A Fair Feed for All: Addressing Retail Gaps and Food Deserts in Victoria

Jasmine Sibree, AgriFutures Australia, 2025 World Food Forum Fellow

Executive Summary

This policy proposal addresses food deserts in Victoria through coordinated urban planning, fiscal incentives, and data-driven approaches to enable equitable food access. Food deserts are areas where people lack access to nutritious food. Despite growing attention on food insecurity amidst rising living costs, existing policies focus on food safety and commercial dealings, without adequately addressing the geographic distribution of nutritious food. Limited access to nutritious food leads to unhealthy diets, resulting in chronic health conditions. This costs individuals, communities, and the Australian healthcare system A$3.24 billion annually (AIHW, 2024). Addressing food deserts would improve food security and the productivity of affected communities whilst reducing health inequality.

This policy recommends establishing a Victorian Food Environment Improvement Tax Incentive, modeled on the Fresh Food Financing Initiative in the United States. The proposed incentive would encourage healthy food retailers to open and maintain stores in food deserts, with a phased payroll tax incentive structure over seven years to promote sustainable business operations. The scheme is estimated to result in A$4.74 million in foregone tax revenue annually, based on similar approaches taken in the United States. This investment is expected to yield substantial returns through improved public health outcomes, reduced healthcare costs, and job creation. Potential barriers and risks to this policy include challenges in defining clear eligibility criteria, ensuring accurate identification of food desert areas, and justification of foregone cost. 

Problem Identification

Food deserts are characterised by an absence of food retailers that offer healthy options and typically coincide with areas of socioeconomic disadvantage (USDA, 2009). Poor urban planning and insufficient support for diverse retail options have led to the growth of food deserts in Australia (Needham et al., 2020). Limited availability of nutritious food in food deserts translates into poor dietary patterns, contributing to higher rates of obesity, type 2 diabetes, cardiovascular disease, and premature mortality (Morrison & Paine, 2022). Data on the impact of food deserts in Australia is limited. However, a US study found average life expectancy in food deserts to be 75.5 years compared to 80.2 years in normal areas (ACS, 2023). Residents of food deserts face two to three times higher diabetes risk, adding to Australia’s existing $3.4 billion annual diabetes healthcare costs (Colvin & Lavoipierre, 2015; AIHW, 2024).

Food deserts also present a missed opportunity for local communities’ economic productivity and earnings. Poor health outcomes resulting from inadequate nutrition reduce an individual’s ability to work, resulting in lost productivity. A study conducted by PwC (2015, p.11) found that foregone earnings from diabetes and obesity totaled to A$4.74 billion, with food deserts contributing to these negative impacts. Despite growing awareness of food deserts, there remains a lack of targeted policy to support the development of diverse and healthy food retail options in underserved areas.

Context

Background

A food environment refers to the physical, economic, social and cultural surroundings that influence people's food choices. Food deserts are a food environment where residents have limited access to affordable and nutritious food, particularly fresh fruit and vegetables (USDA, 2009, p.11). Food deserts are created by low supermarket density, a high concentration of unhealthy outlets and barriers such as low income and poor public transport options. Food deserts emerge largely from urban planning decisions that neglect healthy food retail considerations in residential development, especially in low-income or expanding suburban areas. Additionally, commercial viability plays a significant role in shaping food environments, with unhealthy outlets like fast-food chains often dominating food desert areas due to their profitability (VicHealth, 2021, p.7). Food desert areas are co-created by poor-walkability and inadequate public transport networks, which limit residents’ local access to nutritious food (Morrison & Paine, 2023). 

In Australia, food deserts frequently occur in low-income urban fringe areas. In Melbourne, researchers identified more than 300 urban areas where access to unhealthy food outlets exceeded that of healthy food outlets and supermarkets (Needham et al., 2020). Similarly, in Western Sydney, two-thirds of suburbs have no food stores at all (Morrison & Paine, 2023) and where food stores exist, unhealthy outlets outnumber healthy ones by six to one.

Food deserts present serious health consequences. Diet-related chronic conditions are prevalent in communities where food access is constrained, reinforcing cycles of poor health and inequality. The limited availability of nutritious food in food deserts translates into poor dietary outcomes for residents, driving higher rates of obesity, type 2 diabetes, and cardiovascular disease (Government of Western Australia, 2022). Studies show that access to healthy food within 800 meters of home is consistently associated with lower risks of childhood obesity (Government of Western Australia, 2022, pp. 3-4; Miller et al, 2014). Beyond health, food deserts create broader socioeconomic disadvantages. A lack of diverse food businesses stifles local entrepreneurship, reduces job opportunities, and undermines community resilience (Arup et al., 2017, p.1036). 

