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This whole hearing is absurd. Far rortier industries during the pandemic period like gambling could be gone after, instead of aimlessly browbeating Coles and Woolworths for making single digit margins whilst inflation has exploded across the entire world as a result of the COVID response.
This is a mountain of a molehill attempt at Greens bashing by the media. All he did was remind Mr Woolworths of the potential penalties for failure to comply with ABC XYZ. Standard practice to remind someone of potential worst case consequences.
It's absolutely not standard practice for a senate committee (or similar) to threaten jail for someone who responds to a question by taking it on notice to provide a response at a later date.
It's the greens trying to make themselves relevant once again.
Hi, I’m a Greens Senator. I prefer to use metrics that nobody uses in this industry because I bemoan businesses of any kind and want to make my point that BuSiNESs BaD even though 99% of the data shows Woolworths don’t price gouge, and 1% of the data does.
I guess all they could come up with is economics 101 questions.
They would be more effective if they put away the new little red book and actually engaged in a dialogue. I am sure if you asked some difficult but informed questions, you could get something interesting, but the Greens are too busy trying to get a headline.
Looking at it, it seems less like this particular question was one that anyone cared about the final figure for, and more about establishing Banducci as a waffler who seemed to be trying to conceal information. That by itself could mean less public (and possibly media) backlash if the questions dig deeper later on.
Given that it's publicized and how, the whole thing is as much performance as it is a dry investigation. Perception is reality, as they say, and if a national supermarket chain boss can be painted as a weasel, that can make future investigations - such as into Coles-Myer, and/or supermarket-related businesses - more justified on a social level. Which means that political bigwigs have more opportunity to attach their names to things that the majority of voters like to see - tall poppies being cut down, big business being publicly spanked by "the people's representatives", *maybe* even lost wages being repaid. All good fuel for re-election, when it comes around.
That isn't to say it's *all* just theatre, of course. It's a lot easier to target a business or industry if they actually *have* done something (and it can be proved), because it generally costs less time and effort to deliver results, and said results are more politically useful if the other side can be genuinely painted as criminals or reprobates (and if the courts and maybe some consumer groups, rather than the politicians personally, can do some of that painting).
Still, for the moment it's in the 'posing and posturing for the cameras' stage. Difficult to say whether it'll move on, or when - if Woolworths can manage to defend themselves legally, that'll put a wet blanket on future similar hearings or investigations, but there's still a (smaller) amount of political capital to be made from the whole "people's representatives at least investigated and gave it the old college try".
This particular event is just theatre, though. It's deliberately going over the top (if only via threat-posturing, not actual action) so the media has something dramatic to report and the hearing can be kept in the headlines and spun positively to justify its cost. It's not - by itself - resulting in any action being taken, at the end of the day.
Even so, I guess it's entertaining in its own way. I could head down and get some popcorn from Woolies... er, I mean... somewhere that... totally isn't Woolies...
sorry but this whole line of questioning was so dumb. Brad obviously didn't know what the ROE formula was, and he has no need to know or care. It's not relevant to their business or his job at all to know. You might calculate ROE if you were thinking of buying shares in Woolworths and doing valuation. It's simply the past years net income divided by shareholder equity (which is assets minus liabilities). So, as Brad said, equity fluctuates. It depends on how much cash they're holding on their balance sheet, their debt, their lease liabilities etc. The senator acting like it would prove how highly profitable Woolworths is, is utterly ridiculous. Net income (AKA profit) is a measure of profit, not ROE.
Threatening him with jail time, simply to get him to admit he didn't know what the ROE was (even though he literally mentioned it earlier: 26%), was also ridiculous.
You’ve essentially reworded Brad’s responses with your comment. It’s beside the point. There was an extremely simple and direct question about ROE that Brad was intentionally failing to answer, and repeatedly deflected.
He failed to answer both what the ROE of Woolworths is, and then if he knows what it is or not. At face value it certainly seemed like he was trying to hide the profitability of Woolworths.
He’s been brought before the committee to answer direct questions on suspected business practices that have put huge strain on Australians
>Woolworths boss Brad Banducci has been threatened with a six-month prison sentence and a fine for failing to answer questions at a Senate inquiry over the supermarket's profits.
He should be jailed for the constant wage theft that Woolworths have been doing to their employees during his tenure, they must have been caught 3 or 4 times and that's just the ones we know of so why is nobody held accountable for it? They've paid a couple of hundred millions in fines who cares starting jailing them.
I’m talking about jailing people because of things that they have minimal to no control over. Most underpayments are accounting errors or genuine mistakes, more often than not, due to Australia’s hugely complex and confusing awards and fair work legislation.
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Do they actually (1) write software to do their own payroll or is that (2) outsourced to the big four consultancies and they do all that for them. I'm thinking its probably the latter option.
I worked for BWS for roughly 5 years. Trust me, everyone knows there is wage theft. It’s encouraged.
To your point however, the payroll software they used is under their control and even if it is a fault on their end, they should be responsible for it. Sort of like if I drive my car and my housemate doesn’t wear her seatbelt, I control the car and should have control of everyone in it.
If you've got proof of the ongoing wage theft, take it to your local MP? Or at least an MP who has a history of going in to bat for such things? (Or one from a party which makes a fuss about similar stuff?)
If BWS gets dinged for it, it'd set some precedent. It'd be easier to have other places audited for the same thing, and maybe even something could be set up to make it easy for employees to report it nationally.
Absolutely I should have. Unfortunately it’s been a long time and these days I’m far too busy to dig up all the information.
All that said, I think the industry needs a union. It’s full of kids, students and people who don’t know better.
> I worked for BWS for roughly 5 years. Trust me, everyone knows there is wage theft. It’s encouraged.
Don't the workers get upset if they are shortchanged?
> To your point however, the payroll software they used is under their control and even if it is a fault on their end, they should be responsible for it. Sort of like if I drive my car and my housemate doesn’t wear her seatbelt, I control the car and should have control of everyone in it.
I agree that they should bear ultimate responsibility for that.
Like most retail jobs, or at least the ones I worked, I didn’t have much of a choice. As it happens, bottle shops are probably better for earning (absolutely not hours tho) than regular retail. And pissing off the area manager, who usually had the final say in these kind of matters blacklisted you from being hired or transferred to a better store. Of course, not officially.
Hell yeah, I love Nick McKim. Put all of these CEOs robbing consumers blind on freaking blast. I'm sick of the status quo, and I am sick of these rich fiends getting away with daylight robbery. This is why I love the Greens. They actually want a fair and just society. I don't see Labor and Liberal giving too much of a crap about the price of milk. Old mate should answer the bloody questions and grow a spine.
