Speech: David Seymour to Aurecon | Supermarkets and Regulation

28 September 2026

Introduction

Thank you for having me here today at Aurecon. Despite being a politician, I promise you, I come in peace.

Not all of us get our kicks from attacking successful businesses. In fact, I want to talk about quite the opposite. Aurecon employs more than 800 Kiwis, providing work in all different parts of the country on projects that will make a difference in peoples’ lives. Whether it’s the Manawatu Highway, or your work on the City Rail Link.

Business brings together four types of people. Investors have their capital. Workers have their time and talents. Entrepreneurs have their dreams and ideas. Customers have needs they cannot meet alone. They come together in voluntary cooperation to trade value for value, getting stronger together. Business, at its core, is a beautiful thing that should be respected more than it often is in our culture.

Sadly business, and some sectors in particular, have become whipping boys for a frustration that runs deep in New Zealand.

In almost every poll, every focus group, issue number one is the "cost of living." I can see why.

People feel poorer than they used to. Wages have barely kept up with inflation for the past decade. There are people who have less money left at the end of the week than they did in, say, 2019. They're tightening the belt, cutting the small luxuries - the holidays, the concerts, the family dinner out. Because the essentials are too expensive: groceries, fuel, power, the mortgage.

They’re understandably angry at the areas where they see their pay check used up. The checkout, the pump, the rates bill.

And that feeling of anger and helplessness creates a vacuum. Nature may abhor a vacuum, but politicians love one.

But this is an engineering consultancy. I haven’t been an engineer for nearly 20 years, but some things are fundamental. Define the problem, design possible solutions, assess their effectiveness, elegance, and efficiency, then recommend the best possible solution.

A fourth ‘E,’ Ethics is also critical in engineering design. Sometimes the best engineering solution is unconscionable. When I was at engineering school the Ford Pinto saga was the most memorable case study. If you know the story, Ford’s engineering solution may have been elegant and efficient, perhaps even effective for their purposes, but it was unethical and people lost their lives as a result.

These are the criteria I apply to policies in politics. Do they address the problem? Will they work effectively and efficiently? Will they cause outside harm despite solving the problem?

Defining the problem

The cost of living crisis is often described as a problem of high prices, but that is only half the story. As I said earlier, people are frustrated that wages have struggled to keep up with inflation. The real problem is productivity, it is the ratio between the time taken to earn money, and the things it can buy.

New Zealand’s real problem is that productivity growth has been an anaemic 0.2 per cent per year for the past fifteen years. Not everyone moves forward at the same rate, so at that level, it is easy for many people to be going backwards. You can’t blame people for asking, ‘is this system rigged against me?’

The productivity problem is what businesses attempt to solve. Entrepreneurs organise people and capital to produce more for customers. If they do it well, they make a profit, but soon others catch on and every business needs to do better.

So goes a virtuous circle of creative destruction, better ideas come along, people produce more, they take home more money, and there’s more to buy. The long-term evidence is indisputable. After 200 years of the capitalist system, people live twice as long, over 80 now compared with 40 in 1800. You don’t have to be a card-carrying capitalist to admit, living a whole extra life on average is pretty good progress.

The problem is that politicians have entered a phase of political panic. Every week we hear another policy that fails to address the problem of poor productivity growth and will in fact make it worse.

Other parties' solutions

National's promise to break up Foodstuffs is just the latest entry in a long list. It has caught the most attention because that party traditionally holds itself out as a sober and sensible broker of economic policy. As one supporter of the party put to me last week, “if they’ll abandon their principles so easily on supermarkets, what principles can I trust them to hold?”

They are not the first Party to say they’ll ‘break up the supermarkets.’ New Zealand First really were fast to that one. Labour want to ban "price gouging," presumably a large bureaucracy will be formed to work out a fair price for an off-season lettuce in a remote part of the country. The Greens want to expropriate supermarkets and run them as a state supermarket chain. They point out the government also runs an airline so it’ll be ok, as if that helps their cause. Others want to split the gentailers. Tax the banks. Buy the banks. Start a state-run Māori food program.

