Concerns Labor's remote food subsidy scheme could benefit big players, reduce competition
Grocery wholesalers have concerns the federal government's remote food subsidy plan will benefit major supermarkets. (ABC News: Jessica Black)
In short:
A group of independent grocery wholesalers and distributors are seeking to overhaul the federal Labor government's planned remote food subsidy scheme.
Wholesalers and distributors are concerned the proposal would force them out of business and further advantage major supermarket chains.
What's next?
Government-owned Outback Stores, which would have initial control over the subsidies, say they will continue to work with the industry to develop the scheme.
A group of grocery wholesalers and distributors are hoping to halt federal Labor's planned remote food subsidy scheme, raising concerns the policy will force them out of business and unfairly benefit major supermarkets.
The group — which includes Independent Food Distributors Australia, TAH Northern Trading and Smimac Foodservices — said it would seek an injunction from the Australian Competition and Consumer Commission (ACCC) on the scheme.
The federal government in February announced a $50 million plan to subsidise the cost of groceries for people in remote communities, who can pay up to double for essential items compared to city populations.
The proposal is set to price-match around 30 essential items — such as milk and bread — with Coles and Woolworths, by subsidising their freight and procurement costs.
Eggs were among the 30 items proposed in the federal Labor government's remote groceries subsidy list. (ABC News: Lily Nothling)
The scheme would be administered by Commonwealth-owned corporation Outback Stores, which runs 58 remote grocers in the Northern Territory, Western Australia, New South Wales and South Australia.
As well as stocking the cheaper items in its own grocers, Outback Stores will also sell those on to other remote stores at a lower than wholesale price.
At an industry roundtable held in Alice Springs on Tuesday, independent wholesalers raised concerns the proposal would erode their ability to compete and push them out of business.
Heather Scott, the director of Indigenous-owned wholesalers TAH Northern Trading and a Smimac Foodservices representative, said she supported lowering the cost of groceries for remote consumers.
But she was "outraged" about the way it would be implemented.
Heather Scott says the policy will use taxpayer money to put independent grocery stores at a disadvantage. (ABC News: Lillian Rangiah)
"The federal government appear to be allowing a monopoly to be created through Outback Stores,"she said.
"There's already a very robust and healthy wholesale market in the Northern Territory … funding Outback Stores to do what we already do is outrageous."
A group of stakeholders including Ms Scott is set to meet with the competition watchdog this week to seek advice.
"I need the ACCC to acknowledge that there's some unfair competition entering the market and it's government-backed — and I find that is completely unfair," she said.
"It's basically taking away those 38 products that we currently sell and market … and it goes to Outback Stores, completely bypassing us."
Brad Gaddes says the federal Labor government's policy doesn't address the root cause of the high grocery prices. (ABC News: Lillian Rangiah)
Brad Gaddes from the NT Chamber of Commerce's Central Australian committee said industry needed more detail about the proposal.
"Subsidising those products is not necessarily going to mean that they're cheaper for the consumer," he said.
"The freight costs and the higher fuel costs, and the higher cost of doing business out in remote communities is what we need to address."
In a statement, Metcash, which owns IGA, also expressed concerns the policy was "not a cost effective or efficient solution to reducing the cost of groceries and improving food security in the NT".
The meeting canvassed alternative proposals such as a flat subsidy for transport costs or applying the subsidy at the point of sale.
Outback Stores buying from Woolworths
During the roundtable, Outback Stores chief executive Michael Borg said the corporation was sourcing some supplies directly from Woolworths, for a better rate than Metcash.
"We've got a real crisis around the cost of goods — and we have directed some of our volume through Woolworths at the moment because they are up for assisting remote communities around the Top End of the country," he said.
Outback Stores says there is a "real crisis around the cost of goods". (ABC News: Victoria Pengilley)
"As the CEO of Outback Stores, I take the opportunity to purchase and procure stock cheaper than I'm currently getting at Metcash."
Labor's Lingiari MP Marion Scrymgour was at the roundtable and said she would pass on feedback to the prime minister's office.
"These are quite serious issues that we need to look at, to discuss and have a commitment to," she said.
NT Coalition senator Jacinta Nampijinpa Price also attended but did not offer a policy alternative, instead arguing she was there to listen.
In a statement, Outback Stores said it would continue working with the industry to develop the scheme.
"As this scheme evolves in the coming months, we encourage continued collaboration between all stakeholders," it said.