Executive Summary
The GROCERYchoice website was launched on 6 August 2008 by the
Australian Competition and Consumer Commission (ACCC). Later that year, the
Government announced that the consumer organisation, CHOICE, would take over
responsibility for the website. CHOICE was to launch a new version of the
website in mid-2009. However, a few days before it was due to launch, the
Government announced on
26 June 2009 that the website project would be abandoned.
This inquiry has revealed that the Government's GROCERYchoice
initiative was characterised by waste and mismanagement. It was designed to
fulfil a hollow election promise to put downward pressure on grocery prices.
However, it is clear that the aims of the website were not going to be
achievable. The poorly-designed ACCC website collected data in 61 regions
across Australia, some of them covering tens of thousands of square kilometres,
bearing no resemblance to real-world consumer shopping patterns. The
difficulties in making like for like comparisons across fresh produce and
different private label products also undermined the ACCC website's
effectiveness.
This inquiry into the GROCERYchoice website has also raised
questions about the legitimacy of the tender process run by the ACCC.
The committee has serious concerns about the thoroughness of
the ACCC's evaluation process for the GROCERYchoice data collection contract.
The time pressure that the Government placed on the ACCC to launch the website
clearly led to hasty
decision-making and little consideration of the potential saving to the
taxpayer of $2.7 million (the cost differential between the two data
collection bids).
It appears that at least $2.7 million could have been saved if
the Government had been more flexible and kept its eye on the ball. The launch
date for the website was arbitrary and politically motivated.
While not suggesting a lack of integrity on the part of Retail*Facts,
the company that won the contract, the committee is disappointed by the ACCC's
apparent indifference to the risks inherent in Retail*Facts' simultaneous data
collection activities for Woolworths.
Recommendation 1
The committee recommends that the Commonwealth
Auditor-General investigate the tender process undertaken by the Australian
Competition and Consumer Commission in relation to the data collection contract
for the GROCERYchoice website.
The ACCC's decision not to undertake any in-field checks of
Retail*Facts' price collection, as authorised by the contract, is particularly
concerning to the committee. This lack of due diligence on the part of the
ACCC leaves open the possibility that the integrity and secrecy of the
GROCERYchoice data may have been compromised.
Recommendation 2
The committee recommends that the Australian Competition and
Consumer Commission take more care in the future to monitor and assess the
performance of contractors that undertake data collection on its behalf.
When the Government announced on 26 June 2009 that it was
abandoning the GROCERYchoice website, the Minister for Competition Policy and
Consumer Affairs, the Hon. Dr Craig Emerson MP, stated that the Government
would hold discussions with supermarkets about the possibility of an
industry-operated grocery price data website. Since then, neither the
Government nor the major chains have reported any further developments on such
a website.
Recommendation 3
The committee recommends that the Government reveal its
plans for an industry-operated grocery price data website.
The committee also believes that Dr Emerson demonstrated a lack
of professionalism in his decision to announce the scrapping of the
GROCERYchoice website, just days before its scheduled re-launch, without having
forewarned CHOICE or provided an opportunity to respond. His behaviour lacked
a clear sense of transparency or fair play, having not had the courtesy to
speak to representatives of CHOICE prior to publicly announcing that the
Government was terminating its contractual arrangements.
Recommendation 4
The committee recommends that the Government note the unfair
manner in which its contractual arrangements with CHOICE were prematurely
terminated by the Minister for Competition Policy and Consumer Affairs,
the Hon. Dr Craig Emerson MP, without affording CHOICE a right of reply, and
ensure that such unprofessional and discourteous conduct does not occur again.
The committee is also of the view that the generalised
information disseminated by the ACCC through the GROCERYchoice website was prejudicial
and unfair to independent retailers, which do not and cannot operate to the
same economies of scale as major chain supermarkets.
The Mercury published an article the day after the
launch of GROCERYchoice, comparing the costs of grocery baskets at the major
retailers and independents. The article also reported that the Chairman of the
ACCC, Mr Graeme Samuel, had said that the website only compared supermarkets
that were 1 000 square metres or larger. However, this inquiry has heard
evidence that much smaller independent supermarkets had been included in the
ACCC's surveys.
Recommendation 5
The committee recommends that both the Government and the Australian
Competition and Consumer Commission note that the operation of the
GROCERYchoice website was prejudicial and unfair to independent retailers.
Recommendation 6
Additionally and specifically, the committee recommends that
the Australian Competition and Consumer Commission apologise to Tasmanian
Independent Retailers for unfairly comparing small independent retailers to
major chain supermarkets in its price surveys for the GROCERYchoice website,
thereby disadvantaging smaller operators and contributing to undeserved
negative press in the Mercury on 7 August 2008.
The
committee is also concerned about the potential for breaches of the Trade Practices
Act 1974 in the role played by the Australian National Retailers
Association (ANRA) during negotiations with CHOICE about the GROCERYchoice
website and believes the matter warrants further investigation.
Recommendation 7
The committee recommends that the Australian Competition and
Consumer Commission investigate any potential breaches of the Trade
Practices Act 1974 in relation to the role played by the Australian
National Retailers Association in negotiations with CHOICE on the GROCERYchoice
website.
Overall, the committee believes that GROCERYchoice was a
shocking waste of taxpayers' money, clearly demonstrating the Government's
apparent disregard for obtaining value for money. Public funds should not have
been spent on GROCERYchoice without having a clearer idea of the goals of the
website and the practical feasibility of attaining them. GROCERYchoice has
provided little information of use to consumers, as can be seen by the sharply
declining drop in website use. The total cost to date of this failed
experiment is $7.7 million with an estimated contingent liability of $700 000,
although this may vary depending on the deliberation over the Government's
unilateral termination of the CHOICE contract. The status of any possible
further litigation by CHOICE or other contractors remains unclear. The
Government appears not to have learnt any lessons from the failed FuelWatch
experiment.
Recommendation 8
The committee recommends that the Government learn from this
episode of waste and mismanagement and ensure that such inappropriate and careless
spending does not occur again in the future, noting that now, more than ever,
value for money for the taxpayer should be a top priority.
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