It is a good response to focus groups, people are angry at the people who are taking the cash off them in return for goods. Of course, they are only focusing on the cost half of the equation, and they are creating a sense of political panic in the process.

Another school of thought does focus on the income side. It has become popular to say ‘you’re hard up, so we’ll introduce a new tax on someone you don’t know or like and give you their money.’

I'll note two things about every single one of these policies. One. none of them came from ACT. We stand on the side of proper problem definition and ethical policy making.

Two. They all engage in zero-sum thinking. They assume you want to take from someone else using regulation or tax to solve your problem.

Instead of addressing the underlying problem, they will destroy the confidence to invest. They will undermine confidence in the future. Why invest and innovate - the activities we need for productivity growth - if you could be one bad political focus group away from having your business attacked by your own government?

The cost of living is a real problem, not just a political one. But it deserves a real solution, not just a political one.

Supermarkets – the reality

Take supermarkets.

Two major players make up 82% of the market. Independent, Asian and Indian grocers make up the rest, and that share is growing. For comparison: Finland, population 5.6 million, has two players at 82.5% market share.

What’s more, Supermarkets do not have a monopoly on a single item. Butchers, bakers, greengrocers, chemists (including large chains), hardware stores and liquor stores compete with supermarkets from every angle. It is wrong to say New Zealanders have only two options, we actually have many.

So I question the story that New Zealand has some unique duopoly strangling competition.

Recently published data shows that supermarket prices did not in fact rise after the much-maligned merger of the early 2000s. In fact, New Zealand prices have tracked New Zealand and the OECD since the early 1990s. Economist Shamubeel Equab, not known for his right-wing views, said “overall food prices in New Zealand versus advanced economies seem to go on kind of the same [track]. It doesn't mean we're not all being gouged but we can't see it in the data."

Woolworths makes 1.8 cents profit on every dollar you spend. Foodstuffs makes about 3.6 cents. Spend $100 on groceries, and Woolworths pockets $1.80, New World $3.60.

The recent report released by the National Party suggests consumers could save 1.9 per cent over 20 years. That is the same as food price inflation in the year to July anyway. The authors of that report were careful to leave themselves lots of wiggle room to escape their conclusions in the future, even saying that whole break up might be impractical, and might push prices up if a couple of their assumptions are wrong.

There are three factors that influence the price of food more than anything.

First is the state of our finances, which is why ending wasteful spending and balancing the books is job number one for the next Government. I don't love bringing Labour into this, but over COVID they printed and distributed tens of billions of dollars, while simultaneously slamming the brakes on the actual economy and the generation of real value. Money was printed, but output didn't increase. Prices went up. Wages still haven't caught up. Everything feels expensive because, relative to your wage, it is. The real problem is a lack of productivity growth. We'll come back to that.

Second - the war in Iran has sent oil prices climbing, and that hits every link of the global food chain. Diesel moves the trucks, tractors and ships that get food from the world to your New World in Upper Hutt. Oil is the base ingredient in the plastic that keeps your food fresh. The fertiliser that grows your apples got more expensive too. A higher oil price isn't just three bucks at the pump; it's everywhere, and it shows up at the checkout.

Third, and this underlies everything - New Zealand is enormous. Bigger than you think: It is 1,327km in a straight line from Kaitaia to Invercargill. That is the same as the distance from New York to Florida. New Zealand is the same size as the Eastern Seaboard of the United States, where over 100 million people live. We are thinly spread, dotted with small rural towns, split down the middle by a mountain range and across the middle by the Cook Strait. And geographically, we're about as remote as a country can be - next stop, Antarctica. Building and running supply chains here is expensive and complicated by default.

