Retailers Warn Excessive Legislation a Backward Step for Productivity

Strategic Insights -

The Australian Retailers Association (ARA) and National Retail Association (NRA) have cautioned that the Federal Government's proposed supermarket pricing legislation risks tangling business in unnecessary red tape, running counter to the Federal Government's commitment to improve productivity. Retailers are warning that excessive legislation will increase compliance costs and complexity, rather than lowering prices, and are urging the government to tackle structural barriers to entry, planning and zoning restrictions, and regulatory and tax inconsistencies across the states.

Key Takeaways:

  • The proposed supermarket pricing legislation risks creating unnecessary red tape for retailers, contradicting the Federal Government's commitment to improve productivity.
  • The ARA and NRA are calling for the government to tackle tax and regulatory impediments faced by supermarkets, such as planning and zoning restrictions, and regulatory and tax inconsistencies across states.
  • Retailers have already implemented measures to drive down business costs and pass savings on to consumers, such as enhancing pricing transparency, increasing promotional offers, and expanding affordable product ranges.
  • The Australian grocery sector remains highly competitive, with new entrants gaining market share and cross-shopping behavior among consumers at an all-time high.
  • Retailers are committed to policies that drive down business costs and ensure savings can be passed on to consumers and suppliers.
  • The ARA and NRA will review the government consultation and engage constructively to support a sustainable, competitive sector that delivers better outcomes for consumers and businesses.
  • Chris Rodwell, ARA CEO, emphasizes the need for genuine harmonization reform in areas such as planning, waste, and sustainability, transport, and logistics, payroll tax.

Statistics:

  • The net profit margin of Coles and Woolworths remained stable at less than three cents in the dollar in recent times.
  • Australian grocery inflation is lower than in many OECD countries, as confirmed by the most recent ACCC report.
  • Eight taxpayer-funded reports have failed to find evidence of price gouging.
  • The Australian supermarket sector is Australia's largest private employer, providing frontline support in times of crisis such as bushfires and flooding.
  • The sector contributes significantly to the community through major tax contributions and purchasing from local Australian suppliers.

Sources:

  • Australian Retailers Association (ARA)
  • National Retail Association (NRA)
  • ACCC report on grocery inflation