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Victoria needs to introduce price controls on food and other everyday supermarket items to combat the rising cost of living, the Victorian Greens say, despite criticism from economists and the UK abandoning a similar plan earlier this year.<\/p>\n
The Greens are threatening to run a fresh cost of living campaign and seek an upper house inquiry into grocery prices just days after failing to convince the Andrews government to cap the price of rent as part of last week\u2019s housing overhaul.<\/p>\n
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Greens MP Sam Hibbins (centre) says people are crying out for supermarket price controls. <\/span>Credit: <\/span>Chris Hopkins<\/cite><\/p>\n The minor party has for months been calling for a rent freeze both nationally and in Victoria. But Greens MP Sam Hibbins has denied his party is looking for a new populist catchcry.<\/p>\n \u201cThe rent control campaign is not going away by any stretch of the imagination,\u201d he said. \u201cPeople are crying out for direct government intervention. What we\u2019re talking about is price controls on food and groceries with a focus on profiteering supermarkets. So whether it relates to our policies on rent or bill freezes, it\u2019s entirely consistent with our economic approach.\u201d<\/p>\n The price of some supermarket items increased by as much as 40 per cent in the 12 months to July this year, research from Deakin University found.<\/p>\n By the end of the financial year, food inflation had outpaced overall inflation, while Coles and Woolworths announced profits of $1.09 billion and $1.6 billion respectively.<\/p>\n Tania Clarke, policy director at the Consumer Action Law Centre, said she had seen a spike in referrals from Victoria Police because people were resorting to shoplifting to feed their family.<\/p>\n \u201cPeople are desperate,\u201d she said.<\/p>\n Supermarket prices have long been the domain of the Australian Competition and Consumer Commission, a national watchdog. However, Hibbins argues Victoria has several powers at its disposal to enforce supermarket price controls, and has done so as recently as the 1980s.<\/p>\n The member for Prahran said the state government could declare groceries a regulated industry, allowing the Essential Services Commission to set prices.<\/p>\n \u201cSo that\u2019s bread, dairy, cooking needs, meat, even personal care products,\u201d Hibbins said. \u201cAlternatively, they could introduce their own legislation.\u201d<\/p>\n Greece last year forced supermarkets to reduce prices on basic products, and Hungary followed suit this year. But the UK abandoned plans for voluntary price controls in June following a backlash from retailers.<\/p>\n University of Canberra economics professor Phil Lews said supermarket price controls were never a good idea.<\/p>\n \u201cIt\u2019s the sort of thing students learn in Economics 101,\u201d he said. \u201cPrice is determined by supply and demand. If you try to cap the price, it\u2019s going to lead to a shortage. The price of other items will go up. It\u2019ll be inflationary for most people.\u201d<\/p>\n Australia\u2019s supermarket giants continue to post huge profits amid a cost of living crisis.<\/span>Credit: <\/span>Luis Enrique Ascui<\/cite><\/p>\n Grattan Institute chief executive Danielle Wood agreed.<\/p>\n \u201cWe are much better offering direct support to the most vulnerable, for example recent increases to JobSeeker, to help manage the cost of living pressures than this heavy-handed form of intervention.\u201d<\/p>\n Melbourne University professor Allan Fels, a former chair of the ACCC, also doesn\u2019t support direct price controls on bread, milk and other items.<\/p>\n \u201cI do think there is a case for having well-informed surveillance and exposure of overpricing in particular cases, similar to when the Howard-Costello government introduced such policies when the GST was introduced in 2000,\u201d he said.<\/p>\n Treasurer Tim Pallas previously accused the Greens of wanting to create a \u201ccommand economy\u201d.<\/p>\n \u201cWe do not see a role for the state to fix prices,\u201d Pallas said on the floor of parliament last month. \u201c[The Greens] want to cap \u2013 they want to freeze \u2013 rents. Imagine what that would do to investment in our housing stock? It would be disastrous.<\/p>\n \u201cI can tell you the same would occur were the espoused views of the Greens political party to be applied to broader cost of living issues.\u201d<\/p>\n So, what does Hibbins have to say to the naysayers?<\/p>\n \u201cThere\u2019s always going to be those who will say you can\u2019t disrupt the market because this is going against economic orthodoxy,\u201d he said. \u201cBut the strategic use of price controls is both an effective and credible tool. The government is stuck in a neoliberal policy straitjacket.\u201d<\/p>\n<\/p>\n