The chair of a senate supermarket pricing inquiry has threatened to hold the outgoing boss of Woolworths in contempt after a fiery exchange about Woolies profit margins.
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00:00 Quite a fiery morning in the Senate in the inquiry into supermarket pricing. It all launched
00:09 around nine this morning when the chair of that inquiry, Senator Nick McKim, started
00:16 asking the outgoing boss of Woolworths, Brad Banducci, if he knew the return on equity
00:22 for the supermarket retailer. Now, Mr Banducci initially said, well, that's not really something
00:30 we focus on here at Woolworths in terms of measuring our profitability, saying that instead
00:36 they like to look at other ways of measuring how well the company is doing. Clearly, the
00:43 senator was not going to let this one go and insisted that his understanding of the return
00:50 on equity for Woolworths was around 26%, which is far higher even than some of the major
00:57 banks. And the senator insisted that this showed that potentially Woolworths was price
01:03 gouging. Again, Mr Banducci insisted it's not something they really focus on at the
01:08 company and declined to essentially say whether yes or no, he believed that the return on
01:15 equity was 26%. This just went on for so long, Casey, and eventually we had this fiery moment
01:22 from the senator towards Mr Banducci.
01:24 I repeatedly refused to answer my question on return on equity. I feel compelled to advise
01:31 you that it is open to the Senate to hold a witness in contempt when they refuse to
01:38 answer a legitimate question. Having said that, I ask you again, is your return on equity
01:50 in the last financial year about 26%?
01:54 Senator, I've answered the question many times.
01:57 You have not answered the question, Mr Banducci. Honestly, I'm not interested in your spin
02:04 or your bullshit. This is a Senate inquiry.
02:09 Quite the exchange there, Amelia, it turns on. So the committee took a break after that,
02:13 but they have since returned. What's happened since?
02:16 So they did take a break. Then they returned around 11 o'clock, I believe. And then with
02:23 more questions about return on equity, this very technical financial measurement, the
02:28 suddenly Mr Senator Nick McKim called a sudden snap break to discuss what they were going
02:35 to do about this back and forth about this technical term. They then came back. And here
02:41 is eventually the moment where it appears that this situation was resolved two hours
02:46 later.
02:47 I think your evidence to the committee is you don't know what the return on equity was
02:53 for Woolworths in the last financial year. And you would like to take the question on
02:57 notice. Could you please just answer yes or no, whether that is your evidence to the committee?
03:02 Senator, yes, I will take it on notice and we will come back and provide another.
03:08 Yes. Just to be clear. Yes. When you say yes, that is yes, I do not know. And yes, you will
03:14 take it on notice. Are you answering yes to both parts of that question?
03:19 Yes, Senator.
03:20 OK, thank you, Mr Banducci. You don't know what the ROE for Woolworths is.
03:30 So yeah, an apparent admission there that the Woolworths CEO doesn't know one of those
03:34 financial metrics of his company, at least off the top of his head. Amelia, I imagine
03:39 this is not the only thing the Woolworths CEO was grilled on.
03:42 No, Casey. We also had a lot of questions from various senators about allegations already
03:49 heard through this inquiry, namely by the CEO of Metcash, which runs IGA, that the major
03:56 supermarkets are participating in land banking. This is where companies go up and buy land
04:03 and they have no real desire to develop it or put a store on it. They're simply buying
04:08 up this land to keep out their competition. Mr Banducci denied that Woolworths is participating
04:14 in land banking. We also had a lot of questions, as you might imagine, about how the supermarket
04:21 is treating its suppliers. While this inquiry has, as its name would suggest, been to look
04:28 into supermarket pricing, we have heard so many reports from growers throughout this
04:34 inquiry that they are being squeezed. Indeed, we've had some growers of things like citrus
04:39 say they haven't really received nominal increases on what they get from the supermarkets for
04:43 more than a decade. So there was lots of conversation about how the supermarket is treating its
04:48 suppliers. We did have Mr Banducci say they believe that they practice in good faith with
04:55 their suppliers. However, they did say that potentially they need to do more with less
04:59 sophisticated or smaller suppliers. We have now had Mr Banducci, it appears, finish for
05:05 the day. And now next up, we have the boss of Coles appearing before this inquiry.
05:10 - Thank you.
05:11 [BLANK_AUDIO]