Woolies warns of 60pc price hike
WOOLWORTHS has warned it could be forced to increase some drink prices by 60 per cent in Western Australia if the State Government pushes ahead with a container deposit scheme similar to the NSW government's disastrous "Return and Earn" program.
In a written submission outlining its concerns about WA's "cash for cans" plan slated to roll out in 2020, Woolworths said the estimated total cost to NSW households from Return and Earn would be $420 million, based on a "conservative" average levy of 12 cents per container.
Due to WA's much larger size and smaller population, the supermarket predicted handling and administration fees would be "significantly more" at around 15 cents per container.
"The CDS will have a significant cost-of-living impact on our customers," Woolworths government relations manager Richard Fifer wrote. "Based on an increase of 15 cents per item, a 24x600ml pack of Woolworths still water will rise from $6 to $9.60, which is an increase of 60 per cent."
Woolworths said its experience with similar schemes in South Australia and the Northern Territory showed the "vast majority" of beverage containers were still returned through kerbside recycling, "reflecting the low engagement consumers have in seeking a refund".
The NSW government's scheme, launched on December 1, 2017, has been heavily criticised for pushing up the price of drinks without any environmental benefit, given 80 per cent of bottles and cans were already being recycled via yellow bins.
In April, The Australian reported the five biggest drinks manufacturers - Coca-Cola Amatil, Carlton United Brewers, Lion, Coopers and Asahi - were pocketing $34 million a month in unclaimed "deposits".
Drinks manufacturers raised their prices to pay for the 10-cent "deposit" to be paid back to consumers if they return near pristine-condition bottles and cans "uncrushed, unbroken" and with "the original labels attached".
The paper reported that just 13 per cent of eligible bottles and cans were being returned and Exchange for Change, the company formed by the five drinks makers to manage the scheme, simply hands the unclaimed money back to them.
As of May, more than 350 million drink containers had been returned to around 600 Return and Earn machines.
In April, an interim report by the NSW Independent Pricing and Regulatory Tribunal found prices had increased by 10-14 cents for soft drinks and water, 6 cents for beers and fruit juices, and 7 cents for ciders.
Queensland will introduce its own container deposit scheme in November.
"We stand by the evidence provided in our submission to the WA government on the container deposit scheme last year," a Woolworths spokesman said.
"Since our submission there has been constructive engagement between industry and government on the proposed design and implementation of the scheme. If this approach continues, we trust the consumer costs associated with the scheme can be minimised."