CHRISTINA:

So, we actually started doing this back in, I reckon about seven years ago when I started my PhD, looking at how food prices affect families in Australia because without that data, then you can't really go forward and advocate to governments or anyone else to do anything about it as an issue.

ASHLYNNE:

Dr Christina Zorbas has spent years digging down to see when and how the price of our food jumps. She and her colleagues are responsible for one of the only public transparent databases on the price we pay for food.

CHRISTINA:

We started tracking data right before the pandemic hit, and then all of a sudden everyone was interested in the database, given that it's one of the only databases that exists for public reasons. And so, since the pandemic is when we saw some of the sharpest increases that we've seen in the last two decades. We've seen spikes in, for example, like, the price of lettuce and cucumber, a lot of the greens category, because a few years ago when we had the floods a lot of those crops got wiped out. So that sort of stuff tends to make sense when you see it. But then, when you look at other things like milk going up by 39% or chicken going up by 55% in a three year period when it had been pretty stable before that, that's the sort of stuff that we don't really have an explanation for.

ASHLYNNE:

And the price hikes of the last few years, they’re changing what we buy and how much we eat. At least one study last year found 1 in 3 Australians had struggled to afford to eat properly during the year.

CHRISTINA:

Like it's pretty shocking that for the first time in the last couple of years, people are buying less in that people are struggling to actually just buy food in general in Australia. Like, you can only imagine the anxiety of not being able to feed your family. The person that always pops into my head is a woman who told us that no one should be disadvantaged by the food that they have to eat, to be able to live in their house. But at times you have to choose between food or your house or your warmth or internet for your children, and you shouldn't have to. You should be able to do all those things because we don't live in a third world country, but sometimes parts of Australia feel like it is. So that is like how it hits on the ground for families and that is always, sort of, what motivates me for doing my little part because people are struggling and we should never lose sight of that.

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ASHLYNNE:

From Schwartz Media and 7am, I'm Ashlynne McGhee and this is The Cost: Inside the Living Crisis.

It’s budget week, which means crunch time for the leaders tasked with tackling how expensive Australia is right now. And the thing we’re all talking about is our grocery bills, why food seems to cost more each time we visit the supermarket, and we no longer joke about instant noodles and baked beans.

Today, national affairs correspondent for The Saturday Paper Mike Seccombe on what some call the great price gouge, and whether the government has the appetite to tackle it.

It’s Tuesday, May 14. It’s budget day.

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ASHLYNNE:

Mike, I think the time we all notice the pain of cost of living is putting food on a plate so, talk to me about the kind of attention that we're seeing on the price of food.

MIKE:

Oh well, it's just about everyone's discussion at the moment, you know, in the supermarkets. There's a great deal of public anger at the big supermarkets and how much prices have gone up. You know, you hear it on radio talkback, you see it in the TV vox pops of shoppers.

Audio Excerpt - TikTok influencer:

“You remember when Coles used to feed a whole family of four for $10? You can't even get a f*** bag of cheese for that price anymore. Feed your family...”

MIKE:

And for some reason, you know, in the last three months of last year, according to the Bureau of Statistics, food prices went up 9.2%, which was the fastest rate of growth in, I think, 13 odd years since from maybe the third quarter of 2006. I'm pleased to say that in the first three months of this year, the rate of rise was down a lot to 3.8. But you know, those previous increases are, you know, baked in. Food prices in particular have been going up here more than in many comparable countries. And part of the reason for this, according to many economists and others, is that Australia has one of the most concentrated grocery markets in the world. The two big players, Coles and Woolies, hold between them about two thirds of the market, and the politicians are onto this. You know, we had the independent Andrew Wilkie, for example, saying that it was simply unconscionable that Coles and Woolworths were raking it in while Australians had to choose between rent and food.

Audio Excerpt - Andrew Wilkie:

“I second the motion the government must do something about grocery prices because it is simply unconscionable that Woolworths and Coles rake it in while Australians go hungry, or are struggling so hard to pay for a roof over their head.”

MIKE:

The Prime Minister, Anthony Albanese, said earlier this year that it was quite clear that the supermarkets had excessive market power.

Audio Excerpt - Anthony Albanese:

“Our government is prepared to take action to make sure that Australians are not paying $1 more than they should for the things that they need.”

MIKE:

Both the Greens on the left, and the Nationals on the right, have advocated the divestiture, the break-up, of the big players. You know, that they should have to sell off some of their stores to new competitors to increase competition. So, what's the government doing? They announced a review of what was called the Food and Grocery Code of Conduct, which is a voluntary code that the grocery business all signs up to. It's meant to keep the prices of food fair in Australia and to prevent the retailers from exploiting their customers on the one hand, but particularly their suppliers. And then, second inquiry, the ACCC, the competition watchdog, has launched an inquiry. And finally, we've just seen the end of a months-long Senate inquiry led by the Greens. It's provided one of the best insights we've had yet.

Audio Excerpt - Senate Committee Chair:

“All right, I declare open this hearing of the Senate Select Committee on Supermarket Prices.”

