Tue Oct 1

Government moves to tighten planning rules to stop land banking and boost supermarket competition

Written by: Michelle Grattan, Professorial Fellow, University of Canberra

The Albanese government, in a fresh strike against the supermarkets, has announced it will work with the states to reform regulations to help boost competition by opening more sites for new stores.

The government also is providing about $30 million to the Australian Competition and Consumer Commission to assist it to undertake more investigations and enforcement in the supermarket and retail sectors.

This follows the ACCC’s launch of legal action against Coles and Woolworths for alleged dodgy discounting practices.

Prime Minister Anthony Albanese and Treasurer Jim Chalmers said in a statement present planning and zoning restrictions, including on land use, “are acting as a barrier to competition by inhibiting business entry expansion”.

“They potentially allow land banking, preventing competition and pushing up prices in our local communities.”

The government said it was “taking decisive action to help consumers get fairer prices” from supermarkets.

“Misconduct in the supermarket and retail sector is unfair, unacceptable and makes cost-of-living pressures worse for Australians.”

The government stressed its latest measures followed a series of actions it has taken. Last week it released its mandatory food and grocery code for consultation. It has also banned unfair contract terms and increased penalties for breaches of competition and consumer law, and is reforming the merger provisions.

The interim report of the Australian Competition and Consumer Commission’s year-long supermarkets inquiry released on Friday ^[1] identified land use restrictions, zoning laws and planning regulations as challenges for aspiring operators attempting to compete with the major chains.

The Commission said it had also received submissions relating to “land banking” which it defined as a supermarket purchasing land without an intention to develop it (or to develop it in a timely manner) in order to stop competitors establishing supermarkets on it.

Information provided to the Commission suggested Woolworths had interests in 110 sites intended for future supermarket use and Coles had interests in 42.

The Commission had not yet formed conclusions about whether land banking was occurring.

It said Coles and Woolworths had also acquired entire shopping centres, including those where competitors operated.