Political theatre and business bashing won’t deliver a magic bullet for bringing down grocery prices, because there isn’t one.
Already a subscriber?Sometimes it can be better to be a fast follower than a first mover – and that’s exactly how it turned out on Tuesday at the Senate select committee into supermarket prices., Coles chief executive Leah Weckert took a much calmer approach, unpicking McKim’s hyperbolic outrage over the supermarket giants’ apparently egregious profits.
Banducci ended up in the faintly ridiculous position of agreeing to admit that he did not know Woolworths’ RoE and would answer the question on notice, just to allow the hearings to roll on.After a brief prepared statement – in which she repeated the fact that Coles’Coles’ RoE was 31 per cent last financial year
Banks are required to hold equity against every loan they write, and mark the value of that equity to market each period, so their RoE is always going to be lower. Further, RoE is a lagged measure that reflects an equity and asset base that has been built over a long time. Yes, supermarket prices have risen. But as Banducci and Weckert explained, this is a relatively recent phenomenon and is, in no small part, the result of supply-side dislocations – raw materials, labour, energy, rent – that now appear to be resolving themselves. By way of example, Banducci said there had been zero inflation on Woolworths shelves last week.
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