Australian Council of Trade Unions price gouging probe begins

Skyrocketing supermarket prices and surging airfares have been examined in a union-backed inquiry into allegations of price-gouging by business.

The nation’s peak union body, the Australian Council of Trade Unions, is currently conducting the probe which is led by former competition tsar professor Allan Fels.

Fels was the inaugural chair of the Australian Competition and Consumer Commission (ACCC) from 1995 to 2003.

Speaking to the inquiry, Rebecca Thistleton executive director at the McKell Institute, a progressive think-tank, claimed that price gouging had become an unfortunate reality for people living in rural and remote areas.

“When you already have decreased competition, the increased costs of getting fruit and vegetables transported to these areas mean the prices become unmanageable for anyone,” Ms Thistleton said.

Pointing to research from the National Indigenous Australians Agency, Thistleton highlighted examples of remote communities paying up to 40 per cent more for groceries than people in capital cities.

Ms Thistleton highlighted instances where consumers had paid $12 for a box of Cornflakes, or $13 for a small jar of Vegemite.

A small jar of Vegemite is currently priced at $4 at both the major supermarkets.

Separately, Transport Workers Union national President Mike McNess told the inquiry Qantas airfares had risen 32 per cent on pre-pandemic levels.

“While airfares have gone through the roof, service standards have gone through the floor,” he said.

“Paying a third more for a ticket wouldn't be justified even if standards had improved.”

However, in its annual report, Qantas said when compared to before the pandemic, its domestic fares were just 4 per cent higher than pre-Covid levels and international fares were up 10 per cent, in inflation adjusted terms.

The inquiry is the latest development in an ongoing debate between employer groups and unions over what factors are driving inflationary pressures across the economy.

Opening the inquiry, professor Fels said price setting was the “missing piece” in understanding Australia’s inflation story and its impact on consumers.

While inflation has eased from its peak of 7.8 per cent in the December quarter to its latest reading of 4.9 per cent, professor Fels said it was important to understand the impact of higher prices on households and to determine what was causing price increase.

“I want to focus on the immediate prices. What's driving them? How are they set? Are they fair or unfair? Would they survive if there is true competition?” he said.

Recent analysis released by the Organisation for Economic Co-operation and Development (OECD) in June, which the ACTU regularly cites, showed that as inflation accelerated in Australia early last year it was profits, particularly from mining and energy companies, that drove higher price.

But the OECD’s analysis also showed as inflation peaked at 7.8 per cent in the December quarter, profits and labour costs contributed to price increases in equal amounts.

Reacting to the inquiry’s first hearing, Andrew McKellar chief executive of the Australian Chamber of Commerce and Industry, the nation’s peak business lobby group, labelled the inquiry as a “pantomime”.

“It is a farcical inquiry. It is limited, superficial and has no power,” Mr McKellar said.

“We already have bodies like the Australian Competition and Consumer Commission that are tasked to examine poor behaviour in the economy. Why the unions now feel they have a mandate to examine this issue is unusual.”

The inquiry is expected to make findings and provide recommendations to the ACTU on policy solutions to limit price gouging in the future.

An interim report is expected by the end of the year.

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