12:00a.m. 20th May 2008

| By Jane Gardner

Shoppers are being ripped off thousands of dollars at the supermarket checkout because of archaic planning laws that discourage competition, according to a new report.

Co-authored by ex-chair of the ACCC, Allan Fels, the Choice Free Zone report suggests food prices would reduce by 18 per cent and household items by 28 per cent if laws were overhauled to more supermarkets within an area.

He said current planning laws were archaic and hurting the consumer.

“The planning system should be about protecting the community from congestion, noise and the loss of cultural and environmental assets,” he said.

“Instead, planning laws are protecting existing retail landlords from the threat of competition.

“New supermarkets and larger food stores are being denied the opportunity to compete with existing shopping centres.”

Supermarket chain ALDI Queensland general manager Victor Jakupec said they had come up against planning constraints while attempting to build a store in Buderim.

“With the old Maroochy Council, one of the restrictions was they wouldn’t allow retail outside of centres that were more than 1000 square metres. Our stores were 1300 to 1500 square metres,” he said.

“The expectation was we would go in to a shopping centre, but there was what they call restrictive governance from other supermarkets or no space in the shopping centres.

“All councils have got their own interpretation of planning laws, which makes it difficult to try and have a consistent approach.

“I think it would make it easier for any developer to have consistent planning laws. It would certainly help us to understand where we are able to go.”

Mr Jakupec agrees that having more supermarkets within close proximity decreases prices.

“Wherever there is an ALDI store, our major competitors will drop their prices, so in that respect you could draw the conclusion prices would come down.

“There have been a number of different reports and studies done on our prices and generally the consensus is they are lower. It introduces competition over and above what is normally there and that brings prices down.”

Aaron Gadiel, chief executive of the Urban Taskforce, said the Maroochy Council’s restrictions were a prime example of the points illustrated in the report.

“Market analysis was suggesting there is space for six ALDI stores in the area, but they can’t have anything more than 1000 square metres outside an established shopping centre.

“This has nothing to do with traffic, noise or environmental amenities; it’s an arbitrary rule for the express purpose of protecting established shopping centres from competition.

“But competition is all about businesses slugging it out with each other to give the best service and prices to the consumer. What you’ve got to do is take out this idea that it’s wrong to approve a new business that might do that.

“Struggling suburban families will be the big winners if there is more competition ... they will save thousands of dollars off their supermarket bills.

“They are already penalised by having to travel greater distances to do their shopping and they need a greater choice nearer their homes.”

The report also says that reforming the system could inject $296 billion into the Australian economy and deliver another 147,000 jobs into the workforce.

Major retail landlords in existing shopping centres were taking between 17 and 21% of retail turnover as rent, the report said.

This compared with nine to 12 per cent in other countries.

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