MIKE:

So at the heart of the Senate inquiry, I guess, was the big question of whether the supermarkets are price gouging. The supermarkets themselves, of course, deny that they are, and price gouging itself is not explicitly illegal. But it's a claim that an overwhelming number of people, including the people conducting the Senate inquiry, think was worth interrogating.

ASHLYNNE:

So Mike, tell me what actually happened at this inquiry. What'd we hear?

MIKE:

Well, it might be worth starting with what happened when the supermarkets themselves got hauled in.

Audio Excerpt - Brad Banducci:

“I'm Brad Banducci and I'm the CEO of Woolworths.”

Audio Excerpt - Senator McKim:

“Thanks Mr. Banducci. I now invite you, if you wish, to make a short opening statement.”

ASHLYNNE:

People might be familiar with Brad Banducci, the Woolworths CEO. By the time he got called to the inquiry he'd already had a shocker of a year. He walked out on an interview with the Four Corners program, and shortly after that he announced that he was resigning from his role early, taking his millions and moving on. It's probably fair to say that Banducci is not very used to this level of public scrutiny and is not a very good performer under pressure, because he was asked by Nick McKim to tell the inquiry how profitable Woolworths was.

Audio Excerpt - Brad Banducci:

“Can you just clarify the question sorry, Senator?”

Audio Excerpt - Senator McKim:

“Well, I'm after your ROE, your return on equity here, Mr Banducci.”

Audio Excerpt - Brad Banducci:

“The return on funds employed or, which is the way we... We look at the return on investment for others.”

Audio Excerpt - Senator McKim:

“Mr Banducci, are you struggling with the ordinary English language meaning of the words I’m using in my questions?”

Audio Excerpt - Brad Banducci:

“I’m focusing on corporate finance, Senator, and that’s what…”

MIKE:

This finally got so heated, with Banducci refusing to provide a figure for return on equity, that McKim threatened to find him in contempt and put him in jail.

Audio Excerpt - Senator McKim:

“There's no context to this question, apart from the context where you are giving evidence to a Senate committee and it is open to the Senate to hold you in contempt and imprison you for up to six months, if you do not comply with an order of this committee. That is the context.”

MIKE:

Eventually, Banducci conceded that he just didn't know the figure, that Woolworths measured its profitability by other measures other than return on equity, the inquiry allowed him to take the question on notice. But Ash, that isn't all that's been heard. Obviously we've been hearing from people who are struggling. During the first of the public hearings, we heard from advocates who said that people were telling them they were skipping meals, that they couldn't afford to eat three times a day anymore.

Audio Excerpt - Advocate:

“Members of our community who are nurses have reached out to us and said, they're studying full time, they're working as nurses, and they're also, like, having to go to the bins to get food.”

MIKE:

We heard about young people who are dumpster diving, you know, jumping into bins to find food and essential items like toiletries and sanitary pads. We also heard evidence from the people who supply the big supermarkets, particularly farmers, saying that they were being screwed down by the supermarkets, who were sort of setting unreasonable prices for their produce, prices at which the farmers could not make ends meet, essentially.

Audio Excerpt - Michael Badcock:

“My full name is Michael Lloyd Badcock, and I am a grower.”

MIKE:

You know, one farmer who appeared before the inquiry, he was a semi-retired cabbage and cauliflower farmer, he claimed that other farmers weren't speaking up for fear of the backlash from the supermarket duopoly.

Audio Excerpt - Michael Badcock:

“A lot of these buyers act like little Hitlers, and if you upset them, you're gonna suffer.”

MIKE:

And Ashlynne, the inquiry also heard some pretty interesting research which laid out exactly how and when supermarkets raised their prices and how those price hikes have changed how Australians eat, and how we're continuing to eat.

ASHLYNNE:

Coming up after the break, what happened when Christina Zorbas took her database of food prices to the Senate Inquiry?

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ASHLYNNE:

So Christina, you and your colleagues were actually asked to give evidence to the inquiry into supermarket prices. What was that day like, and what did you want to get on the record?

CHRISTINA:

Yeah. I guess when you deal with politicians, you never know which way it's going to go. But they listened to everything we had to say, we gave them a presentation on all the evidence. But they asked a lot of questions around, you know, how we create better transparency in the supermarkets, what the health impacts of rising food prices, and I don't know if you saw any of the the drama around the Kellogg's CEO coming out and saying we should be eating breakfast cereals for dinner because it's a more affordable option.

Audio Excerpt - Kelloggs CEO:

“It turns out that over 25% of our consumption is outside the breakfast occasion. A lot of it’s at dinner and that, that occasion continues to grow. As well as the snack occasion, but cereal for dinner is probably more on trend now and we would expect it to continue as that consumer is under pressure.”

CHRISTINA:

Funnily enough, we had done an analysis in response to that, showing that Kellogg's cereals had gone up by like 40% in a couple of years. So it's quite ironic that they're coming out and saying, you know, buy our products, it's more affordable than buying a meal, but at the same time they're not doing anything to absorb any costs and passing those on to consumers too. You know, Australia compared to other countries like the UK, our policies are so much weaker when it comes to food. Like, it's pretty crazy. Globally we actually don't perform very well at all. But the senators involved in the inquiry were very diverse, from diverse backgrounds. You had the independents, you had the Labor senators, the Greens senators, and they collectively really were interested in the topic. So I really commend all of them for putting their brains together to try to tackle what is a very complex issue.

