Profiteering and price gouging
You may notice that prices for basic goods increase during a health emergency or after a natural disaster. For example, items such as face masks, bottled water, bread, milk, fruit and vegetables and petrol. This often happens because it costs businesses more to get goods into their shop.
A business may have to:
- transport their goods further due to road closures, which means higher petrol costs
- fly goods into town, which greatly increases costs.
Health emergencies and natural disasters can also affect the supply of goods. When goods are in short supply, there is more demand. Greater demand means higher prices.
A business may set whatever prices it chooses for its goods or services. Government agencies will not interfere unless there is evidence of illegal conduct (such as collusion).
Cyclone Larry in 2006 destroyed most of north Queensland’s banana crop when it passed through Innisfail. Bananas were still available from other growers around the country. However, the reduced supply forced up demand. This led to higher prices.
Unconscionable conduct is against the law. Businesses must always act in good conscience.
If found guilty of unconscionable conduct, the maximum fines are:
- For a corporation, the greater of:-
- $10 million, OR
- three times the value of the benefit received, OR
- where the benefit cannot be calculated, 10 per cent of annual turnover in the preceding 12 months.
- For an individual, $500,000 per breach.