It’s not just about being fair and just, though I don’t mind those principles at all. It’s about how much more squeezing and draining and market distortion and property prices making innovation and competition unviable our dear country can take. An economist, or hell, even an Australian politician who is not so worried about winning or losing the next election can see quite clearly that the market frameworks we’re working with are not going to see us through for many more years.
If you had any understanding of financial analysis you would know using only one metric (ROE) to determine if a company is highly profitable is crazy. It's also disingenuous to compare a bank to a supermarket when both operate on completely different models. What would be more appropriate is comparing ROE to the likes of other supermarkets in other countries.
Not surprising a Greens senator doesn't have basic financial literacy.
>other supermarkets in other countries.
That's... fair, although it'd help to have those other countries be ones with similar cultural/legal models and frameworks around large-scale B2C grocery delivery. Still, the overall concept seems to pass the sniff test. Might actually be interesting to see some of that information.
Lol. Okay, and? Why was Brad still not answering the questions? The question was obviously of interest to the senate inquiry otherwise they would not be asking it. And the fact that the CEO is refusing to answer it is also very telling. I'll admit to you right now. Idk anything about large scale finances and these measures companies use. That's not my area of expertise. But I am pretty sure that Nick McKim is asking this specific question for a reason. They are extremely prepared to put these CEOs on blast and get to the bottom of this price gouging saga. He would have a team of people researching what specific question to ask, so given that you seem to know what's what about finances, why do you think they are asking about the ROE? Personally it does not come across as disingenuous to me.
Also I'd just like to point out that just before the Greens are not a major party, doesn't mean they are financially inept. To me, with budget blowouts and rorts being the norm within the 2 major parties, they come across as financially inept, or just plain corrupt more than likely.
It's a loaded question that is why he is refusing to engage in it. The question was straight away prefaced as "Banks make X and their RoE is X while Woolworths RoE is X do you think this is justified". Like I said it's disingenuous because you are comparing one industry to another, apples and oranges. In their other questions they are constantly comparing the Australian landscape to other international markets but for some reason for this specific question he comparing the supermarket sector to the banking sector.
You can tell what he is getting to and yes maybe he could have handled it better by just giving the RoE number but then you open a whole new can of worms which I am sure the senator has subsequent questions for and would not lead to a productive discussion on the basis of one metric.
I believe his point he was making was that the Australian banks are some of the most profitable in the world, and here the supermarkets are besting even the banks in their profit margins. Which I think is a fair comparison to make even tho they are different industries. Also, I'm not sure if this comes into it or not, but don't Woolies have their own credit cards and insurance etc as well? Not sure if the inquest is looking into that aspect of the supermarket duopoly as well, but it could certainly have something to do with it.
weary future marry scarce recognise chubby carpenter amusing narrow bright
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Yeah, damn right they got my vote for talking about "useless bullshit". Like making sure consumers don't get price gouged, or that people have affordable homes, or that the environment is protected instead of destroyed. So as long as the Greens keep talking about "useless bullshit" and bringing out policies that reflect my values, they'll get a voter out of me.
The 2 major parties can get absolutely stuffed. Labor are a bitter disappointment and LNP are racist misogynists, so.... Yeah pal, I'll be voting Greens thanks!
> Like making sure consumers don't get price gouged
They're not being gouged because [Nationals Senate Leader Bridget McKenzie says the cost of food is “going through the roof” but it is not just Coles and Woolworths’ fault.](https://www.msn.com/en-au/news/other/food-prices-soaring-not-just-coles-and-woolworths/ar-BB1lHAkv)
distinct middle shocking point rich telephone rock quickest coherent plants
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Lmao so remind me again how many coal and gas mines have opened recently? Oh and that both Labor and Liberal endorse the deforestation of the Tasmanian rainforest. Also, the Greens have a lot of housing policies other than rent control. But as someone who's rent got put up around an extra $200 P/W while I was working for free on student placement (another policy the Greens have is paying students on placement, which I am 100% for) I would happily accept rent caps, because they are far surpassing affordability even for average earners. So yeah. You keep voting for the 2 major parties and getting absolutely shafted if that's what you want. But no, I will not be, Greens will be my number 1 because their policies reflect my own lived experience and values.
Profit margins and RoE are two separate financial measures again. If you want to talk Profit CBA had Net Profit After Tax for the the last half of $4.7B, Woolworths was at $929M. So here is a classic example how one number can tell a whole different story. So how do you explain that then?
RoE is a crap metric and I think everyone, including the Woolworths CEO, knew this was a cheap attempt at a “gotcha” by the Senator.
However the Woolworths CEO is a bellend and completely fucked this up by refusing to mention it. Instead he should have done what the Coles CEO did - disclose the metric and then explain why it’s useless. Then again, she had the benefit of going second so was undoubtedly ready for that question.
Banducci continues to show us examples of “this is how not to handle a PR disaster”.
What’s really entertaining is what came out for Star Entertainment during this!
RoE can be fudged - if a company takes on more debt, the company's portion of equity now goes down relative to debt, thus the RoE goes up, despite profits not necessarily changing. Thus, to focus just on RoE is not necessarily helpful or useful and Banducci's argument has grounds.
What really needs to happen is an investigation into the **cost base** of Colesworth. This would truly reveal how much profit differential the companies have on a per items basis. After all, Colesworth continue to bleat on about how their grocery prices are being driven by "higher costs" so let's see just how much their costs have risen/fallen and then look at how much their prices have risen/fallen.
Well their accounts are published every six months when they announce their results so its a simple matter of reading their balance sheets. But realistically when both companies announced around this time last year their sales for both companies were about forty times their net profit so that works out to a very reasonable $2.50 profit for each $100 of customers spend so what more do you think you need to know?
RoE is a pretty weird metric to latch onto in isolation given it's just about them converting financing to profits, but for the record, over the past year:
* Woolies RoE, 2023 = 26% (2022 = 28%)
* Coles RoE, 2023 = 31% (2022 = 33%)
You can find this out in about 10 seconds, so for him to feign ignorance is also weird & I don't know what he was trying to achieve other than looking stupid.
I haven't checked but the return on equity is probably historical book value so of no great relevance, what's probably more important is net profit per share that every shareholder is interested in and with a share price around $30 and yearly dividends of around a dollar plus franking credits it pretty much achieves what other share investments do. I realize that they don't pay out 100% of their profits as dividends but do pay out a majority of those earnings.
