THOMAS ORITI, HOST: Australia's major supermarkets could be fined billions of dollars under a proposal from a former Labor Minister tasked with investigating the industry's dealings with suppliers. Dr. Craig Emerson's interim report recommends the Government to create a mandatory code with potentially massive financial penalties amid allegations the grocers are abusing their market power. Now, important to note, there's currently a voluntary code of conduct. Few issues though, the supermarkets themselves drafted it. Anyone believing the code was breached must prove their case before an arbitrator that the supermarkets appointed. The interim report has also dismissed calls for the Government to have divestiture powers to break up Coles and Woolworths. So, lots of questions about this and how it could affect your grocery bills. And to help answer them, we're joined live now by the Prime Minister, Anthony Albanese. Prime Minister, good morning.
ANTHONY ALBANESE, PRIME MINISTER: Good morning, Thomas.
ORITI: Thank you for joining us. So, important to note, first of all, this is an interim report. Can you tell us, will the Government act on this advice from Craig Emerson?
PRIME MINISTER: Well, the interim report has been released. It'll be out for consultation until the 26th of April and then Dr. Emerson will deliver his final recommendations by the end of the financial year, by 30 June. This is a very strong interim report though, I've got to say, so that clearly we are signalling the direction in which Dr. Emerson is headed. This proposes to replace the current voluntary code of conduct with a mandated system. The Government wants a fair go for families and a fair go for farmers. And I think that's what Australians want as well. This work is all about how do we make our supermarkets as competitive as they can be, so that Australians get the best deal possible, whether they be the providers or of course, the consumers at the checkout. And this recommends the code be made mandatory with very heavy penalties for major breaches.
ORITI: A fair go for families. I just want to pick up on that because I wonder whether there could be a potential negative impact here, Prime Minister. I mean, obviously the farmers want more money from the supermarkets for their produce, but if the supermarkets go ahead and do that, couldn't they just hike up prices at the checkout and make it more expensive for families?
PRIME MINISTER: Well, the gap that's been there is that when prices have fallen for farmers, we've often seen prices continue to increase for consumers at the checkout. And that's why we need transparency, that's why we need a code of conduct that looks at the entire supply chain and we want a fair go for all. What is happening at the moment is that the power of the supermarkets with just a voluntary code of conduct has seen a lack of confidence in the system. And that's why Dr. Emerson has pointed towards the need for mandating, rather than a voluntary code of conduct that essentially is run by the same businesses that are being complained about.
ORITI: I mean, Dr. Emerson was asked though, to examine how the guidelines ensure that supermarkets deal fairly with their suppliers. So, supply is very much a focus here. Are you confident that review will also reduce prices for consumers, though? We've heard some doubts about that.
PRIME MINISTER: Oh, absolutely. And Dr. Emerson's review is certainly looking at the impact on consumers, not just on suppliers. Dr. Emerson's review has focused specifically on the code, but there are other work being undertaken as well, including by the ACCC, looking at competition in the system, including the Senate review which is taking place. We're funding also on top of this, we've already announced our funding of CHOICE, the consumer organisation, to do quarterly price monitoring, ensuring that consumers know where the best deal is available and using that use of information to drive that competition through the system.
ORITI: And I'm sure we'll be hearing from CHOICE down the line, no question about that. I mean, there's potentially, you know, regulatory teeth behind this. The potential for massive penalties, 10 per cent of annual turnover for Coles and Woolies. I mean, off the top of my head, I think for Woolies that could be about $5 billion if that actually happened. But that would be one of the largest corporate fines in Australian history. Correct me if I'm wrong. How likely is that to ever happen? I wonder if that's a headline grabbing item. Are we ever actually likely to see that?
PRIME MINISTER: Well, what Dr. Emerson is saying in this interim report is that there needs to be strong penalties in place for major abuses. And that is what will be the subject now of no doubt submissions as a result of this interim report. And that will go to the final recommendations that will be concluded in the next couple of months.
ORITI: In order for those fines to occur, though, hypothetically, the supermarkets would have to be taken to court by the ACCC and suppliers. And I'm wondering whether that addresses that issue of a fear of retribution though still. I mean, those suppliers who speak up would still have that fear from the supermarkets, wouldn't they?