This is the economic reality we're working with. Honestly, I'm grateful so many people have taken on the challenge of supplying groceries across this country and succeeded. Nearly every Kiwi can get fresh food a short drive from home.

Reality has never stopped political opportunism though. This election campaign, sadly, has had more than I can recall.

National and New Zealand First want to break up NZ-owned Foodstuffs. Labour wants to ban "price gouging", whatever that means, and split up both Foodstuffs and Woolworths. The Greens want to open their own government supermarket. Te Pati Māori wants race-based supermarkets. I wish I was joking.

It's hard to overstate how bad these ideas are.

Foodstuffs and Woolworths have spent 104 and 97 years respectively building logistics, procurement and distribution networks that run through this country like arteries. Foodstuffs, that’s New World, Pak'nSave and Four Square, is owned by local businesspeople who benefit from sharing those networks. That's economies of scale. That's how the shelves stay full and prices stay lower than they'd otherwise be.

So ask yourself: what happens if you cut that network in half?

You lose the economies of scale. Every distribution centre now covers a bigger patch of country. Hundreds of millions get spent building duplicate warehouses and duplicate head offices. Every one of those dollars lands back on your receipt. I think it’s insane to think cutting a complex organisation in half makes two, more efficient organisations. If you cut Roger Federer in half, you don't get two better tennis players.

And there's a worse cost. It tells every Kiwi entrepreneur, and every foreign investor watching, don't bother building here. Grow a successful business in New Zealand, and if a politician spots votes in tearing it apart, they will. Why would the next great innovator choose that?

It goes far beyond the supermarket sector. If we want more Rocket Labs, more Halters, more Sharesies, we won’t get them by discouraging investment. 

I also don't accept the premise that this market isn't competitive. Competition is exactly what's given us click and collect, and grocery delivery. New supermarkets keep opening, both major players disruptive independents. Kai Co in Christchurch is one example. So are the Asian and Indian grocers where you can buy international produce, or dense, protein-rich lentils for a couple of dollars a kilo.

What I'm saying today may not be popular. But it's true. These policies aren't just bad economics. They're unethical. They undermine the rule of law and property rights in this country, and they betray the basic idea of free enterprise. And that's exactly why I was so disappointed to see National shamelessly join the pile-on. The good news is we’ve recently welcomed them back to the church of no new taxes, and the church of free enterprise is also a forgiving one.

ACT's alternative

It’s not all doom and gloom, I still believe we can overcome challenges like this.

Firstly, we need to grow productivity.

New Zealand has had one of the worst productivity records in the OECD for half a century. Productivity is defined as how much value we create per hour of work. And when we don't grow that, wages don't grow either, no matter how many politicians promise otherwise. You cannot regulate your way to being richer. You can only produce your way there.

Our problem is that it is too hard, too slow, and too expensive to compete, to invest, and to build. If you want lower prices, higher wages, and more choice, you don't do it by smashing the businesses that exist. You do it by making it radically easier for new ones to enter and challenge them.

The biggest barrier to a third, fourth, or fifth supermarket chain in New Zealand isn't Foodstuffs or Woolworths. It's the government.

Here’s what it actually takes to open a new supermarket in this country.

You're not dealing with one regulator. You're dealing with dozens. The Commerce Commission. MPI. WorkSafe. IRD. Customs. NZTA. The Privacy Commissioner. Police. MBIE. And then your local council, if you want to operate in more than one town, that's not one council, that's every council, each with their own rules, their own forms, their own timelines, their own opinions about your car park.

Hundreds of regulations. Dozens of regulators. All before you've sold a single tin of beans.

And then there's resource consent. To open one new supermarket in New Zealand, on average, you are looking at two years and a million dollars, before you've laid a single brick, hired a single check-out operator, or sold a single litre of milk. Two years of holding costs, legal fees, consultants, and uncertainty. A million dollars just to get permission to try.

Now ask yourself: if you were an investor with capital to deploy, and someone told you "come to New Zealand, we'll only take two years and a million bucks before you're allowed to compete" - would you? Or would you take your money somewhere it's wanted?