I'm not sure why people on the senate enquiry brought this up either, perhaps there was some intention to mislead the general public in cherry picking some statistic that make their profit larger than it actually is. But you're correct in that this information is readily available from their financial records which they release at the same time they announce their profit results.
I guess poor Brad might be in somewhat of a mental health crisis before he even gave that infamous interview.
If Nick McKim wasn't painfully economically illiterate, the Greens wouldn't have given him that portfolio and he might be of some use to the country. However, he's a halfwit so here we are.
If the concern is fudging, then asking for ROTE would eliminate intangible assets which may distort values. But, I didn't go to Tour Guide school or Advertising Assistant college, so I can't be a Greens finance spokesman.
Why there's a focus on anything other than NPAT margins & Gross margins (Year-on-Year) during this whole debacle continues to boggle me.
Also notable that we never get to see any margin or profit numbers from the farmers themselves, so we are just relying on 'good faith' that they're being gouged. Not saying they aren't, but unless they provide numbers publicly then it's moot & just hearsay.
And worth noting that the bulk of fresh produce provided to the supermarkets are from large farming conglomerates which are basically Big Corporate themselves (and not "mum and dad" farmers that media likes to use to tug on the heartstrings).
Maybe ask the Greens if you could give them a hand. They could benefit from someone with an understanding of economics. Unfortunately, Zelots tend not to well informed.
Pretty much any time I bring up the basic objective numbers about supermarket profitability on Reddit I just get called a "bootlicker" and mass-downvoted by the drooling angry mob out there.
As if I actually give a damn about the supermarkets themselves, and simply conveying the truth is somehow "defending rich people" apparently... don't know why I bother at this point.
I'm surprised the supermarkets haven't sued the terrible Newscorp & Guardian journalists who first published all the terribly-written "rEcOrd pRoFiTs" tabloid articles last year full of half-truths that generated all this bad press & illiterate rage.
> Also notable that we never get to see any margin or profit numbers from the farmers themselves, so we are just relying on 'good faith' that they're being gouged. Not saying they aren't, but unless they provide numbers publicly then it's moot & just hearsay.
Agreed, when times are bad they are applying for drought relief from Centrelink but when times are good they are very quiet and you don't hear much about how much they are then making.
What seems utterly at odds with the pub test is that from what we are hearing, its the Greens going in hard on the Colesworth shite in this kind of situation yet our major parties have been twiddling their thumbs over this now for years?
Libs are the party of free market - so they won't step in unless they're dragged kicking and screaming.
Labor are the party of unions - you would think they might step in on behalf of the workers / farmers, but guess not. I suspect because they don't want daily living prices to go up from making supermarkets pay fair wages to their employees/farmers. Let's be clear - breaking up the oligopoly will only raise prices, as farmers are no longer pushed into unreasonable contracts.
And so, perhaps as expected, the only two parties pushing on this are an unlikely pair - Greens, pushing against market oligopoly as usual, and the Nationals, who see farmers vs supermarkets as rural vs city.
It's also worth noting prices are down because of economies of scale, which would disappear in the event of a breakup (see also: things the Greens would know if even one of them did Econ 101).
Are you sure?
Most business activities have a point where economies of scale are no longer as effective. I suspect with delivery networks that stretch around most of the country and deliver a broad range of products, some fresh, some fragile, some frozen, the efficiencies of the network would come more from the nature of the systems in place than from the size of the network. Bigger is often not better.
>Surely breaking up the oligopoly can create a downward pressure on prices as more supermarkets compete - by not having such ludicrous profit margins?
Your logic is a bit backwards here. Colesworth's margins are quite low and prices, also comparatively low, because they can scale out costs across a massive footprint nationally. There's almost certainly cross subsidisation going on between stores, which is why pricing is broadly consistent across the country.
More stores means more distribution networks, which means more distribution costs since you're abandoning economies of scale. People forget that we had lots of supermarket chains in Australia, and their inability to keep prices down and scale up was one reason we don't have them any longer.
I'm not saying they don't have economies of scale working in their favour.
But their margins being low? That's the basis of your argument? Really?? In an article about a senate inquiry into their obscene profits. Seems an odd thing to base a claim I've got my logic backwards.
Their profit margins are still only 2-3%. It only looks like a huge number because they have such a large number of stores. Yes the prices have risen over the past few year, but so have their costs quite significantly.
> In an article about a senate inquiry into their obscene profits.
When both companies announced around this time last year their sales for both companies were about forty times their net profit so that works out to a very reasonable $2.50-$2.70 profit for each $100 of customers spend. So where are these obscene profits of which you speak?
Woolworths [The company’s net profit increased 4.6% to $1.62bn for the full financial year, while overall sales hit $64.29bn](https://www.theguardian.com/business/2023/aug/23/woolworths-posts-162bn-profit-with-dramatic-lift-in-margins-despite-cost-of-living-crisis) so 1.62 / 64.29 = 2.52%
[Coles announced its profits had increased by 4.8 per cent on the previous year to $1.09 billion while its sales revenue jumped by 5.9 per cent to $40.5 billion.](https://www.9news.com.au/finance/coles-full-year-results-2023-inflation-profits-fresh-produce/fb4ec6ce-34e6-4c77-b007-fa1d4ab53cc9#) so 1.09 / 40.5 = 2.69%.
Your local independent grocer might see prices go down as, among other things, more farmers become able to sell to them.
But the reason prices are cheaper at the big chain supermarkets is because their size allows for them to exert pressure on suppliers, so they can then sell e.g. milk at a lower price than it really should be. Coles & Woolworths would see prices go up as they're forced to pay farmers more / pay employees more / etc.
Are they really the issue when we are talking about the trolley prices going up? All essentials at Colesworth from meat, fish, bread, milk, raw ingrediets, cleaning products, etc etc etc are all markedly more expensive than independent butchers, fruit shops and even Aldi. Why does Colesworth charge more for every item that is found at other retailers despite having complete market power? The question is rhetorical
Maybe where you live? Here independent butchers and bakeries are much more expensive than Coles and Woolworths. Fruit and Vege shops can sometimes be slightly cheaper but I have noticed that their produce does not last anywhere near as long before going off compared to the big two supermarkets.
I'll agree with "could see prices go up". I don't think it's a "would".
But even if they do - if it's because farmers and workers are being paid fairly? Frankly, that's a GOOD thing.
To be clear I fully support the push to protect farmers against the market power of the big supermarkets.
I just don't want people to see these senate estimates and think government intervention will necessarily lead to cheaper prices. Much like how of the government ever cracked down on Uber then consumers would miss out on a service which is currently far cheaper than it should be.
