Woolworths CEO threatened with contempt charge in Senate supermarket price inquiry

In a dramatic turn of events that has captured the attention of consumers and industry watchers alike, Woolworths CEO Brad Banducci found himself in hot water during a Senate inquiry, facing threats of jail time and fines for his reticence in discussing the supermarket giant's substantial profits.


The Senate inquiry, which has been delving into the pricing practices of Australia's major supermarkets, sought to uncover the details behind Woolworths' impressive $1.7 billion profit after tax in the most recent financial year.

Senators were particularly interested in the company's return on equity—a vital indicator of profitability.

However, Banducci sidestepped these inquiries, choosing instead to discuss another metric.


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Outgoing Woolworths CEO Brad Banducci earned the ire of a Greens senator over his response to a question on the supermarket’s return on equity. Image Credit: YouTube/ABC News (Australia)


'We measure return on investment, which we think is the right way of measuring profitability in a company,' Banducci stated.

Return on investment (ROI) measures how profitable an investment is compared to its cost.

On the other hand, return on equity (ROE) checks how well a company uses its shareholders' money to make profits.

Banducci’s response did not satisfy inquiry chair Greens senator Nick McKim, who then issued a warning.

‘I feel compelled to advise you that it is open to the Senate to hold a witness in contempt when they refuse to answer a legitimate question,’ he said.

This serious charge carries a fine of up to $5000 and a potential six-month prison sentence.

The standoff led to a suspension of the hearings, highlighting the intense scrutiny over the profit margins of Woolworths and its main competitor, Coles.

The two supermarkets, which command about two-thirds of Australia's supermarket sector, have been accused of price gouging.


Senator McKim did not mince words when he accused Banducci of selectively presenting data to downplay the company's profitability.

'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,' McKim said.

He accused Woolworths of using its market dominance to pressure suppliers, including farmers, to reduce wages, compromise staff safety, and overcharge customers.

Banducci denied any allegations of price gouging, stating, 'It’s very hard to say that we have price gouging. I would respectfully submit that this is an incredibly competitive market and that is good for consumers.'

He attributed the rising prices at the checkout to grocery inflation, which he claimed was driven by cost increases from global consumer goods suppliers and the cyclical impacts on domestic fresh food markets.

Despite the CEO's assurances, the inquiry comes at a time when many Australians are feeling the pinch of the cost of living crisis.

Banducci's comments about grocery inflation and the competitive market did little to assuage concerns about the affordability of everyday essentials.


This Senate inquiry is not the only challenge Banducci has faced recently.

His resignation from the top job was announced in February following an interview with ABC's Four Corners, where he struggled to answer questions about Woolworths' market share.

Banducci is set to step down as chief executive at the end of August.


Source: YouTube/ABC News (Australia)

As the inquiry continues, with Coles chief executive Leah Weckert also scheduled to appear, the spotlight remains on the practices of Australia's supermarket behemoths.

The inquiry's timing coincides with a review of the voluntary Food and Grocery Code of Conduct, which governs the relationship between supermarkets and suppliers.

The review has recommended that the code be made mandatory, with significant financial penalties for breaches.
Key Takeaways

  • Woolworths CEO Brad Banducci was threatened with jail and a fine for not answering questions at a Senate inquiry regarding the company's profits.
  • The inquiry chair accused Woolworths of price gouging and exploiting market dominance to the detriment of suppliers, employees, and customers.
  • Woolworths reported a $1.7 billion profit after tax in the most recent financial year, and its return on equity was a key point of contention.
  • There is ongoing scrutiny of major supermarkets, with a review suggesting that the voluntary Food and Grocery Code of Conduct should be made mandatory.
For many, this unfolding story is more than just corporate drama—it's a matter that hits close to home.

Have price increases affected your budget? Do you feel that the market is as competitive as it should be? Share your thoughts in the comments below!
 
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Politicials might be able to get away with dodging and not answering questios in parliament. But Mr Banducci you do not have that leeway in appearing before a Government enquiry. Just answer the questions posed to give some perspective on hobesty and inegrity which seems to be lacking in Coles and Woolworths. We all know that Coles and Woolworths are bullying their suppliers and treating their customers with contempt. No amount of promotion, advertising and spin is going to convince the public otherwise.
 
