Greens' essential goods cap 'may lead to shortages'

The cost of essential groceries will be capped under a Queensland Greens plan but an expert has warned it may lead to shortages.

Households are set to save under a price freeze on 30 basic items such as milk, bread, eggs and nappies with any increases tied to wages, the Greens said on Wednesday.

Ahead of the October state election the Greens said it would also set up a Fair Prices Authority in the hope of breaking up a duopoly held by supermarket giants Coles and Woolworths.

Cost cap measures are used overseas and Greens MP Amy MacMahon said there was no reason the same approach couldn't be adopted in Queensland.

Under the Greens plan, the Fair Prices Authority would determine the list of 30 items based on a basic essentials list similar to the “basket of goods” used to calculate CPI.

The list would be open to public feedback and take into account cultural and dietary requirements, the Greens said.

However an economics expert said there were risks with enforcing a price cap.

Greens MP Amy MacMahon
Greens MP Amy MacMahon says cost cap measures are used by governments overseas.

Griffith University's Associate Professor Nicholas Rohde said consumers would flock to the items on the essential list because they were cheaper but producers would likely cut back on supply as they are less profitable.

"The risk associated with this is you could end up creating shortages," he told AAP.

"Expenditure on programs would probably be a more effective way of helping low income families."

For the Greens to legislate their proposed Fair Prices Authority, it would require government support as the reigning Labor party holds a majority ahead of the October 26 state election.

The Greens currently have two MPs in Queensland parliament.

Premier Steven Miles dismissed the price cap as a "populist" policy, likening the Greens to the opposition.

"They're good at headlines, good at slogans, a bit like the LNP," he told reporters.

The premier said the Greens had a chance to discuss the cap at the state government's supermarket pricing inquiry this year but failed to show.

"How would this (cap) impact on the price of other goods? How would this address the cost-of-living - they would've had the chance to ask supermarket CEOs that very question," Mr Miles said on Wednesday. 

Queensland Premier Steven Miles
Premier Steven Miles says the Greens' plan will not address the cost-of-living.

A report from the supermarket inquiry found consumers are at a disadvantage due to the dominant market share held by Coles and Woolworths.

The price caps would apply to all retail giants with total sales of more than $3 billion per year in Queensland.

It would require them to offer at least one product in each of the 30 categories of essential items at a capped price across all Queensland stores.

The Queensland government is already subsidising essential goods discounts for far north communities, with more than 30 retailers across Cape York, Torres Strait and the Gulf signing up under the scheme.

Subsidies on basic goods such as milk, bread and fresh produce will rise from 5.2 per cent to 20 per cent under the scheme.

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