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Price-gouging inquiry hears Australians are skipping meals, as supermarkets under fire

Leading economist Allan Fels has shared harrowing stories of Australians struggling to cope with the cost-of-living, as he unveiled sweeping recommendations aimed at stopping consumers from paying too much.

Fels, the inaugural Australian Competition and Consumer Commission chair, said he received more than 750 public submissions to the price gouging enquiry, one of which was from a nurse who was battling with a massive increase in prices.

That included a whopping 40 per cent rise in insurance premiums.

“She has to make spending compromises every day,” Fels told the National Press Club.

“She told me there have been times when she skipped meals, lived off toast, worn shoes with holes in them for extended periods … because she couldn’t afford to replace them.”

Fels said Australians were paying too much, too often.

He called for a national competition and prices commission, which could look into high prices.

Woolworths, Coles and Qantas have been accused of price-gouging. Photo: Getty/TND

“The cause is weak and ineffective competition in too many markets,” he said.

The commission could give effect to the government’s national competition policy and look at the reasons behind high prices, he added.

The government should also greatly strengthen competition policy to stop enabling price gouging, the economist said.

Fels pointed to the government’s refusal to allow more Qatar flights into Australia as an example of it sanctioning very high prices – in that case, in Qantas’s favour.

He also said supermarkets were a key problem area.

“Our inquiry was flooded with submissions and concerns about supermarket prices. I think we all know, the whole community is very concerned about them. Why have they crept up? I think there has been an aspect the COVID lockdown has really facilitated a rise in margins,” he said.

“They went up and have not come back. Sometimes firms need a little bit of a justification in an occasional environment to get prices up. I think they had the opportunity during COVID and have continued with it. That is sort of the immediate on the surface comment. I think with competition, there is some but it is not very strong, and even between them and Aldi and IGA have stabilised a little bit.

“I would say it has not been quite as strong. I think that is another factor in causing a slow upward drift.”

Fels flagged “considerable reservations” about childcare prices, saying both the early childhood education and care sectors were “riddled with overcharging”, principally because of the market’s design and the difficulty for people to switch services.

“Both shaming and price regulation should be considered to rectify overcharging,” Prof Fels has said in a report.

The economist called for legal powers to expose firms that charge excessive prices to be reinstated, after they were used by the coalition in 2000 when the GST was introduced.

Governments should require bank accounts to be portable in the same way they years ago made mobile phone businesses let customers switch suppliers and retain their numbers, he said.

Claims the rise in the profit share of GDP were because of mining prices did not stack up, Fels said.

“The profit share excluding mining has risen and energy and other prices associated with mining have themselves been a very significant contributor to Australian inflation,” he told the press club.

Fels noted the government had accepted there was a strong case for an in-depth review of supermarket pricing.

His inquiry into price gouging was commissioned by the Australian Council of Trade Unions.

– with AAP

Topics: Consumer
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