Yes I think greed is in play but how about the Government be charged with the same crime 48 cents in the dollar tax for fuel. Pot calling the kettle black do you think.
As a scientist knowing a bit about the Earth's systems upon which we depend, I would be quite happy to see our government add $1 to any tax on petrol/diesel that we pay, as it would perhaps enable Australia to organise effective public transport. No doubt there would be assorted side-effects, such as enabling our glorious duopoly of supermarkets to increase their price gouging and compelling me to buy a moped to get my ancient carcass to the supermarket rather than usng my car; but it might just begin to convince those assorted folk who like 5-litre engined vehicles for sitting in in commuter-jams twice a day to try something a little smaller and lighter with a 1000cc engine
 
the grandstanding by the (unelected) senate is the greater problem. Nothing will come from this, other than a greens senator increasing his 'profile' but absolutely nothing will result. No other country uses the measure that was referenced, the value of the share is not the measure used. Will wait to see if the Aldi representative can answer the same question as it's not a listed company so the measure is not relevant.
Couldn't have said it better, grandstanding by the government senators, Tough threats and no action.
 
Yes I think greed is in play but how about the Government be charged with the same crime 48 cents in the dollar tax for fuel. Pot calling the kettle black do you think.
Totally agree. In any other Corporation, this Senator would be charged with bullying. He carried on like he had all the power. Accuser and executioner. Need to look in their own backyard and the taxes charged on essential utilities.
 
Re: your question -have prices increased so much? A 2 kg chook at woollies costing $25 now when prepandemic cost much much less. Its too expensive. Why should Banducci go to jail when he is a multi milionaire getting millions per year from woolworths to fleece Australian consumers? That money should be returned to all Australian consumers Plus Jail time
 
Return On Equity is the vital information needed here, and it's very good to see that the Senators, led by Greens Senator Nick McKim, know the right questions to ask. The primary reason for the massive profits is investor/shareholder demand to always expect a larger % profit on their investments every financial year. It is this 'shareholder greed' that the ROE figures clearly expose, and such profits are simply no longer sustainable. It is normal for shareholders to experience good and not-so-good years, and to always demand increasing profits every financial year is pure greed on their behalf. It's certainly time for the Senate to instigate setting a few boundaries and limits on profits for the essential living needs of average people. This obviously requires some form of regulating authority to be put in place, as these companies can no longer be trusted to self-regulate their own profitability; and if shareholders then choose to shift their money into other areas instead of the grocery retail sector, so be it. We, the people, won't miss them. That is a lesson that all potential investors need to learn.
 
"Have price increases affected your budget? Do you feel that the market is as competitive as it should be?"

When talking about price increases and budgets, one has destroyed the other at our place.
There is no budget.
There is the rent, and there is food.
There is sometimes something for the credit card.

The car sits parked in the yard, and gets an occasional run to the doctor's.
I walk to the shopping centre for groceries.
Our budget is: "Can we pay it this fortnight?"

Nothing will come out of these inquiries - nothing.
We've had Royal Commissions and inquiries for years over various important issues.
They get ignored.

Until our politicians are also reduced to bread and beans, nothing will be done.
That's not a whinge ...
That's a fact!

Addit:-
Oh, and while I am here ...
Our hardest times begin on 1st January every year, when the PBS rolls over, and we have to pay for Chemist until the Safety Net limit is reached. We are fortunate to have the safety net.
The wonder drug Tagrisso costs $90,000 a year, which is picked up by the PBS scheme.

So grateful for it. (No, it's not for me.)

Edit: Until the Safety Net is reached, we pay $44 for 40 Tagrisso, and very happy with that.
Price chaged per day @full price is $270 per tablet.
 