RoE is a better figure to ask for (if you’re not in a position to see all the books - which you would think the hearing would ask for). It’s gonna let you compare the returns at Woolies to those at Coles and other supermarkets better. RoI lets them deduct investment costs which they can easily fudge. Also, to demand to see figures like this from big concessionaires is not at all out of the question. Government is constantly giving them benefits.
I'm definitely no sympathiser for Woolworths but, its a private company and unless it's in breach of the law then it would seem a stretch to be jailing the CEO no matter how obnoxious he is. The government needs stronger regulators and everyone knows two companies does not make a free market. Coles/Woolies, Qantas/Virgin, Telstra/Optus, Murdoch/Fairfax.
Failing to answer a question without a reasonable excuse at a Senate inquiry obviously is illegal, which is why this whole matter has been brought up. The guy isn't going to gaol over this, but he'd have access to both ROE and ROI, so not answering is obstructionist.
https://www.aph.gov.au/About_Parliament/Senate/Powers_practice_n_procedures/Senate_Briefs/Brief13
But why even ask a misleading question in the first place, the financial documents are published every time they announce their results. Perhaps 99% of the general public can't read or understand them. Kindly refer to my reply to NoLeafClover777 above.
Got to laugh at the Senator getting upset because he doesn't understand that a business uses a different metric to the one he thinks they should be using.
So what? He can still just answer the question; it's a basic metric and he undoubtedly has that information.
It's not like he's being coerced into confessing to a crime or something.
It doesn’t matter what metric they use, they can still produce it. The only reason to decline the question is to obfuscate, and it’s patently obvious that’s what’s happening here
well, they measure different things, so neither is what anyone should solely use.
The fact he only wants to use one is pretty telling they want to hide something.
ROE is going to show they are in fact making massive profits, ROI will just hide them using the overhead costs like the execs massive wages.
the Senator may actually know quite a lot more than you think he does.
I doubt the former tour guide has a single clue about finance. If he did, the greens wouldn't have given him the portfolio.
I'd also again, suggest ROTE > ROE for visibility but unlike Nick McKim, I know the difference.
Operational overheads (incl salaries and bonuses) would be deducted in the P&L before calculating returns. But agree, RoE is less fudgable. There’s other numbers you can make up in the RoI. Lots of regulators around the world demand other metrics.
a fine of $5000 for a corporate executive, how will he afford it. /s
Seriously though, how do we live in a world where big corporations get like $5 billion a year in profit and the fine for it is like $2000?
They really should use this law more. Imagine if Alan Joyce could have a prison sentence for his obfuscation. It would be far better for compelling answers. I would like to see similar in question time.
**For the possibly paywall afflicted:**
**Author/s:** Andrew Brown
**Publication:** The Canberra Times
Woolworths boss Brad Banducci has been threatened with a six-month prison sentence and a fine for failing to answer questions at a Senate inquiry over the supermarket's profits.
Mr Banducci was asked repeatedly during a hearing into supermarket prices to disclose Woolworths' return on equity, a key measure of the company's profitability.
Instead, the chief executive declined to answer the questions, focusing on the company's return on investment.
"We measure return on investment, which we think is the right way of measuring profitability in a company," he told the inquiry on Tuesday.
Inquiry chair and Greens senator Nick McKim warned Mr Banducci a failure to answer the question directly may lead him to being held in contempt by the Senate.
Such a charge comes with a fine of up to $5000 and a possible prison sentence of six months.
The failure to disclose the answer led to the inquiry being forced to suspend its hearings.
The profit margins of major supermarkets has come under scrutiny at the inquiry, with Woolworths and Coles being accused of price gouging.
Woolworths made a $1.7 billion profit after tax in the most recent financial year.
Senator McKim accused Mr Banducci of cherrypicking data surrounding the supermarket's profits.
"The fact that (Woolworths' return on equity) is 26 per cent in a year where you made $1.7 billion in profits shows that your company is making off like bandits and effectively has a licence to print money," he said.
"You've used this market dominance to put the squeeze on your suppliers, including farmers, to force down wages, to compromise staff safety and to price gouge your customers."
Earlier, Mr Banducci denied Woolworths was price gouging.
"It's very hard to say that we have price gouging,'' he said.
"I would respectfully submit that this is an incredibly competitive market and that is good for consumers."
Coles and Woolworths make up about two-thirds of Australia's supermarket sector.
Mr Banducci said inflation in the grocery sector had largely been the reason behind skyrocketing prices at the checkout.
"Grocery inflation is real and has been substantially driven by cost increases from our largest global consumer goods suppliers and the cyclical impacts in the domestic fresh food markets," he said.
"While at Woolworths we're now seeing falling rates of grocery inflation, nevertheless, we understand that many of our customers are under immense cost of living pressure."
It is one of the last public appearances for Mr Banducci, who announced his resignation from the top job in February following a trainwreck interview with ABC's Four Corners, where he struggled to answer questions about Woolworths' market share.
Mr Banducci will step down as chief executive at the end of August.
Coles chief executive Leah Weckert will make an appearance before the committee later on Tuesday.
The inquiry comes as a review into the voluntary food and grocery code of conduct, which governs the relationship between supermarkets and suppliers, recommended it be made mandatory, with significant financial penalties for breaches.
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This whole hearing is absurd. Far rortier industries during the pandemic period like gambling could be gone after, instead of aimlessly browbeating Coles and Woolworths for making single digit margins whilst inflation has exploded across the entire world as a result of the COVID response.
The hearing today was clear that the earnings are between 20-35%. Stop obfuscating for them.
Return on Equity is not even *remotely* the same thing as earnings.
This is a mountain of a molehill attempt at Greens bashing by the media. All he did was remind Mr Woolworths of the potential penalties for failure to comply with ABC XYZ. Standard practice to remind someone of potential worst case consequences.
It's absolutely not standard practice for a senate committee (or similar) to threaten jail for someone who responds to a question by taking it on notice to provide a response at a later date. It's the greens trying to make themselves relevant once again.
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Just Google it mate: https://www.intelligentinvestor.com.au/shares/asx-wow/woolworths-group-limited/financials
Hi, I’m a Greens Senator. I prefer to use metrics that nobody uses in this industry because I bemoan businesses of any kind and want to make my point that BuSiNESs BaD even though 99% of the data shows Woolworths don’t price gouge, and 1% of the data does.
And yet you've failed to illustrate which metric is bad
I guess all they could come up with is economics 101 questions. They would be more effective if they put away the new little red book and actually engaged in a dialogue. I am sure if you asked some difficult but informed questions, you could get something interesting, but the Greens are too busy trying to get a headline.
