Preying on desperation

The Haps

Parliament returns from a school Holiday recess, where ACT has been holding packed public meetings. Thank you to all who came to hear from the Party and share their views. David Seymour’s next meeting is in his hometown of Whangarei on May 1, please register here if you’d like to go.

James Christmas is the Party’s candidate for the Tamaki electorate. Everyone who meets James says he is a) very bright and b) very likeable. He’s going to campaign like hell in the Tamaki Electorate to hold it for ACT.

Preying on desperation

In the good life, each year brings a little extra possibility, more money left before payday and new things to do with it. The opposite is also true, and no wonder most of the world is grim. The cost of essentials eats up any money left over and possibility along with it.

Nothing’s more essential than food, and food prices have risen 30 per cent in the past five years. A lot of that increase was in 2023, when the Ukraine war and Labour’s excesses combined to drive food prices up 12.1 per cent for one year. Since then it’s returned to 3-4 per cent per year.

Enter the politician’s syllogism:

1. something must be done

2. this is something

Therefore: this must be done.

People are desperate after five years where wages barely kept up with inflation. Something must be done.

People see food prices at the supermarket, so that’s the place something must be done if you want their votes. ‘Breaking up’ the supermarkets is something, so that’s what must be done.

So goes the proposition of separating New World from Pak‘nSave. They won’t touch Woolworths because it’s Australian owned and impairing such an investment would seriously damage the Government’s most important international relationship.

So it’s really Australia First, but what of the supermarket chain that is owned by people up and down New Zealand?

Foodstuffs is a co-op where each location is owned by locals. We have met these people, worked with one once. More often than not, they swept the floors, fell in love with the industry, moved half way across the country to run a Four Square, maybe worked their way up to a New World, ground it out. Quite different from the centrally-owned Aussie corporate that is Woolworths.

Those are the people proposed to cop it for five years of food price inflation they didn’t cause. It wouldn’t be so bad if the ‘solution’ worked for consumers , but it will make things worse for them, too.

Separating New World and Pak‘nSave won’t do much for competition, because they’re not direct competitors. They largely serve different customers in different locations. One is high end, the other discount, both compete with Woolworths from opposite sides of the market. Raising competition by separating them is like trying to make BMW compete with Kia.

The two share Distribution Centres and all the office bureaucracy required to be in business. Presumably, splitting up Foodstuffs will mean they need to duplicate their back ends, like a newly divorced couple setting up two households for the kids. This will make groceries more expensive.

Together they have more purchasing power, divided they will have less. Unilever, Procter & Gamble, PepsiCo, and all the other global supermarket suppliers dwarf New Zealand chains. They make Foodstuffs look like a corner dairy in world terms. Splitting into two supermarket chains will, if anything, reduce their leverage against the multinationals who supply most of their product lines.

Altogether the winners will be the Aussie competitor, and global suppliers. The losers will be the supermarket chain that’s Kiwi owned, and supermarket customers.

It is difficult to think of a worse way to address people’s concerns about grocery prices. It is preying on people’s agony, selling a solution that won’t actually work. It’s the worst kind of politics that takes people’s trust and leaves them only buyer’s remorse and frustration.

We’ve been doing this too long as a country. Farmers, Landlords, Licenced Firearm Owners, Petrol Stations, Banks, Supermarkets, they’ve all suffered pile-ons by one Government or another to scratch a political itch, usually when the price of what they sell spiked for reasons having nothing to do with them.

What all the pile-ons have in common is not that they didn’t work, but they failed spectacularly. The war on landlords made rent go up, because tenants actually need landlords (and vice versa). The Fuel Market study did nothing but add silly bureaucracy, when the price of fuel is driven by tax and the international market (painfully obvious at the moment).

Real solutions to high costs are harder. Replacing the Resource Management Act with a law based on property rights is hard, but we are doing it. It should never take 28 years to consent a new supermarket, like the Wairau Rd Pak‘n’Save in Auckland did.

Fixing labelling laws so more foreign goods can be sold in New Zealand stores will help get prices down. We are too small a market to be picky about labels on items that are perfectly good to sell in countries wealthier than us. ACT’s Andrew Hoggard has done exactly that.

Making it easier for overseas investors to put in the money that any serious supermarket play would require – David Seymour is doing that in his role responsible for overseas investment policy.

These are some of the hard things needed to get more affordable groceries into the country. If it was easy, it would be fixed by now. Preying on people’s agony won’t actually help.