Current Policy Environment in Australia

The Australian Government’s National Preventative Health Strategy 2021-2030 positions food environments as central to health (DHDA, 2021). Despite this, policy gaps remain as existing legislation focuses on food safety, reformulation, and supply chain regulation. For example, the Food Standards Australia New Zealand Act 1991 (FSANZ) regulates safety, quality, labelling, and processing (FSANZ, 2025). Similarly, initiatives like the DHDA’s food reformulation program set out to reduce the sodium and sugar content in core foods (DHDA, 2023). The Food and Grocery Code of Conduct (FGCC), overseen by the Australian Competition and Consumer Commission (ACCC), governs fair commercial dealings between supermarkets and suppliers (ACCC, 2025). While these policies regulate food safety and commercial dealings, they overlook the geographic availability of nutritious food. 

Responsibility for land use planning lies predominantly with state and local governments, who, under urban planning acts, have the authority to address structural factors contributing to food deserts. For example, the City of Maribyrnong in Victoria conducted a food desert mapping assessment in 2008, demonstrating local-level efforts to understand food access (VicHealth, 2008). However, Victoria’s urban planning legislation does not mandate comprehensive assessment of food environments, resulting in inconsistent capacity amongst councils to address food deserts. 

Food environment monitoring is not yet well established in Australia. The Australian Food Environment Dashboard (A-FED), developed by Deakin University, is a tool dedicated to assessing food environments. The dashboard evaluates food composition, labelling, promotion, affordability, supermarkets, fast-food, and food settings (Deakin University, 2025). The dashboard features tools that track changes in food retail landscapes across local government areas, identifying suburbs with limited access to healthy food. This dataset is currently limited to Victorian data from 2019. Created to inform Australian policymakers, researchers, advocacy groups, and the public, the dashboard highlights areas needing action to support healthy diets.

Case Study: United States, Pennsylvania, Fresh Food Financing Initiative

Launched in 2004, the Pennsylvania Fresh Food Financing Initiative (FFFI), aimed to improve access to healthy food in underserved low-income neighborhoods by financing supermarket development (Fife, 2012). The Food Trust, a local not-for-profit, mapped food access and identified financing as the main barrier to alleviating food deserts in Philadelphia. The program brought together urban planners, economic agencies, and community advocates to address the issue (The Food Trust, 2022.; Bell & Standish, 2009). Pennsylvania lawmakers allocated US$30 million in funding between 2004 and 2006, which, combined with New Market Tax Credits (NMTC)  and private investments, created a comprehensive financing package covering various development stages (Fife, 2012; CDFI, n.d.). Over six years, the FFFI financed 88 projects across 34 counties, creating 5,000 jobs and improving food access for 500,000 residents (Fife, 2012). A 2010 social return on investment analysis found that the program generated US$2.23 billion in value, including healthcare cost savings, productivity gains, and economic benefits, far exceeding initial investment (Chirouze et al., 2010). 

Policy Options

Option 1:  Mandate state-level support for the Australian Food Environment Assessment Tool through Victorian public health legislation

As part of Victoria’s Public Health and Wellbeing Act 2008 (the Act), councils are required to submit a Municipal Public Health and Wellbeing Plan (MPHWPs) every four years. Deakin University, creators of the A-FED tool, recommend that MPHWPs place greater emphasis on strategies to improve food environments (Dangerfield et al, 2024; VicHealth, 2021). This option proposes amending the Act to mandate council participation in the A-FED tool, by requiring yearly data submission on A-FED metrics and ongoing use of the tool for monitoring food environments. An up-to-date dataset would create a consistent and reliable evidence base to identify food deserts, allowing for targeted interventions. Mandated use of this tool would further compel local councils to consider food deserts as part of public health planning.

Some councils may face challenges in using the tool, and stronger data collection alone will not address food deserts without parallel investment and policy action. However, most councils already hold relevant data, meaning mandatory submission is unlikely to demand new resources. While focused on Victoria, due to data availability, similar state-based legislative mechanisms could be adopted by other states and territories. This would promote a nationally consistent approach, given the commonalities in urban planning legislation across Australia.

Option 2: Amending state federal planning acts, such as Victoria’s Planning and Environment Act 1987, to embed food environment assessments as part of the urban planning process

Victoria’s Planning and Environment Act 1987 should be amended to embed food environment assessments as a requirement for urban developments. This would mandate food environment assessments for key planning processes, like structure plans, precinct plans, and rezoning or development proposals involving retail and commercial centres. This option would function similarly to how Environmental Effect Statements (EES) currently assess developmental impacts on nature. For established areas, amendments could require Planning Schemes and Development Contributions Plans to incorporate objectives for improving access to healthy and affordable food. The Act should also require planning authorities to consult with public health units, local councils, and affected communities when making decisions in food desert areas.

By making food access a statutory planning consideration, Victoria can ensure that equitable access to healthy food is prioritised in both new and existing developments. By basing the costing of a food environment assessment on the existing EES system, a comprehensive food environment analysis for a local government area could cost around A$2 million per assessment (WMBD, 2021).