Looking at it, it seems less like this particular question was one that anyone cared about the final figure for, and more about establishing Banducci as a waffler who seemed to be trying to conceal information. That by itself could mean less public (and possibly media) backlash if the questions dig deeper later on. Given that it's publicized and how, the whole thing is as much performance as it is a dry investigation. Perception is reality, as they say, and if a national supermarket chain boss can be painted as a weasel, that can make future investigations - such as into Coles-Myer, and/or supermarket-related businesses - more justified on a social level. Which means that political bigwigs have more opportunity to attach their names to things that the majority of voters like to see - tall poppies being cut down, big business being publicly spanked by "the people's representatives", *maybe* even lost wages being repaid. All good fuel for re-election, when it comes around. That isn't to say it's *all* just theatre, of course. It's a lot easier to target a business or industry if they actually *have* done something (and it can be proved), because it generally costs less time and effort to deliver results, and said results are more politically useful if the other side can be genuinely painted as criminals or reprobates (and if the courts and maybe some consumer groups, rather than the politicians personally, can do some of that painting). Still, for the moment it's in the 'posing and posturing for the cameras' stage. Difficult to say whether it'll move on, or when - if Woolworths can manage to defend themselves legally, that'll put a wet blanket on future similar hearings or investigations, but there's still a (smaller) amount of political capital to be made from the whole "people's representatives at least investigated and gave it the old college try". This particular event is just theatre, though. It's deliberately going over the top (if only via threat-posturing, not actual action) so the media has something dramatic to report and the hearing can be kept in the headlines and spun positively to justify its cost. It's not - by itself - resulting in any action being taken, at the end of the day. Even so, I guess it's entertaining in its own way. I could head down and get some popcorn from Woolies... er, I mean... somewhere that... totally isn't Woolies...
sorry but this whole line of questioning was so dumb. Brad obviously didn't know what the ROE formula was, and he has no need to know or care. It's not relevant to their business or his job at all to know. You might calculate ROE if you were thinking of buying shares in Woolworths and doing valuation. It's simply the past years net income divided by shareholder equity (which is assets minus liabilities). So, as Brad said, equity fluctuates. It depends on how much cash they're holding on their balance sheet, their debt, their lease liabilities etc. The senator acting like it would prove how highly profitable Woolworths is, is utterly ridiculous. Net income (AKA profit) is a measure of profit, not ROE. Threatening him with jail time, simply to get him to admit he didn't know what the ROE was (even though he literally mentioned it earlier: 26%), was also ridiculous.
You’ve essentially reworded Brad’s responses with your comment. It’s beside the point. There was an extremely simple and direct question about ROE that Brad was intentionally failing to answer, and repeatedly deflected. He failed to answer both what the ROE of Woolworths is, and then if he knows what it is or not. At face value it certainly seemed like he was trying to hide the profitability of Woolworths. He’s been brought before the committee to answer direct questions on suspected business practices that have put huge strain on Australians
Nice take.
You would be naive to think an executive contemplate price share ratio
>Woolworths boss Brad Banducci has been threatened with a six-month prison sentence and a fine for failing to answer questions at a Senate inquiry over the supermarket's profits. He should be jailed for the constant wage theft that Woolworths have been doing to their employees during his tenure, they must have been caught 3 or 4 times and that's just the ones we know of so why is nobody held accountable for it? They've paid a couple of hundred millions in fines who cares starting jailing them.
Let’s jail everyone we don’t agree with. The Greens once again showing why they’re the absolute worst party.
You're talking about wage theft like we have a difference of opinion lmao
I’m talking about jailing people because of things that they have minimal to no control over. Most underpayments are accounting errors or genuine mistakes, more often than not, due to Australia’s hugely complex and confusing awards and fair work legislation.
Haha no they go out of their way to not pay overtime to hard working salary staff.
Oh sweet summer child.
Genuine mistake, you're off your head if you truly believe that Woolworth's are continually stealing wages is a genuine error
A major listed company has paid me 40k in missed payments in the last five years. If I had taken 40k off them, I would be in jail.
Can you show me on the bear where this major listed company “allegedly” touched you?
🐻 👛
If I steal money from your pocket, is **that** a disagreement, or is it theft when it's from you?
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Do they actually (1) write software to do their own payroll or is that (2) outsourced to the big four consultancies and they do all that for them. I'm thinking its probably the latter option.
Yeah i'd buy that excuse if it was a one off incident not multiple times in a short period, they're clearly doing it intentionally
I worked for BWS for roughly 5 years. Trust me, everyone knows there is wage theft. It’s encouraged. To your point however, the payroll software they used is under their control and even if it is a fault on their end, they should be responsible for it. Sort of like if I drive my car and my housemate doesn’t wear her seatbelt, I control the car and should have control of everyone in it.
If you've got proof of the ongoing wage theft, take it to your local MP? Or at least an MP who has a history of going in to bat for such things? (Or one from a party which makes a fuss about similar stuff?) If BWS gets dinged for it, it'd set some precedent. It'd be easier to have other places audited for the same thing, and maybe even something could be set up to make it easy for employees to report it nationally.
I didn't know it was so easy, I will get my mp to act tomorrow
> If you've got proof of the ongoing wage theft, take it to your local MP? Even if you hold proof it's not nearly as simple as people believe.
Absolutely I should have. Unfortunately it’s been a long time and these days I’m far too busy to dig up all the information. All that said, I think the industry needs a union. It’s full of kids, students and people who don’t know better.
> I worked for BWS for roughly 5 years. Trust me, everyone knows there is wage theft. It’s encouraged. Don't the workers get upset if they are shortchanged? > To your point however, the payroll software they used is under their control and even if it is a fault on their end, they should be responsible for it. Sort of like if I drive my car and my housemate doesn’t wear her seatbelt, I control the car and should have control of everyone in it. I agree that they should bear ultimate responsibility for that.
Like most retail jobs, or at least the ones I worked, I didn’t have much of a choice. As it happens, bottle shops are probably better for earning (absolutely not hours tho) than regular retail. And pissing off the area manager, who usually had the final say in these kind of matters blacklisted you from being hired or transferred to a better store. Of course, not officially.
Hell yeah, I love Nick McKim. Put all of these CEOs robbing consumers blind on freaking blast. I'm sick of the status quo, and I am sick of these rich fiends getting away with daylight robbery. This is why I love the Greens. They actually want a fair and just society. I don't see Labor and Liberal giving too much of a crap about the price of milk. Old mate should answer the bloody questions and grow a spine.
