Independent wholesale distributors are urging the federal government to reassess a $50 million food subsidy program for remote stores that began on July 1. The program, promoted by Federal Minister for Indigenous Australians Malarndirri McCarthy, aims to provide cheaper groceries across Australia. McCarthy stated, "[Families have] told me they've got a real reduction in prices by at least 50 percent for their families and that's what matters."
The subsidy program is designed to price-match 30 essential product categories and is managed by Outback Stores, a Commonwealth-owned corporation that operates 58 remote grocery stores in the Northern Territory, Western Australia, New South Wales, and South Australia.
Richard Forbes, CEO of Independent Food Distributors Australia, criticized the program's approach and implementation. He argued that it undermines the private sector by allowing government stores to sell food at lower prices. "You're effectively saying to the private sector, we've created a subsidy scheme where our own stores can provide food cheaper than you can," Forbes said. He expressed concern that this could threaten the financial viability of private businesses.
Forbes supports the goal of providing affordable food to remote Indigenous communities but believes the private sector should be included in the subsidy scheme. "The private sector is already providing food to every community in the Northern Territory, so why wouldn't you include the private sector in the subsidy scheme?" he asked. He also noted that the program was supposed to be reviewed after three months, but that review has not yet occurred.
Forbes has raised his concerns with the Australian Competition and Consumer Commission (ACCC), arguing that the scheme could lead to a government monopoly. "If the businesses are impacted to the extent where we think they will be, that they go out of business, then there's no one left," he warned.
Angela Cordero, director of Desert Distributors in Alice Springs, expressed that the subsidy could render her business "unviable." Her company supplies food to various institutions, including prisons and hospitals, and serves remote Indigenous communities. Cordero stated, "We're utterly gobsmacked at how this scheme has been rolled out excluding an entire industry of experienced and established food chain specialists."
She noted that her business was essential during the COVID-19 pandemic, helping to keep remote areas supplied. Now, she feels sidelined by the new program. "A lot of customers have called up and said: 'Thanks, but we're going to have to move over and purchase these products elsewhere,'" she said.
The federal government's list of 30 essential item categories includes more than double that number of individual products. Cordero pointed out that there are multiple options within each category, such as six types of nappies and four types of pasta. She criticized the lack of consultation with industry experts like herself. "No one has come to me to ask me if I can compete with these prices," she said.
Cordero suggested that a point-of-sale solution could allow store owners to purchase from any supplier, maintaining existing relationships and avoiding reliance on the government-backed program.
Senator McCarthy has indicated that 152 stores will participate in the subsidy scheme, a prospect that Cordero finds concerning. "It will be too late by then. The damage will be done and it will be irreparable," she said. McCarthy stated that she has been guided by the ACCC in implementing the program and believes she is operating within the guidelines. Outback Stores has been contacted for comment.