ASHLYNNE:

So Christina, how have we ended up in this situation where you reckon our food policies are so much weaker than other countries? And whose responsibility is it to fix it now?

CHRISTINA:

I mean, it's a good question, and I think my question is anyone really taking that role and doing it seriously. Traditionally we know, like, supermarkets and food industries are really big proponents of self-regulation. So, they say, we can do it on our own, don't worry. Like, give us a guideline that's not mandatory and we'll decide whether we do it or not. We don't need the government to step in. So that tends to be what happens, and at a food industry level, and a supermarket level, we have one of the most concentrated sectors in the world. It just means that in Australia, supermarkets can set the playing field, and set the rules. So these guys have a lot of money and a lot of power, like, on the international retail stage they're always up the top end in delivering profits. So, that is different to other countries. Like, I have a Greek background so every time I'm in Greece, the retailers are just different. They're smaller, you go to one city, there's one, another city, there's another one. And Greece pretty much went out bold and said, you know, we need your price lists. We need you to keep one item in any product down. Like you can't inflate everything. There always needs to be one type of bread that's affordable and at a real minimum cost. And in other countries like France, I think they've actually said we're going to fine you if you don't comply and you keep doing dodgy things with your food prices. So, I don't know, in Australia, like, I just struggle to ever see that becoming a reality because we've had such little action and little regulation to date.

But where my scepticism, sort of, comes forward is that we have seen so many inquiries in the food space and we actually have so many strategies at the moment and I still don't see people's lives getting better.

ASHLYNNE:

And so, Mike, there's a performative aspect to all of this, but it also sounds like there's a real spotlight being shone on this issue and we're hearing a lot of concentrated evidence. But does anything actually change out of this? Does anything actually happen out of this inquiry now?

MIKE:

Well, as to whether supermarkets were price gouging their customers, according to the Senate committee, the answer was yes. That's the short answer, the longer answer, of course, took 195 pages to tell. And it went across pricing, the impact on customers, food waste, the supermarket's relationship with suppliers, wages and conditions for workers. So, it was pretty broad and it made some major recommendations. But at this point it's hard to say what else, if anything, it will mean for everyday Australians and the prices we pay. And there seems to be broad agreement among the political parties, at least rhetorically, that something needs to be done, but big differences on what it is, and what it looks like. At any rate, the Albanese government does not support many of the recommendations. It does not support, for example, the idea of busting up the big supermarkets. So, at this stage, the major action that we can see agreement on is making the food and grocery code of conduct mandatory, which might help suppliers, but not so much shoppers. And, you know, it's not likely we're going to see any unity on the other recommendations either. So, you know, while the debate continues and meanwhile the immediate question for people who are struggling to pay for their groceries is, how do you afford to eat well? And perhaps we should go then, I guess to the other side of the equation, which is things like income support, other cost of living relief that may free up a bit more money so that these people can afford to spend more on their groceries.

ASHLYNNE:

Yeah, so sounds like the government might have a little more appetite, pardon the pun, for that sort of tinkering in the budget. But, with the treasurer getting up and delivering the budget tonight, what else will they try to do to kind of put a little pressure on, to tip the scale a little in the favour of consumers?

MIKE:

I would make the point that even before the budget, the government has been very supportive of wage rises for the lowest paid. And some of those have flowed through, and so they will make it easy to put food on the table I would suggest. But, you know, you're right they can't directly affect food prices, but they could offset the costs in other areas, you know, which would ease the burden. For example, last year's budget included something like $3 billion in power bill relief. It's quite likely we'll get a second round of that. Not that the punters seem to notice, particularly last year, when they got that relief.

Of course this may well be the last budget before the next election. Not necessarily, but probably, and it’s certainly going to be setting the tone. So this is not just an economic problem for the country, it’s also a political problem for the government. It’s a very fine line they have to walk, between providing some kind of cost of living relief and not setting inflation running again.

So yeah, in summary, I guess you would say the government is not going to be able to do anything directly about the price of our groceries, but I think there will be some stuff in the budget that will open up a little space so we will have more money that we can spend on those groceries.

ASHLYNNE:

Thanks so much for your time, Mike.

MIKE:

Pleasure Ashlynne. Cheers.

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ASHLYNNE:

Also in tonight’s federal budget there’ll be a surplus, but it’ll be smaller than last year at $9.3 billion dollars.

Some economists had been urging the government to spend more rather than banking money in this budget given the economic climate.

Last year’s surplus was about 22 billion dollars.

And,

The Federal Court has decided Elon Musk’s X is no longer required to hide videos of last month’s Sydney church stabbing.

The Court denied an application from the eSafety Commissioner to extend the ban, which Musk had argued was a breach of free speech.

That’s all from us from today, thanks for listening. We’ll see you again tomorrow.

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