Option 3: Provide Victorian payroll tax incentives to food retailers to establish themselves in food deserts

Adjusting the Victorian payroll tax system to support small to medium grocers and independent food retailers in designated Victorian food desert areas could encourage investment in food desert communities. This tax incentive would introduce a reduced payroll tax rate of 2% for the first three years of operation and 3.5% for the following four years, phasing support over seven years to encourage sustained presence in designated areas. Eligibility criteria would focus on retailers who commit to providing a substantial proportion of healthy and nutritious foods rather than processed items.

Tax incentives assist in reducing the financial risks for businesses looking to expand into typically disadvantaged neighbourhoods where food deserts prevail. This approach also supports local economies by creating jobs in food desert communities. Challenges to implementation would be defining clear eligibility criteria, identifying eligible food desert areas, and defining what qualifies as a healthy food offering. Administrative costs of implementing a new tax incentive could likely be absorbed within existing Victorian State Revenue Office (SRO) resources, with the primary fiscal impact arising from foregone tax revenue. Taking into account the cost of similar programs run through the NMTC program in the United States, and scaling to Victoria’s population, foregone revenue is estimated at A$4.74 million per year. This cost is likely to be offset over the long-term by improved population health and the creation of new businesses.

Policy recommendation

Option 3 would provide a tax incentive via reduced payroll tax to small to medium supermarkets, independent grocers, and food retailers that open and maintain stores in food desert areas. This financial incentive would encourage market entry into underserved communities that are typically overlooked due to higher operational risks and lower profitability. 

Rationale

By lowering the financial risks for businesses, this approach seeks to stimulate private sector investment in healthy food retail options and improve food access. Tax incentives encourage retailers to develop financially sustainable operations while committing to stocking a defined proportion of healthy, nutritious, and staple foods. Targeting retailers this way ensures food stores provide fresh, affordable food, addressing the diet-related health issues caused by food deserts.

Funding

The creation of a Victorian Food Environment Improvement Tax Incentive would not require additional budgetary allocations. Creation and administration of the incentive could be managed within the SRO’s existing resources. This incentive would result in foregone tax revenue to the SRO. In the first year of the US Government’s NMTC, more than US$80 million was allocated to support food desert neighbourhoods (The Reinvestment Fund, 2011, p.2). Accounting for inflation, this investment would be worth US$150 million today. Scaling this investment to Victoria’s current population, a comparable annual figure for foregone revenue from the proposed payroll tax incentive would be A$4.74 million. The opportunity cost of this scheme is offset in the long term as improved population health reduces healthcare expenditure. Local employment and economic activity stimulated by the creation of new businesses would also be generated through the incentive. 

Implementation

The Victorian SRO would administer the tax incentive. The creation of this incentive would require amending the Payroll Tax Act 2007. The incentive could be modeled on a previous amendment to lower the payroll tax for regional employers in 2017 which provided a clear framework for administration, eligibility, and compliance for participants (SRO, 2025). As part of the amendment, retailers seeking eligibility must demonstrate the following: 

Drawing on the structure of the NMTC, retailers would pay a reduced rate of payroll tax of 2% annually for the first three years, and 3.5% for the following four years (The Reinvestment Fund, 2011). This phased approach supports long-term business sustainability.

Monitoring and Evaluation

Success would be measured according to growth in the number of healthy food retailers operating in designated food deserts, measured through the A-FED tool. Changes in the availability and sales volumes of healthy food items reported by retailers could also be assessed. Improvements in food security, travel times for food, and dietary outcomes for target communities could be gauged through surveying. Longer-term evaluation would assess reductions in diet-related chronic health conditions.

Risks

Barriers

A key barrier is that the SRO may face operational challenges in establishing clear eligibility criteria and robust verification processes for the tax incentive. Confirming that food retailers comply with product stocking standards and verifying accurate demographic data in line with ABS statistics may be challenging. If these processes lack clarity and efficiency, eligible businesses could face uncertainty potentially affecting uptake and trust in the incentive. This barrier could be mitigated by developing transparent eligibility guidelines, verification tools, and data-sharing expectations and agreements with relevant authorities to ensure the program runs smoothly.

Risks

The geographic identification of food deserts for eligibility may fail to capture all food desert areas, potentially excluding some communities. Inaccuracies or delays in updates of the A-FED database could result in tax incentive-related decisions being based on incorrect data, potentially leading to unfair inclusion or exclusion of businesses and undermining confidence in the scheme. To mitigate this, the database should be regularly verified and include processes for appeals or corrections.

The anticipated A$4.74 million annual foregone tax revenue represents a fiscal trade-off that may be scrutinised, particularly if uptake exceeds expectations or if program administration costs increase. This highlights the need for regular performance evaluation to justify ongoing investment. There is a risk that increased availability of healthy food stores may not fully resolve food desert challenges if other factors like inadequate urban design, pedestrian infrastructure, and transport connectivity remain unaddressed.

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