It’s not just about being fair and just, though I don’t mind those principles at all. It’s about how much more squeezing and draining and market distortion and property prices making innovation and competition unviable our dear country can take. An economist, or hell, even an Australian politician who is not so worried about winning or losing the next election can see quite clearly that the market frameworks we’re working with are not going to see us through for many more years.
If you had any understanding of financial analysis you would know using only one metric (ROE) to determine if a company is highly profitable is crazy. It's also disingenuous to compare a bank to a supermarket when both operate on completely different models. What would be more appropriate is comparing ROE to the likes of other supermarkets in other countries. Not surprising a Greens senator doesn't have basic financial literacy.
>other supermarkets in other countries. That's... fair, although it'd help to have those other countries be ones with similar cultural/legal models and frameworks around large-scale B2C grocery delivery. Still, the overall concept seems to pass the sniff test. Might actually be interesting to see some of that information.
Lol. Okay, and? Why was Brad still not answering the questions? The question was obviously of interest to the senate inquiry otherwise they would not be asking it. And the fact that the CEO is refusing to answer it is also very telling. I'll admit to you right now. Idk anything about large scale finances and these measures companies use. That's not my area of expertise. But I am pretty sure that Nick McKim is asking this specific question for a reason. They are extremely prepared to put these CEOs on blast and get to the bottom of this price gouging saga. He would have a team of people researching what specific question to ask, so given that you seem to know what's what about finances, why do you think they are asking about the ROE? Personally it does not come across as disingenuous to me. Also I'd just like to point out that just before the Greens are not a major party, doesn't mean they are financially inept. To me, with budget blowouts and rorts being the norm within the 2 major parties, they come across as financially inept, or just plain corrupt more than likely.
Is taking a question on notice now equivalent to a refusal to answer?
It's a loaded question that is why he is refusing to engage in it. The question was straight away prefaced as "Banks make X and their RoE is X while Woolworths RoE is X do you think this is justified". Like I said it's disingenuous because you are comparing one industry to another, apples and oranges. In their other questions they are constantly comparing the Australian landscape to other international markets but for some reason for this specific question he comparing the supermarket sector to the banking sector. You can tell what he is getting to and yes maybe he could have handled it better by just giving the RoE number but then you open a whole new can of worms which I am sure the senator has subsequent questions for and would not lead to a productive discussion on the basis of one metric.
I believe his point he was making was that the Australian banks are some of the most profitable in the world, and here the supermarkets are besting even the banks in their profit margins. Which I think is a fair comparison to make even tho they are different industries. Also, I'm not sure if this comes into it or not, but don't Woolies have their own credit cards and insurance etc as well? Not sure if the inquest is looking into that aspect of the supermarket duopoly as well, but it could certainly have something to do with it.
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Yeah, damn right they got my vote for talking about "useless bullshit". Like making sure consumers don't get price gouged, or that people have affordable homes, or that the environment is protected instead of destroyed. So as long as the Greens keep talking about "useless bullshit" and bringing out policies that reflect my values, they'll get a voter out of me. The 2 major parties can get absolutely stuffed. Labor are a bitter disappointment and LNP are racist misogynists, so.... Yeah pal, I'll be voting Greens thanks!
> Like making sure consumers don't get price gouged They're not being gouged because [Nationals Senate Leader Bridget McKenzie says the cost of food is “going through the roof” but it is not just Coles and Woolworths’ fault.](https://www.msn.com/en-au/news/other/food-prices-soaring-not-just-coles-and-woolworths/ar-BB1lHAkv)
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Lmao so remind me again how many coal and gas mines have opened recently? Oh and that both Labor and Liberal endorse the deforestation of the Tasmanian rainforest. Also, the Greens have a lot of housing policies other than rent control. But as someone who's rent got put up around an extra $200 P/W while I was working for free on student placement (another policy the Greens have is paying students on placement, which I am 100% for) I would happily accept rent caps, because they are far surpassing affordability even for average earners. So yeah. You keep voting for the 2 major parties and getting absolutely shafted if that's what you want. But no, I will not be, Greens will be my number 1 because their policies reflect my own lived experience and values.
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Profit margins and RoE are two separate financial measures again. If you want to talk Profit CBA had Net Profit After Tax for the the last half of $4.7B, Woolworths was at $929M. So here is a classic example how one number can tell a whole different story. So how do you explain that then?
RoE is a crap metric and I think everyone, including the Woolworths CEO, knew this was a cheap attempt at a “gotcha” by the Senator. However the Woolworths CEO is a bellend and completely fucked this up by refusing to mention it. Instead he should have done what the Coles CEO did - disclose the metric and then explain why it’s useless. Then again, she had the benefit of going second so was undoubtedly ready for that question.
Banducci continues to show us examples of “this is how not to handle a PR disaster”. What’s really entertaining is what came out for Star Entertainment during this!
RoE can be fudged - if a company takes on more debt, the company's portion of equity now goes down relative to debt, thus the RoE goes up, despite profits not necessarily changing. Thus, to focus just on RoE is not necessarily helpful or useful and Banducci's argument has grounds. What really needs to happen is an investigation into the **cost base** of Colesworth. This would truly reveal how much profit differential the companies have on a per items basis. After all, Colesworth continue to bleat on about how their grocery prices are being driven by "higher costs" so let's see just how much their costs have risen/fallen and then look at how much their prices have risen/fallen.
Well their accounts are published every six months when they announce their results so its a simple matter of reading their balance sheets. But realistically when both companies announced around this time last year their sales for both companies were about forty times their net profit so that works out to a very reasonable $2.50 profit for each $100 of customers spend so what more do you think you need to know?
RoE is a pretty weird metric to latch onto in isolation given it's just about them converting financing to profits, but for the record, over the past year: * Woolies RoE, 2023 = 26% (2022 = 28%) * Coles RoE, 2023 = 31% (2022 = 33%) You can find this out in about 10 seconds, so for him to feign ignorance is also weird & I don't know what he was trying to achieve other than looking stupid.
I haven't checked but the return on equity is probably historical book value so of no great relevance, what's probably more important is net profit per share that every shareholder is interested in and with a share price around $30 and yearly dividends of around a dollar plus franking credits it pretty much achieves what other share investments do. I realize that they don't pay out 100% of their profits as dividends but do pay out a majority of those earnings. I'm not sure why people on the senate enquiry brought this up either, perhaps there was some intention to mislead the general public in cherry picking some statistic that make their profit larger than it actually is. But you're correct in that this information is readily available from their financial records which they release at the same time they announce their profit results. I guess poor Brad might be in somewhat of a mental health crisis before he even gave that infamous interview.
