That’s why I would support any efforts that are made to ease cost-of-living pressures and provide our community with a fairer and cheaper shopping experience for essential items.” The Coalition plan would also impose tougher civil penalties up to $2 million for supermarkets that fail to comply with the Food and Grocery Code and would create a Supermarket Commissioner. In the north-west, Coles also has supermarkets in Kununurra, South Hedland and Tom Price, while Woolworths is in Derby, Newman, Port Hedland, Wickham and Karratha. Corporate lobbyists and more conservative members of the Coalition have criticised the plan, airing concerns about free market principles, while the Labor Government has flatly ruled out any proposals for forced break-up laws — despite recommendations from the Senate inquiry report.