PRIME MINISTER: What they'd have though is a change in the power relationship. Effectively at the moment, because the code of conduct is voluntary, because it's been established essentially by the major supermarket chains, there's a lack of confidence in the system. What we need is a capacity for a proper examination for the ACCC to have increased power is what this interim recommendation would suggest. And that would build more confidence in the system so that people can put their hand up and say, hang on, let's have a look here, this is not fair on us. Whether it be the suppliers or whether it be the end consumers, people at the checkout.
ORITI: Craig Emerson also warned against calls for the Government to have these divestiture powers. So, the idea from the Nationals and the Greens rarely walking down the same aisle together on this one of being able to force the big supermarkets to sell off stores. You've made your feelings clear about that, Prime Minister. You don't want to see that happen. I mean, just keeping in mind Craig Emerson is on the same political aisle as you, some people might say, well, of course he'd say that. Did he stray outside the scope of his review in saying that?
PRIME MINISTER: Not at all. Dr. Emerson is someone who has a long record as an economist, particularly when it comes to competition policy. And that's why he was an appropriate person to do this review. And he's made the obvious point, what do you do if there's two supermarkets in a particular town or regional community, and one of them is Woolworths and one of them is Coles, what do you do? Tell Coles to sell to Woolworths? That would lead to an increased concentration of market power as well. Or do you somehow get a foreign company to come in and have a presence in a regional town? It is a reflection of the need to have serious responses to what is a serious problem rather than a populist response that sounds good. But we know that when you have a concentration of power, then you have to look at what the implications are of any recommendations and divestiture sounds okay until you think through. Okay, if you force someone to sell, who do they sell to?
ORITI: Yeah, look, a conversation I’m sure we will be continuing to have on this program in the months ahead. I just want to ask you about another issue though, Prime Minister, because some breaking news this morning, it's just been announced you're appointing a special adviser on Israel's response to the strikes which killed seven aid workers in Gaza last year. One of them Australian, of course, Zomi Frankcom. Air Chief Marshal Mark Binskin. Tell us some more about that announcement. It's just happened. How is this going to work?
PRIME MINISTER: Well, Special Adviser Binskin, of course, would be well known to Australians for the role that he's played in the Australian Defence Force. He will serve as Special Advisor on Israel's response to the strikes that occurred that killed Zomi Frankcom and six of her World Central Kitchen colleagues. We have made it very clear that these deaths are utterly inexcusable and the action is needed to ensure that such a tragedy is never repeated. And we also want full accountability for these deaths. Now, the information that Israel has provided so far on its investigation hasn't yet satisfied our expectations. So, we would expect that Mr. Binskin will be able to work in a way that provides greater information to Australia. We want to ensure that all evidence is preserved. We want to ensure that if the investigation finds that the Israeli Defence Force personnel have not acted in accordance with the law, then appropriate action should be taken and such action should be made public.
ORITI: Special Adviser on Israel's response, so just to get my head around the jargon, in a way, will he be actively investigating anything, though, or acting more as a liaison?
PRIME MINISTER: He will have certainly the confidence of the Australian Government to engage and we expect the full cooperation of the Israeli Government with this investigation. We want him to, obviously it is a difficult circumstance given the conflict that is ongoing in Gaza, but we want him to have full access and we expect that from the Israeli Government and the Israeli Defence Force.
ORITI: Lots of talk around this, Prime Minister, Britain's Deputy Prime Minister has said the UK will stop selling arms to Israel if legal advice determines it’s breached international law. Would you consider withdrawing any support Australia is offering as well? Would you go down that path?
PRIME MINISTER: Well, we of course don't send arms to Israel now, so we haven't done so for some period of years.
ORITI: Support in any form, though.
PRIME MINISTER: Well, we'll await Air Chief Marshal Binskin's report to us. We've appointed him, it's a serious step that the Australian Government is taking because we take this action very seriously. I mean, the circumstances around this where you had three vehicles that were clearly marked as being providing support and aid for desperate people in Gaza. And you had a strike on one of the vehicles, you had people then flee to a second vehicle that then had a strike on that vehicle and then somehow some people then got to a third vehicle that was then hit as well, so that all of these aid workers were killed. This is a completely unacceptable situation and Australians are quite rightly outraged by this and we want proper answers and full accountability.
ORITI: Okay, Prime Minister, it's been great having you back on the show. Thank you very much for joining us.
PRIME MINISTER: Thanks very much.