Announcement date
10 February 2025
Link to announcement
Albanese Labor Government building on investments to Close The Gap | Ministers' media centre
Problem being addressed
Food and essentials in remote First Nations communities are significantly higher in price than the same products in urban centres. Coupled with comparably low income, this means many First Nations people living in remote communities are struggling with cost-of-living and overall food security. Food security is an important social determinant of health and overall health and wellbeing. Poor food security is associated with increased risk of chronic diseases.
Food and essentials in remote communities are expensive for many reasons, including the high cost of freighting the products the long distances between the point of harvest or production and the community store. Remote supply chains often rely on only a small number of service providers and require multiple transfer points, with each stop along the supply chain increasing the cost and time it takes for the product to reach the consumer, thus increasing the risk of degradation and damage of goods. In addition to long distances and poor infrastructure, small consumer populations in remote communities with limited purchasing power often means bulk pricing for products is unviable.
Proposal
The IA considers five options to support food insecurity in remote Australia:
- Option 1: Retain the status quo where the current trial on nine essential items will continue through to 2029, after which point, all essential goods would return to their ‘market prices.’
- Option 2: Mandate and enforce price caps on essential items in remote stores.
- Option 3: Subsidise the cost of freight directly to the remote store. Remotes stores would receive the subsidy after the sale of the goods.
- Option 4: Apply a subsidy through Outback Stores Pty Ltd (Outback Stores) on 30 essential items (with the ability to adjust to respond to changes in supply and demand)) with the target to lower the cost of these items to be comparable with urban retailers. Outback Stores would provide subsidised items to remote stores at a lower wholesale price, subsidising the sale price (if required) and the cost of freight.
- Option 5: Apply a subsidy through Outback Stores on 30 essentials to lower the cost of these items to be below the sale price at urban retailers. This option considers the lower average incomes of First Nations people in remote communities, the higher rates of food insecurity in remote First Nations communities and the higher prices of food and essentials in remote stores.
The preferred option was identified as Option 4 as it is supported by key stakeholders and builds on an existing successful model administered by Outback Stores. Options 4 and 5 have a greater positive impact on affected cohorts and best meet the objectives of the policy to reduce costs for consumers of a defined basket of healthy food and essential items in remote First Nations communities, support remote stores to implement pricing policies that aim to improve nutrition and health outcomes for First Nations people and improve the governance, operational and management capacity of remote stores. Option 4 is preferred over Option 5 due to the lower costs to operate and noting the risks of criticism or the intended benefits of the subsidy to remote communities not being realised due to use of the Option 5 subsidy by people outside of remote communities.
To ensure a coordinated and complementary impact, the NIAA is developing the Industry Standards for Remote Community Stores Code, remote store governance benchmarking and training, and a store-based nutrition workforce to be implemented alongside Option 4.
Assessed Impact Analysis outcome
Adequate
Assessment comments
The IA considers a range of options and provides a detailed implementation plan. To be considered ‘good practice’ as per the Australian Government Guide to Policy Impact Analysis, the IA would have benefited from a more detailed analysis of the potential economic impacts and further consultation with stakeholders.
Regulatory burden
The NIAA estimates the preferred option will result in an increase in average regulatory costs of $5.113 million per year, over ten years. The NIAA estimates 98% of this cost impact will be incurred by Outback Stores to administer and operate the scheme.