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As a scientist knowing a bit about the Earth's systems upon which we depend, I would be quite happy to see our government add $1 to any tax on petrol/diesel that we pay, as it would perhaps enable Australia to organise effective public transport. No doubt there would be assorted side-effects, such as enabling our glorious duopoly of supermarkets to increase their price gouging and compelling me to buy a moped to get my ancient carcass to the supermarket rather than usng my car; but it might just begin to convince those assorted folk who like 5-litre engined vehicles for sitting in in commuter-jams twice a day to try something a little smaller and lighter with a 1000cc engine
Yes, 100%.
Great that you are a scientist dealing in fact based data. I have taken on board most of the reasons (roughly about 10 that I am aware of) that compel people to be sceptics of fact about how the Earth's systems work. It's intriguing to have that knowledge when listening to the bold and at times ill-informed commentary and working out which reason box perspective they are coming from and why.

Separate to that.
Funny thing, recently (2 weeks ago), around the time interest in this Inquiry started to ramp up, Coles started giving me gifts as a Coles plus member. I have received 2 gift boxes in 2 weeks, both delivered by a courier to my home.
The first comprised 5 items of mainly female hygiene products and the more recent one had 2 sugar-free soda bottles, Fanta pineapple and Coca-Cola lime, a large pack of popcorn, a small vegan packet of cheesy chickpea puff snacks and a container of dark cacao brownie protein balls. Both gift boxes were well received with most gifts going to others. Notwithstanding the pleasure of receiving such gifts, one of my minds canyons released an echo asking why would Coles start doing that at this time!

In addition, in recent times and in ongoing messages, Coles are now asking if I want $20 off for spending say $250 on any shop I do until a certain date. I get the feeling Coles are working hard in a PR sense to alter perceptions in some cases. Maybe the spin is on!

NB: I have a need to do a couple of shops a week and can't always get to the supermarket. For me the delivery fee works out at about $2.37 per delivery when bearing in mind the membership fee for Coles plus. I have found with online grocery shopping there are significant savings to be made as the unit cost is right in your face and so easy to compare. Turns out a quite a few specials aren't really specials.
 
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On shopping...
Brussel Sprouts have gone up from $9.50kg to $15/kg in the last year.
That's 58%>
In the same year, the CPI was 3.5% !!!

Recently Tim Tams hit a new record - $5 !!
Non-special prices at Coles was usually $3.50.
That's 43%
No - we don't eat biscuits. But notice stuff while walking the aisles.
Toothpaste is another massively hiked.

Frozen Hake is up $2 to $9 ... 28%

We don't need an inquiry - we just need our eyes.
 
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Return On Equity is the vital information needed here, and it's very good to see that the Senators, led by Greens Senator Nick McKim, know the right questions to ask. The primary reason for the massive profits is investor/shareholder demand to always expect a larger % profit on their investments every financial year. It is this 'shareholder greed' that the ROE figures clearly expose, and such profits are simply no longer sustainable. It is normal for shareholders to experience good and not-so-good years, and to always demand increasing profits every financial year is pure greed on their behalf. It's certainly time for the Senate to instigate setting a few boundaries and limits on profits for the essential living needs of average people. This obviously requires some form of regulating authority to be put in place, as these companies can no longer be trusted to self-regulate their own profitability; and if shareholders then choose to shift their money into other areas instead of the grocery retail sector, so be it. We, the people, won't miss them. That is a lesson that all potential investors need to learn.
Very well said. That is the very crux of this matter.

It is sometimes very easy to overlook the salient point in an issue when a less important side-issue irritates one, It can cause an irrelevant conclusion to be made.

I think the genuine hope is that something good for most Australians will come out of this Senate Inquiry.
 
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"Have price increases affected your budget? Do you feel that the market is as competitive as it should be?"

When talking about price increases and budgets, one has destroyed the other at our place.
There is no budget.
There is the rent, and there is food.
There is sometimes something for the credit card.

The car sits parked in the yard, and gets an occasional run to the doctor's.
I walk to the shopping centre for groceries.
Our budget is: "Can we pay it this fortnight?"

Nothing will come out of these inquiries - nothing.
We've had Royal Commissions and inquiries for years over various important issues.
They get ignored.

