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Legislative Council - Fifty-Second Parliament, First Session (52-1)
2011-02-22 Daily Xml
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MILK PRICING

The Hon. R.L. BROKENSHIRE (14:49): I seek leave to make a brief explanation before asking the Minister for Regional Development a question about regional development.

Leave granted.

The Hon. R.L. BROKENSHIRE: On Friday, Wesfarmers, the parent company that owns Coles amongst other subsidiary companies, put out a report about the significant increase in earnings over the first half of this financial year. In that report Wesfarmers said:

Coles, the company's biggest source of revenue and earnings, grew its EBIT [earnings before income tax] contribution by 18.3 per cent to $575 million, as the supermarket chain continued to grow sales faster than archrival Woolworths.

Mr Goyder [from Wesfarmers] credited the strong growth at Coles to its ongoing strategy for heavy discounting, a tactic he described as 'winning back trust' from customers lost to Woolworths in previous years.

'We have reduced the price of about 5,000 items in Coles over the past year, and that's all about giving customers a better deal at the supermarket,' Mr Goyder said.

He said milk sales at Coles had risen by up to 20 per cent following its decision to cut the price by as much as 33 per cent to $1 a litre last month.

Credit Suisse analyst Grant Saligari described the result as 'very solid' and said the strength of earnings from the Coles division suggested the 'price war' in the grocery market was no threat to profits.

My questions are:

1. Has the minister examined the South Australian government's state dairy plan with respect to any ramifications for this drastic reduction in milk prices in the supermarket?

2. Has the minister sought assurances from Coles as per their statement that this reduction in milk price in the supermarket will have no impact on processes and farm gate?

3. Is the minister asking her department to give a regional impact statement assessment on this decision with respect to ramifications potentially for the state government's dairy plan?

The Hon. G.E. GAGO (Minister for Regional Development, Minister for Public Sector Management, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises) (14:52): In fact, most of the questions asked by the honourable member do not belong to either of my portfolios. In fact, it is the Minister for Agriculture and Fisheries who has the lead running on the state dairy plan and those matters. In fact, pricing is probably a commonwealth issue to do with the ACCC and ASIC; so not only is it outside my jurisdiction but it is outside South Australia's jurisdiction. Nevertheless, the issues that the honourable member has raised are most important issues.

The price warfare that is going on does have the potential to affect certain parts and segments of our society, and that is certainly something that I am watching very carefully. As I said, the Minister for Agriculture and Fisheries has the lead on that, and most of those matters are in fact commonwealth driven.

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