Greens Senator Threatens Woolworths CEO with Contempt in Senate Inquiry

Heated Senate inquiry over Woolworths' profitability as politicians demand accountability for rising food prices in Australia.

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Mahnoor Jehangir
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Greens Senator Threatens Woolworths CEO with Contempt in Senate Inquiry

Greens Senator Threatens Woolworths CEO with Contempt in Senate Inquiry

During a tense Senate inquiry into supermarket pricing on April 16, 2024, Greens Senator Nick McKim threatened to hold outgoing Woolworths CEO Brad Banducci in contempt for refusing to directly answer questions about the company's return on equity . The clash occurred as the Senate select committee focused on the contentious issue of rising food and grocery prices in Australia.

Banducci argued that return on investment (ROI) was a more appropriate measure for the committee to consider than return on equity (ROE). Analytics firm LSEG estimated Woolworths' ROE at 26%, while Banducci stated that the company's ROI was around 10%. The difference between these two metrics lies in how they scale a company's profitability - ROE divides income by the total value of equity, while ROI divides it by the total value of all capital employed, including both equity and debt.

Facing a hostile inquiry, Banducci pushed for the adoption of the ROI metric, which presents a lower profitability figure than the ROE metric. However, McKim, as the committee chairman, insisted on focusing on ROE and threatened to hold Banducci in contempt of the Senate and potentially jail him if he refused to answer questions about the company's profitability.

Treasurer Jim Chalmers criticized McKim's actions , calling it "confected outrage" that was detracting from the real issues. Chalmers said the Labor government's approach is more methodical and focused on getting real change, in contrast to McKim's theatrics. Nationals Senator Matt Canavan also criticized McKim's "carry on," saying it had undermined the purpose of the Senate inquiry.

McKim defended his approach, saying it was time to hold big corporations accountable and that his motivations were to put downward pressure on food and grocery prices in Australia. "Woolworths is an extremely profitable company," McKim said. "They need to be held to account for their role in the rising cost of living pressures that so many Australians are facing."

Why this matters: The clash between Senator McKim and Woolworths CEO Banducci highlights the growing tension between politicians and large corporations over rising food and grocery prices in Australia. In the face of the ongoing cost of living challenges faced by many Australians, the government is under pressure to take action and address this pressing issue.

The Senate inquiry into supermarket pricing is ongoing, with further hearings scheduled in the coming weeks. Banducci, who is set to step down as Woolworths CEO in June 2024, will likely face additional questioning about the company's profitability and pricing practices. The outcome of the inquiry could have significant implications for the supermarket industry and the wider Australian economy .

Key Takeaways

  • Greens Senator threatened Woolworths CEO over refusal to disclose return on equity.
  • CEO argued return on investment was more appropriate metric than return on equity.
  • Treasurer criticized Senator's "confected outrage," saying Labor's approach is more methodical.
  • Senate inquiry into supermarket pricing is ongoing, with implications for industry and economy.
  • Clash highlights tension between politicians and corporations over rising food and grocery prices.