Interview: On Holiday
Unions: One Day Longer
Industrial: Never Mind the Bollocks
Politics: Spun Out
Economics: If the Grog Don't Get You ....
History: Taking a Stand
International: The Split
Legal: Pushing the Friendship
Poetry: Simple Subtractions
Review: Sydney Trashed
The Locker Room
AFL-CIO Not The Only War
We Love Morris
A Readers Suggestion
If the Grog Don't Get You ....
Why doesn't your local bottle shop stock that wine label anymore? Did they find not enough demand? I doubt it. What probably happened is that a large liquor retailer within a few kilometres decided that they should be the sole provider of that brand, and the producer of the wine could supply to the small shop at the cost of losing access to the chain store. Welcome to retailing in the twenty first century.
The grog issue was a major fault line in Australian politics in the late 19th century and early twentieth century. The Temperance Movement saw it as the ruination of the working classes. Nowadays the supply of liquor is a symptom of different structural problems in 21st century Australia, none of which are good news for those same working classes.
The federal government bases much of its rhetoric about unfair dismissal laws on the needs of small business. They claim the Liberal-National Party Coalition is the friend of small business and thus they are acting for their constituents and the nation by making it easier to sack people businesses will then be more willing to hire, just so the can fire. A curious logic at best, and a logic that is not based o any research just wishful thinking. Rowena Barrett has been doing a lot of research on the 75000 job creation figure the government claims will happen. She points out that small business employment problems would be best served by some personnel management skills, training and investment.
What does not help small business is big business. The federal government and its regulatory agencies do help big business. These agencies, in particular the ACCC, have been almost total lame ducks in acting against the increasing powers of large corporations in many sectors. Food and liquor retailing stand out as areas dominated by the main players, Woolworths and Coles. Bankruptcies and legal actions by the corner store friends of communities are symptoms of the malaise. These are the very small businesses that Howard and Co tell us they are helping but the same government does little or nothing to stop the expansion of the behemoths, and consumers and producers are squeezed by these giant middlemen. The big banks have also been playing their part, with dubious loan practices, following these up with foreclosures. Small business operators who then attempt to use legal means to fight the bank actions find themselves with far shallower pockets than their adversaries.
Evan Jones provides a great case study of the impacts of Woolies and Coles in liquor retailing in the latest Journal of Australian Political Economy (no 55, June 2005)
Jones points out that the domination of the grocery industry by Woolies and Coles is unparalleled in the western world with these two "players" controlling 80% of the market. Federal Parliament expressed concern about the situation in a select committee report in 1999 but, surprise, surprise, nothing happened. The move into petrol supply was lead by Woolies with Coles now acting to catch up and both have been actively involved in buying up liquor stores for some time.
Now we see Mr Corbett having the audacity to stand up and accuse the Pharmacy Guild of trying to protect their monopoly when the Guild struggles to maintain the role of pharmacies against the attempts by Woolies and Coles to establish themselves in this area. Does Mr Corbett speak for the consumer and small business on this issue? Will the government act to protect small business? Probably not, all in the name of the consumer. The wedge will come in the form of the Pharmacy Guild being accused of extracting too much from the consumer and opposing the obvious "public good" of lower process via Woolies and Coles. Prices will drop as the big players continue their established pattern of forcing suppliers to come to the party and providing goods at a lower rate. Much of the record profits the big two generate is achieved this way. Ask Walmart how this is done. And ask their suppliers in the US how you can deal with this pressure without sourcing from lower wage regions or countries. You can't do it. Read Sara Paretsky latest VI Warshawski novel "Fire Sale" for the impact of the domination of a region in a city by a monolith somewhat similar to Walmart. Social dislocation, low wages, unemployment, health problems, family stress and third world exploitation all flow from the principle of lower costs to consumers. The very same consumers are the ones whose families are forced to accept the low wages and poor conditions the monoliths require. Mr Andrews Fair Pay and Conditions Standard will no doubt be taking this into account!!
But back to the liquor business. Jones dissects the escalating role that the twin towers of retailing are playing. It is estimated that the two hold about 45% of the national liquor outlets. That means 45% of a takeaway liquor trade of $9 billion per annum. Most of the growth of Coles and Woolies in this area has come over the past five years.
The scenario sketched above on your local bottle shop was displayed in the action taken as long ago as 1995 however. In Adelaide an organic trader applied for a license to sell organic wines only to find Coles fighting the application in the Licensing Court. In 2000 a Central Coast publican tried to transfer a dormant license to a new tavern and retail outlet. Under threat from Coles he eventually agreed to a covenant preventing any takeaway sales. The licensee of the Red Lion Hotel in Rozelle in Sydney found Coles objecting to their expansion plans on the basis of interfering with a Coles outlet 12 kilometres away. Geographically seemingly close, but a huge population in between.
So what did the regulators do? The ACCC took the Gosford and Rozelle cases on but the practices have continued elsewhere.
Price is a big factor. Coles and Woolies can sell products at lower prices than potential competitors can even get supply for. Southcorp seemingly were willing to supply the Dan Murphy chain (Woolies owned) at such a rate that Dan Murphy could sell the wine at under wholesale prices. The effect cascaded through the industry.
On a wages front, we can easily imagine this effect on employment conditions. No matter how much an employer in a particular industry wants to maintain wages and conditions, if another player in the same industry uses the upcoming industry relations law changes to slash conditions, how long will it take for others to realise that they must do the same or go under. This happened in Western Australia under the Western Australian Workplace Agreements in the cleaning industry. Western Australian based companies agreed with unions to maintain conditions but when a company from outside WA tendered for a contract and won they did so because they were quite willing to use the laws to slash pay.
The actions of the regulator, the ACCC, in taking on Coles in the above example was a good one, but, as Evan Jones points out, its actions are taken in isolation from a view of the structure of the industry as a whole. The "creeping acquisitions" strategies of Coles and Woolies, whereby they buy up existing independents is a neglected issue. Current ACCCChair Mr Samuels seems to regard it as non-issue. The Senate inquiry into the effectiveness of the Trade Practices Act (2004 report) was more concerned:
"The Committee considers that provisions should be introduced into the Act to ensure that the ACCC has powers to prevent creeping acquisitions which substantially lessen competition in a market."
Government Senators, those champions of small business, supported no action.
Mr Samuels and his employees claim that the consumer is king. I am sure Mr Corbett and the Walton family would wholeheartedly agree. Those who depend on decent wages and conditions should stop to consider that the discounts they get from Liquorland, BiLO, Dan Murphy and the rest do not come from a concern for the consumer but from a concern for Woolies and Coles bottom line.
The advocates of the small business case, whether it be for exemption from unfair dismissal laws, regionally determined wages policies, youth wages, extended probationary employment periods talk in catch-all terms of removing the "red tape as the vehicle for alleviation of small business problems n the marketplace. This rhetoric persistently ignores the structural subordination of small business".
Communities need good wages, good jobs and good conditions. By driving down supplier prices in the name of the consumer, and by driving do wages in the same cause, producers, creators, service providers are weakened socially, their communities are poorer and our society becomes more unequal and unjust. Your rights at work are directly connected to your rights at the retailer in ways that we should all consider.
Journal of Australian Political Economy no 55, June 2005
JAPE; PO Box 76 Wentworth Building, University of Sydney 2006
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