ARA disputes claims planning laws are driving grocery prices up

Posted by Isobel Drake on 20th May 2008

Australian Retail Association Executive Director, Richard Evans, has questioned claims, made by Allan Fels’ (former Chairman of the ACCC), that town planning laws are driving up food prices by as much as 30%.

Professor Fels warned, in a report with Concept Economics, that under the present planning regime “Governments appear to be up-holding anti-competitive processes that elsewhere would potentially considered to be contravening the Trade Practices Act.” However, the ARA is consistent in its view that there are other reasons for higher grocery prices, such as fuel and the drought.

ARA Executive Director Richard Evans has argued strongly that the town planning laws create a monopoly for shopping centre owners and thus the owners can manipulate that monopoly to their benefit, ultimately affecting prices within the shopping centre. “To suggest an easing of the town planning laws to allow more shopping centres is perhaps naïve at best. Whilst prices can be affected by increased competition, the prices in shopping centres are more about the manipulation of occupancy as opposed to competition.

“Grocery prices are more affected by weather conditions, fuel prices and other occupancy costs such as labour. Competition is important but we shouldn’t suspect that prices would reduce by 20% as suggested by Mr Fels. This is a false dawn in a heated debate on grocery prices and it is unwelcome. Fels’ claims create unrealistic expectations for government to act in a knee jerk reaction,” Evans said.