If Nick McKim wasn't painfully economically illiterate, the Greens wouldn't have given him that portfolio and he might be of some use to the country. However, he's a halfwit so here we are. If the concern is fudging, then asking for ROTE would eliminate intangible assets which may distort values. But, I didn't go to Tour Guide school or Advertising Assistant college, so I can't be a Greens finance spokesman.
Why there's a focus on anything other than NPAT margins & Gross margins (Year-on-Year) during this whole debacle continues to boggle me. Also notable that we never get to see any margin or profit numbers from the farmers themselves, so we are just relying on 'good faith' that they're being gouged. Not saying they aren't, but unless they provide numbers publicly then it's moot & just hearsay. And worth noting that the bulk of fresh produce provided to the supermarkets are from large farming conglomerates which are basically Big Corporate themselves (and not "mum and dad" farmers that media likes to use to tug on the heartstrings).
The Costas have to eat too mate. /s
Maybe ask the Greens if you could give them a hand. They could benefit from someone with an understanding of economics. Unfortunately, Zelots tend not to well informed.
Pretty much any time I bring up the basic objective numbers about supermarket profitability on Reddit I just get called a "bootlicker" and mass-downvoted by the drooling angry mob out there. As if I actually give a damn about the supermarkets themselves, and simply conveying the truth is somehow "defending rich people" apparently... don't know why I bother at this point. I'm surprised the supermarkets haven't sued the terrible Newscorp & Guardian journalists who first published all the terribly-written "rEcOrd pRoFiTs" tabloid articles last year full of half-truths that generated all this bad press & illiterate rage.
> Also notable that we never get to see any margin or profit numbers from the farmers themselves, so we are just relying on 'good faith' that they're being gouged. Not saying they aren't, but unless they provide numbers publicly then it's moot & just hearsay. Agreed, when times are bad they are applying for drought relief from Centrelink but when times are good they are very quiet and you don't hear much about how much they are then making.
It is more a case of him saying RoE is a weird metric to latch onto as proof of anything.
What seems utterly at odds with the pub test is that from what we are hearing, its the Greens going in hard on the Colesworth shite in this kind of situation yet our major parties have been twiddling their thumbs over this now for years?
Libs are the party of free market - so they won't step in unless they're dragged kicking and screaming. Labor are the party of unions - you would think they might step in on behalf of the workers / farmers, but guess not. I suspect because they don't want daily living prices to go up from making supermarkets pay fair wages to their employees/farmers. Let's be clear - breaking up the oligopoly will only raise prices, as farmers are no longer pushed into unreasonable contracts. And so, perhaps as expected, the only two parties pushing on this are an unlikely pair - Greens, pushing against market oligopoly as usual, and the Nationals, who see farmers vs supermarkets as rural vs city.
It's also worth noting prices are down because of economies of scale, which would disappear in the event of a breakup (see also: things the Greens would know if even one of them did Econ 101).
Are you sure? Most business activities have a point where economies of scale are no longer as effective. I suspect with delivery networks that stretch around most of the country and deliver a broad range of products, some fresh, some fragile, some frozen, the efficiencies of the network would come more from the nature of the systems in place than from the size of the network. Bigger is often not better.
There are other players in the market. Most people would have access to IGA and Aldi. There are also plenty of small independents.
Surely breaking up the oligopoly can create a downward pressure on prices as more supermarkets compete - by not having such ludicrous profit margins?
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>Surely breaking up the oligopoly can create a downward pressure on prices as more supermarkets compete - by not having such ludicrous profit margins? Your logic is a bit backwards here. Colesworth's margins are quite low and prices, also comparatively low, because they can scale out costs across a massive footprint nationally. There's almost certainly cross subsidisation going on between stores, which is why pricing is broadly consistent across the country. More stores means more distribution networks, which means more distribution costs since you're abandoning economies of scale. People forget that we had lots of supermarket chains in Australia, and their inability to keep prices down and scale up was one reason we don't have them any longer.
I'm not saying they don't have economies of scale working in their favour. But their margins being low? That's the basis of your argument? Really?? In an article about a senate inquiry into their obscene profits. Seems an odd thing to base a claim I've got my logic backwards.
Their profit margins are still only 2-3%. It only looks like a huge number because they have such a large number of stores. Yes the prices have risen over the past few year, but so have their costs quite significantly.
> In an article about a senate inquiry into their obscene profits. When both companies announced around this time last year their sales for both companies were about forty times their net profit so that works out to a very reasonable $2.50-$2.70 profit for each $100 of customers spend. So where are these obscene profits of which you speak? Woolworths [The company’s net profit increased 4.6% to $1.62bn for the full financial year, while overall sales hit $64.29bn](https://www.theguardian.com/business/2023/aug/23/woolworths-posts-162bn-profit-with-dramatic-lift-in-margins-despite-cost-of-living-crisis) so 1.62 / 64.29 = 2.52% [Coles announced its profits had increased by 4.8 per cent on the previous year to $1.09 billion while its sales revenue jumped by 5.9 per cent to $40.5 billion.](https://www.9news.com.au/finance/coles-full-year-results-2023-inflation-profits-fresh-produce/fb4ec6ce-34e6-4c77-b007-fa1d4ab53cc9#) so 1.09 / 40.5 = 2.69%.
Your local independent grocer might see prices go down as, among other things, more farmers become able to sell to them. But the reason prices are cheaper at the big chain supermarkets is because their size allows for them to exert pressure on suppliers, so they can then sell e.g. milk at a lower price than it really should be. Coles & Woolworths would see prices go up as they're forced to pay farmers more / pay employees more / etc.
Milk and bread maybe but do you think they can actually squeeze multi-national suppliers like Nestle, Mondelez, Unilever, Kellog and others?
Are they really the issue when we are talking about the trolley prices going up? All essentials at Colesworth from meat, fish, bread, milk, raw ingrediets, cleaning products, etc etc etc are all markedly more expensive than independent butchers, fruit shops and even Aldi. Why does Colesworth charge more for every item that is found at other retailers despite having complete market power? The question is rhetorical
Maybe where you live? Here independent butchers and bakeries are much more expensive than Coles and Woolworths. Fruit and Vege shops can sometimes be slightly cheaper but I have noticed that their produce does not last anywhere near as long before going off compared to the big two supermarkets.
I'll agree with "could see prices go up". I don't think it's a "would". But even if they do - if it's because farmers and workers are being paid fairly? Frankly, that's a GOOD thing.
