Govt wants more supermarkets in suburbs

A federal government plan to encourage the growth of more supermarkets in the suburbs has been soundly welcomed by developers.

Consumer Affairs Minister Craig Emerson wants to overhaul state planning laws which he believes may be restricting retail to certain areas.

He said zoning laws had the potential to be anti-competitive, a tag that the grocery sector has struggled to shrug off given the dominance of Coles and Woolworths.

The zoning and planning laws will go before next month's COAG meeting where a report on the issue will also be presented, Dr Emerson told Fairfax.

Development lobbyist Urban Taskforce Australia said the extra scrutiny on town planning laws was a win all-round for shoppers and businesses.

"Right now, new retail development is routinely denied on the grounds that it will compete with existing businesses," the taskforce's chief executive Aaron Gadiel said in a statement on Sunday.

"Tackling the power of the retail landlords is essential if we're to get more competition in grocery, clothing and general merchandise retailing."

Current laws saw shopping centres concentrated to certain areas, restricting competition in surrounding suburbs, Mr Gadiel said.

Supermarket competition got a boost earlier this year when the consumer watchdog ended shopping centre lease agreements that limited the competition faced by the big supermarkets.

Rivals, such as Aldi and Franklins argued the restrictive leases were blocking their efforts to gain a foothold in the industry.

Eighty per cent of the leases were abolished by the Australian Competition and Consumer Commission, while the remaining will be weeded out over a five-year period.

The government said earlier this month it wants to apply the blowtorch to Australia's grocery sector to improve competition.