Until our politicians are also reduced to bread and beans, nothing will be done.
That's not a whinge ...
That's a fact!

Addit:-
Oh, and while I am here ...
Our hardest times begin on 1st January every year, when the PBS rolls over, and we have to pay for Chemist until the Safety Net limit is reached. We are fortunate to have the safety net.
The wonder drug Tagrisso costs $90,000 a year, which is picked up by the PBS scheme.

So grateful for it. (No, it's not for me.)
My cancer drug $3.000.00, under Medicare $300.00, under MC and private $30.00 and last but not least MC/Private and OAG, $6.50?
 
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It was a Dorothy Dixer question, no other country uses the measure that was put forward. No company uses 'return of equity' as a measure of their performance. Pure grandstanding by this senator (another over paid unelected member of the senate).
I do not see it that way.
No.
While I agree with the usual return-on-investment metric - indisputably - it should be highlighted that in THIS case, the metric return-on-equity was a term used forensically to dig into what's been going on.

Groceries don't go up for no reason - someone makes a decision

Only shareholders, Directors and CEO's wanting to dodge the light would resist the necessary excavation that brings out the truth.

Of course it's desirable if you are a shareholder, to be able to say: "Nothing to see here ... keep moving."
But consumers will take anything they can get, if it shows up the rogues stealing the returns due legitimately to growers and producers, and felt at the end of the dastardly scheme by consumers.

No way do I buy your "Dorothy-Dixer-grandstanding etc" when it is the only thing exposing the iniquity of those whose own income depends on how effectively they can covertly fleece consumers and producers.

If we are going to have an inquiry - for goodness sakes ... INQUIRE!
Dissing an inquirer because you don't like the question empirically, is irrational.
btw - I have no time for the Marxist Greens - but in this case, they asked an appropriate question
 
Very well said. That is the very crux of this matter.

It is sometimes very easy to overlook the salient point in an issue when a less important side-issue irritates one, It can cause an irrelevant conclusion to be made.

I think the genuine hope is that something good for most Australians will come out of this Senate Inquiry.
I am certainly seeing more Price-gouge People adverts on SBS. That would be a tax-deduction at our expense, would it not?
 
I do not see it that way.
No.
While I agree with the usual return-on-investment metric - indisputably - it should be highlighted that in THIS case, the metric return-on-equity was a term used forensically to dig into what's been going on.

Groceries don't go up for no reason - someone makes a decision

Only shareholders, Directors and CEO's wanting to dodge the light would resist the necessary excavation that brings out the truth.

Of course it's desirable if you are a shareholder, to be able to say: "Nothing to see here ... keep moving."
But consumers will take anything they can get, if it shows up the rogues stealing the returns due legitimately to growers and producers, and felt at the end of the dastardly scheme by consumers.

No way do I buy your "Dorothy-Dixer-grandstanding etc" when it is the only thing exposing the iniquity of those whose own income depends on how effectively they can covertly fleece consumers and producers.

If we are going to have an inquiry - for goodness sakes ... INQUIRE!
Dissing an inquirer because you don't like the question empirically, is irrational.
btw - I have no time for the Marxist Greens - but in this case, they asked an appropriate question
Can one buy Marxist greens at Woolworts? I have heard that Brussel sprouts are expensive.
 
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... why has this inquiry not asked the suppliers like the farmers/ vegetable or Fruit growers to give evidence of what they are paid for, and why have these supermarkets rejected items like crooked carrots, or blemishes which don't affect quality. They do this so they can charge a premium to the customer
And at the same time, knock down the price paid to the producer, who has no option but to take the discounted offer.

Producers still have to: work the ground, fertilise, plant, water, pest control, pay labourers for all of the above.

Then harvesting, washing, packing and transporting, plus heaps more steps in the production process (machine maintenance, fuel, insurance, digitalisation etc etc).

They put up with storm and flood; hail and heatwave.
Grape growers lost because bushfire smoke infiltrated the grapes; so they were dumped.

And parasites like Banducci think they can escape scrutiny for their iniquity, by resigning and walking away. He needs an inquiry into his own motives and bonuses.
 
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