SKY AFTERNOON AGENDA WITH TOM CONNELL
THURSDAY, 18 JANUARY 2024
SUBJECTS: Labour force figures; Competition in the supermarket sector
TOM CONNELL (HOST): We’re joined by the Assistant Treasury and Assistant Employment Minister, Andrew Leigh. Thank you for your time. I think you're the Assistant Minister to the Treasury?
ASSISTANT MINISTER FOR CHARITIES, COMPETITION, TREASURY AND EMPLOYMENT ANDREW LEIGH: That's right, yes.
CONNELL: There you go. So, unemployment still with a three in front of it, it feels like a four is pretty inevitable. More than 100,000 full time jobs going. Is that going to be the well, not the new normal, the old normal is a three in front of it, unrealistic, do you think, as a permanent sort of facet of the economy?
LEIGH: Well, Tom, it is worth recognising how strong the labour market has been under the Albanese government. Under the former government, unemployment was around 5-6% for most of their nine years in office. Under us, it's consistently been below 4%. That translates into about 300,000 more jobs than if unemployment had been where it was under the Coalition.
CONNELL: In terms of the settings of the economy, because the RBA has a say in it, but the government does too, in terms of its fiscal policy. Do you think a three in front of it is great, but not something that's realistic?
LEIGH: I think it's fantastic. And it means jobs for people who wouldn't otherwise have had them. People with unusual CVs, minorities, people who would otherwise be squeezed out of the labour market, get jobs in a full employment economy now. That's why we brought down our Employment White Paper in order to see how we put in place the skills changes, the competition reforms, the evaluation changes that lock in full employment for the long term. It's really important to the Labor mission. It's vital for us that we see those sustained wage changes. We've now had two quarters of real wage growth under Labor and that we see the strong employment outcomes that we've consistently seen under this government.
CONNELL: Getting your competition hat on, Coles and Woolworths, are they too dominant? And if so, what's the evidence of it?
LEIGH: Well, statistically, it's certainly the case that the Australian grocery sector is more concentrated than in other countries, more concentrated than the United Kingdom or the United States for example. That's meant a squeeze on suppliers. But we also want to make sure that we're not seeing a squeeze on consumers. And that's why we've got Craig Emerson, one of Australia's top policy economists, conducting this review into the Food and Grocery Code of Conduct to make sure suppliers and consumers get a fair deal.
CONNELL: Ultimately, though, whatever their dominance is, I mean, I think they’ve got 70% of the market and compared to the rest of the developed economies, that tends to be more for two. But your evidence base has to be on margins ultimately, doesn't it? Is that what needs to be looked at? If their margins are commensurate with around the world, then as much as it might feel like they're profiteering, they're not?
LEIGH: It's a fair question to ask. Certainly we saw an improvement in prices that consumers paid when we had Aldi enter the market. That dose of foreign competition did make a difference to Australian consumers. Increasingly now we're seeing a lot of split basket shopping, people doing half the shop at one grocery store, half the shop at another grocery store. But as a government, we need to make sure, and we are making sure that the supermarkets are doing the right thing by Aussie consumers.
CONNELL: Problem with that, if you got a family, it's usually online, because going to the supermarket or two of them is a lot of time to commit. Once you sort of conduct a review, often in government, you're sort of taking ownership of any perceived problem out of it. Could it be a bit of a flop for Labor? Because if there's not a problem with margins you're not going to do anything at the end of it, are you?
LEIGH: Well, Tom, I think about this from the lens of consumers, not through politics. It is really important that we're on the side of consumers and we're on the side of. What we saw from Peter Dutton over the last week was a call for a boycott of Woolworths, which, if every Australian consumer followed it through, would see 200,000 Australian workers lose their jobs.
CONNELL: Wouldn't they just go to other supermarkets, though?
LEIGH: Well you’d see…
CONNELL: They're still buying the food from somewhere.
LEIGH: You would have seen calamitous impacts on the economy if every Australian followed the advice of Peter Dutton.
CONNELL: I'm not sure it's happened, frankly.
LEIGH: His approach is economically reckless and doesn't take into account the important competition reforms we've put in place, raising the penalties for anticompetitive conduct, banning unfair contract terms, putting in place the competition task force. These are real reforms that will make a difference to consumers and boost productivity, raise the speed limit of the economy at the same time.
CONNELL: 70%, as I said, it's really high for the two major supermarkets. I think the US going off the top of my head is about 43% for their two biggest. But is there anything that government can do about that? Not really?
LEIGH: Right through the competition review, through the work in the ACCC, through the review of the food and grocery code of conduct.
CONNELL: But you can't make their share smaller. It's a market, right?
LEIGH: We need to make sure that those large firms are doing the right thing by Australian consumers. And when you look across the economy, you see in many sectors, Tom, an excessive degree of concentration. Market concentration in Australia has risen over the last couple of decades. Markups - the gap between cost and price - have increased as well. So, we do have a competition problem, a dynamism problem with the Australian economy, and that's led to the worst decade of productivity growth and the worst decade of real income growth in the post war era under the former government.
CONNELL: I'm going to get all tabloid with you. Where do you shop for your groceries?
LEIGH: We split basket.
CONNELL: Split basket.
LEIGH: Go wherever you get a better deal. And by doing that, you're putting a bit of competitive pressure on the grocery store.
CONNELL. So, Coles and Woolworths, Aldi?
LEIGH: They all get a look in, wherever you can get the cheapest deal. Australians who shop around are not only benefiting themselves, but they benefit the wider community
CONNELL: And Aldi is sort of cheaper, but it's German based. Do we want to be supporting Aussie businesses more? Gets a bit complicated.
LEIGH: I'm always keen on supporting Aussie businesses where I can Tom. All of them, though, employ Australian workers.
CONNELL: Often when you see the prices at IGA, it's a bit more expensive. So, this is kind of the issue. As much as Coles and Woolworths is very fashionable, to whack them, usually cheaper than, not Aldi, but the sort of the minor retailers there.
LEIGH: Certainly you'll see IGA working to get people in the door through competitively priced bread, for example, and supporting a local economy. So, it is a benefit for many Australians to be able to walk down to a local corner store to build that sense of community, that sense of neighbourhood, and recognise that it may not always be about saving the last cent, but also about saving a community in which people are able to enjoy shopping local.
CONNELL: Andrew Leigh, appreciate your time. Thank you.
LEIGH: Thank you, Tom.