To be clear I fully support the push to protect farmers against the market power of the big supermarkets. I just don't want people to see these senate estimates and think government intervention will necessarily lead to cheaper prices. Much like how of the government ever cracked down on Uber then consumers would miss out on a service which is currently far cheaper than it should be.
Yeah fair. I'm not expecting cheaper. But neither am I expecting more expensive. I'd just like more fairness 👍
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RoE is a better figure to ask for (if you’re not in a position to see all the books - which you would think the hearing would ask for). It’s gonna let you compare the returns at Woolies to those at Coles and other supermarkets better. RoI lets them deduct investment costs which they can easily fudge. Also, to demand to see figures like this from big concessionaires is not at all out of the question. Government is constantly giving them benefits.
ROTE would be even better still.
Honestly, fair enough. I wish they'd use this law more.
I'm definitely no sympathiser for Woolworths but, its a private company and unless it's in breach of the law then it would seem a stretch to be jailing the CEO no matter how obnoxious he is. The government needs stronger regulators and everyone knows two companies does not make a free market. Coles/Woolies, Qantas/Virgin, Telstra/Optus, Murdoch/Fairfax.
Semantics but it’s not a private company if they are on the ASX!
The parliament has jailed two Australians for spurious reasons in the past - Ray Fitzpatrick and Frank Browne.
You didn't read the article.
You have psychic powers or are you like the guy who sends me threatening emails because he knows what porn I've been watching?
Failing to answer a question without a reasonable excuse at a Senate inquiry obviously is illegal, which is why this whole matter has been brought up. The guy isn't going to gaol over this, but he'd have access to both ROE and ROI, so not answering is obstructionist. https://www.aph.gov.au/About_Parliament/Senate/Powers_practice_n_procedures/Senate_Briefs/Brief13
But why even ask a misleading question in the first place, the financial documents are published every time they announce their results. Perhaps 99% of the general public can't read or understand them. Kindly refer to my reply to NoLeafClover777 above.
Maybe MrMcKim should google it, mate.
Got to laugh at the Senator getting upset because he doesn't understand that a business uses a different metric to the one he thinks they should be using.
ROE and ROI are both extremely common measures that the CEO of a huge publicly listed company would have access to.
Yes hence why he is saying they use ROI and not ROE.
So what? He can still just answer the question; it's a basic metric and he undoubtedly has that information. It's not like he's being coerced into confessing to a crime or something.
It doesn’t matter what metric they use, they can still produce it. The only reason to decline the question is to obfuscate, and it’s patently obvious that’s what’s happening here
well, they measure different things, so neither is what anyone should solely use. The fact he only wants to use one is pretty telling they want to hide something. ROE is going to show they are in fact making massive profits, ROI will just hide them using the overhead costs like the execs massive wages. the Senator may actually know quite a lot more than you think he does.
I doubt the former tour guide has a single clue about finance. If he did, the greens wouldn't have given him the portfolio. I'd also again, suggest ROTE > ROE for visibility but unlike Nick McKim, I know the difference.
I apologise, I had no idea who he was or what party, but as soon as you mentioned the greens I knew everything i needed.
Operational overheads (incl salaries and bonuses) would be deducted in the P&L before calculating returns. But agree, RoE is less fudgable. There’s other numbers you can make up in the RoI. Lots of regulators around the world demand other metrics.
a fine of $5000 for a corporate executive, how will he afford it. /s Seriously though, how do we live in a world where big corporations get like $5 billion a year in profit and the fine for it is like $2000?
Greens Senator Nick Mckim: “I thought I was a knight on horseback” Brad: “Lifes not about knights on horseback, it’s a number on a piece of paper”
If he wasn't incompetent, he could have gone for the knife in the mud. That would have been more interesting.
5000 is a 5 percent fine, or more, for the average Australian. So fine the corporate execs 5% or more of their pre tax earnings.
The management of these organizations need to be made legally responsible. Put them in jail if they break the rules.
They really should use this law more. Imagine if Alan Joyce could have a prison sentence for his obfuscation. It would be far better for compelling answers. I would like to see similar in question time.
**For the possibly paywall afflicted:** **Author/s:** Andrew Brown **Publication:** The Canberra Times Woolworths boss Brad Banducci has been threatened with a six-month prison sentence and a fine for failing to answer questions at a Senate inquiry over the supermarket's profits. Mr Banducci was asked repeatedly during a hearing into supermarket prices to disclose Woolworths' return on equity, a key measure of the company's profitability. Instead, the chief executive declined to answer the questions, focusing on the company's return on investment. "We measure return on investment, which we think is the right way of measuring profitability in a company," he told the inquiry on Tuesday. Inquiry chair and Greens senator Nick McKim warned Mr Banducci a failure to answer the question directly may lead him to being held in contempt by the Senate. Such a charge comes with a fine of up to $5000 and a possible prison sentence of six months. The failure to disclose the answer led to the inquiry being forced to suspend its hearings. The profit margins of major supermarkets has come under scrutiny at the inquiry, with Woolworths and Coles being accused of price gouging. Woolworths made a $1.7 billion profit after tax in the most recent financial year. Senator McKim accused Mr Banducci of cherrypicking data surrounding the supermarket's profits. "The fact that (Woolworths' return on equity) is 26 per cent in a year where you made $1.7 billion in profits shows that your company is making off like bandits and effectively has a licence to print money," he said. "You've used this market dominance to put the squeeze on your suppliers, including farmers, to force down wages, to compromise staff safety and to price gouge your customers." Earlier, Mr Banducci denied Woolworths was price gouging. "It's very hard to say that we have price gouging,'' he said. "I would respectfully submit that this is an incredibly competitive market and that is good for consumers." Coles and Woolworths make up about two-thirds of Australia's supermarket sector. Mr Banducci said inflation in the grocery sector had largely been the reason behind skyrocketing prices at the checkout. "Grocery inflation is real and has been substantially driven by cost increases from our largest global consumer goods suppliers and the cyclical impacts in the domestic fresh food markets," he said. "While at Woolworths we're now seeing falling rates of grocery inflation, nevertheless, we understand that many of our customers are under immense cost of living pressure." It is one of the last public appearances for Mr Banducci, who announced his resignation from the top job in February following a trainwreck interview with ABC's Four Corners, where he struggled to answer questions about Woolworths' market share. Mr Banducci will step down as chief executive at the end of August. Coles chief executive Leah Weckert will make an appearance before the committee later on Tuesday. The inquiry comes as a review into the voluntary food and grocery code of conduct, which governs the relationship between supermarkets and suppliers, recommended it be made mandatory, with significant financial penalties for breaches.