Skip to content Skip to main navigation

Lifestyle

Get RSM on your side at tax time.

IPA lashes the ACT’s fascist supermarket policy

By johnboy - 15 June 2010 16

Report Cover

Free market think tank, The Institute of Public Affairs, has looked into the ACT’s brave new statist experiment into supermarket competition which seems to have pleased no one except Supabarn.

The key consequences of the government’s implementation of its supermarkets policy at Kingston, Dickson, Casey and Amaroo will be to:

• Require the price of groceries at these news supermarket sites to be between $6.52 and $13.45
more expensive than the cheapest ACT supermarket site.

• Increase the price of the mean basket of groceries in the ACT by $1.05 or 1.18 per cent adding an
additional third increase on top of inflation.

Instead of being a policy to promote lower prices, the ACT government’s supermarkets policy
appears to be a form of industry protection for Chief Minister Stanhope’s preferred Supabarn. But as
the ACT Treasury’s own data shows, the cost of that protection will be felt through higher grocery
prices for supermarket shoppers.

In the Canberra Times Mr Stanhope has dismissed this ananlysis as ‘nothing but arrant, unadulterated nonsense”.

Supermarket policy

View Results

Loading ... Loading ...

(For those of you who have not been paying attention here’s a history of the issue.

What’s Your opinion?


Post a comment
Please login to post your comments, or connect with
16 Responses to
IPA lashes the ACT’s fascist supermarket policy
bd84 9:10 pm 15 Jun 10

They have already proven that the introduction of Aldi into the market has done absolutely nothing for competition in this country, price differences where there is an Aldi in close proximity to a Coles or Woolworths are negligable to stores where there is no competition.

You can only include Aldi in comparisons if you can compare them against own brand equivalents of the other supermarkets, if memory serves me right the difference is only a few dollars at most. Anyway, Aldi isn’t real competition for Coles/Woolworths simply because they do not have the range or quality of it’s bigger competitors and Australians shun places where then cannot get their beloved name brand food products.

Deano said :

I would argue that the current situation is the result of ‘letting the players sorting things out’. Competition is all about allowing customers’ choices determining the shape of the market. The last time I checked, there was nothing forcing anyone to use one of the major players. For a variety of reasons, the majority of consumers choose to do so of their own free will.

The government’s competition policy has little to do with improving the outcomes for consumers.

I couldn’t have said it better myself, though I will add that Stanhope clearly doesn’t understand competition policy and the illegality of preventing individuals competing in a market. Government intervention in a market has never created competition, always the opposite.

moneypenny2612 8:14 pm 15 Jun 10

I can’t be bothered reading the IPA report.

But surely in a free market economy, the IPA would happily let the protected species open and then watch them fail as the punters go to Woolies or Coles to find cheaper goods.

Frankly, I don’t see that happening – Supabarn, even at a small premium, is a solid supermarket business and people will support it for so long as it is reasonably price competitive and stocks a good range.

As for the IGAs, perhaps they need to employ a lobbyist…

justin heywood 7:06 pm 15 Jun 10

johnboy said :

Agreed troll sniffer, so a sensible government might have zoned more areas as suitable, put in a restriction on a new entrant with an existing facility within 2km, and let the new players sort things out.

Would have been a much smarter way to do it. Why didn’t they, anyone know?

ML-585 said :

If you compared Aldi products with Woolworths or Coles generic house brands, the results would be much closer if not identical.

Aldi brands are much better quality than the ‘generic’ from Coles/Woolies. I wouldn’t eat the home brand rubbish from either of the majors, but Aldi stuff is generally pretty good. (entirely subjective opinion)

2604 6:02 pm 15 Jun 10

ML-585 said :

If you compared Aldi products with Woolworths or Coles generic house brands, the results would be much closer if not identical.

Ah but that is only the case because WOW/Coles lower the prices of their generic products to match the Aldi ones where there is an Aldi store nearby. If Aldi Cola goes down to 65c per 1.25 litre (from current 69c), Home Brand and Coles Smartbuy will follow.

Still not a reason to exclude Aldi from pricing comparisons. Certain things like per kg Bananas/Tomatoes/Fruit and bulk chicken breast fillets are consistently cheaper at Aldi than at WOW/Coles and could easily be incorporated into such a comparison.

Trev 5:49 pm 15 Jun 10

I seem to recall the IPA disputing the links between tobacco and chronic disease, quite possibly because the likes of Phillip Morris fund them.

georgesgenitals 3:10 pm 15 Jun 10

I always thought ‘fascist’ meant hating somebody because of their face.

54-11 2:51 pm 15 Jun 10

I must be misunderstanding something, because I agree with Stanhope. The IPA is infamous for putting out this sort of arrant nonsense (like they did with their clients, the ciggy manufacturers).

If any group feels that govt policy is disadvantaging them, I suggest getting anyone other than IPA to do their “research”, as it’s been shown repeatedly to be crap work.

random 1:56 pm 15 Jun 10

ML-585 said :

[H]ow does opening new supermarkets cause prices to increase?

The impeccable logic is that, if non-Coles/non-Woolworths supermarkets are more expensive, introducing more of them raises average per-store prices across the ACT.

Following the same reasoning, another option would be to close all supermarkets other than Coles Belconnen.

ML-585 1:25 pm 15 Jun 10

random said :

The price comparisons in the Martin review suggest that ALDI baskets are 20% cheaper than Coles or Woolworths, so we can probably assume that the real average is somewhere south of $80.

Aldi only comes out cheaper in price comparison reports because they do not compare ‘like with like’. Any basket from Coles/Woolworths/IGA etc will contain Name Brand products (Cadbury, Coca-Cola, McCain, whatever) but these products are not stocked at Aldi as they mainly stock only House brand products. So comparing a bottle of Coca-Cola vs Aldi Home Brand Cola is not a fair comparison. If you compared Aldi products with Woolworths or Coles generic house brands, the results would be much closer if not identical.

Rant over.

Both Coles and Aldi claim to have price parity across all their stores (except fresh produce?), although I’ve never checked to see if this is true (got better things to do). I expect Woolworths and Supabarn would do likewise. Clearly I’ve missed something here: how does opening new supermarkets cause prices to increase?

random 11:39 am 15 Jun 10

I guess it’s nice that the IPA is taking a break from climate change denial, but it’s a pretty wretched report.

I especially like the footnote that “Data for ALDI is not available”, which lets the author disgenuously claim that the average price of a basket in Casey will be $88.84 (the average of the Supabarns in Civic and Wanniassa). The price comparisons in the Martin review suggest that ALDI baskets are 20% cheaper than Coles or Woolworths, so we can probably assume that the real average is somewhere south of $80.

It’s also great how the prices at, say, the small Lyneham IGA ($110!) are added to the “non-Coles, non-Woolworths” averages while the ALDIs are excluded — as though there’s a snowball’s chance in hell of a $110/basket IGA opening at the Dickson shops.

Deano 11:28 am 15 Jun 10

johnboy said :

Agreed troll sniffer, so a sensible government might have zoned more areas as suitable, put in a restriction on a new entrant with an existing facility within 2km, and let the new players sort things out.

As any long term Canberran would know, every suburb was planned with its own local shops, as well as nearby medium and major shopping centres. As it turned out, local shops aren’t viable in dormitory suburbs where the majority of the residents leave during the day. Even the medium shopping centres struggle when the majority of their customers are located in the major centres during trading hours.

I would argue that the current situation is the result of ‘letting the players sorting things out’. Competition is all about allowing customers’ choices determining the shape of the market. The last time I checked, there was nothing forcing anyone to use one of the major players. For a variety of reasons, the majority of consumers choose to do so of their own free will.

The government’s competition policy has little to do with improving the outcomes for consumers.

johnboy 10:22 am 15 Jun 10

Agreed troll sniffer, so a sensible government might have zoned more areas as suitable, put in a restriction on a new entrant with an existing facility within 2km, and let the new players sort things out.

trix 10:14 am 15 Jun 10

“Fascist”? Oh, please.

And other than the one biased doco, what’s the background to this story? Can we be bothered having a summary of the Stanhopian policy (which may be complete pants as well, but a bit of compare-and-contrast doesn’t actually hurt journalistic endeavours).

troll-sniffer 10:08 am 15 Jun 10

Free market think tank as long as the thinking reflects the thinking of the thinkers at the sponsors and donors.

I also happen to believe that even if prices are slightly higher, it is better for society to have a choice of more than just the two major supermarkets, if for no other reason than the other chains, particularly SupaBarn, stock a better range and quality of merchandise.

Economists of all persuasions agree that a duopoly controlling around 80% of the grocery retail market is not a healthy environment for consumers.

verbalkint 10:02 am 15 Jun 10

I had a quick skim through the document and there doesn’t seem to be anything in it about how the research was funded or the topic selected.

When a private think-tank releases a paper that completely agrees with a business run campaign (specifically here, the IGA campaign) I think people should start to get skeptical about how independant the research really is.

Related Articles

CBR Tweets

Sign up to our newsletter

Top
Copyright © 2017 Riot ACT Holdings Pty Ltd. All rights reserved.
www.the-riotact.com | www.b2bmagazine.com.au | www.thisiscanberra.com

Search across the site