This is why we don't have more competition. Not because Foodstuffs and Woolworths are hoarding it. Because we've built a regulatory moat around them so wide that nobody sane wants to swim in it.

So here's what we can do

We can make it easier to open a supermarket in New Zealand - not by subsidising a state-owned one, not by chopping up the ones that already work, but by tearing down the actual barriers stopping new ones from opening.

ACT would create a one-stop consenting shop for new market entrants - a single point where a business looking to open, or open multiple sites, can get their consents, their liquor licences, their approvals, in months, not years.

Right now, if you want to open five stores across five councils, you don't deal with one process, you deal with five different sets of arbitrary visual amenity rules, five different liquor licensing committees, five different interpretations of the same national policy statement. One council wants a certain roofline. Another wants a certain number of car parks. Another has an opinion about your signage. None of this makes your groceries cheaper, safer, or better. It just makes them slower and more expensive to sell.

While we’re on liquor licences - right now they can’t be granted until supermarket construction is completed. This forces hearings into a mad panic for the week or two before stores open. Police and Health government officials have opposed supermarkets getting liquor licences. Police have even issued temporary alcohol sale bans to supermarkets because the self-checkouts were deemed promotion of alcohol outside of the designated areas. ACT’s one stop shop will put a stop to that too.  

A one-stop shop means one process, one timeline, one government working with you instead of forty separate hurdles. It means the next entrepreneur who wants to build the next Kai Co doesn't need a team of consultants and two years of patience just to get out of the starting blocks.

We’ll also make changes to product labelling laws. Right now, anyone selling imported food not labelled for New Zealand has two options. They can do an expensive run of product packaged specifically to our regulations, or they need to unload pallets, open each box, and stick nutrition labels over each product individually. That’s why the Dr Pepper you get at the dairy has a little white sticker over the nutrition panel. How absurdly costly and time-consuming is that, for a process that gives you all the same information formatted slightly differently.

ACT will allow food labels for trusted regulatory systems like UK, EU and US by default. This will lower the barrier to entry for international supermarkets, who will no longer need to do expensive runs of products specifically for the tiny Australasian market to open stores. ACT will roll out the welcome mat.

And you might say “so your answer is to help supermarkets?” Well… yes. When you go shopping it’s not you versus the supermarket. Both sides want lower prices. They want lower prices than their competitor, you just want lower prices. If the government raises the cost of supermarkets doing business, that cost is passed on to you. If the government lowers the costs of doing business, you save money.

Plus, lowering the costs of doing business is exactly how you get more competitors to the two big incumbents keeping them honest.

This is the only path forward that leads somewhere we actually want to go as a country.

Conclusion

I've spent this speech talking about supermarkets. But in a way this isn’t really a speech about supermarkets.

It's a speech about how we think about every business New Zealanders rely on.

The same logic applies to the gentailers. The same logic applies to the banks. The same logic applies to landlords and farmers. Every time prices rise and people feel the pinch, a politician will be along shortly to tell you it's because some company, somewhere, is getting away with something - and that the fix is to break it, tax it, or replace it with a government-run version.

That is not a plan for prosperity. It’s a race to the bottom until one day we look up and there's no one left willing to invest, build, or compete in this country. And by then it's too late to undo it.

There is another path and it’s one ACT will be making the case for over the next forty days and beyond. A path where we make it easier for new businesses to arrive and join a competitive market, where we have productivity growth that actually lifts wages, where the teenager sweeping the floor in the Four Square down the road has the aspiration that one day they’ll be the one in the owner’s office giving another young Kiwi an opportunity.

We need to step back from the abyss of madness where politicians fit up a different scapegoat every year to blame for your problems, hoping your vote with give them another three years to think of a real solution.

We need to call out political opportunism for what it is, naked self-preservation masquerading as moral principle. We need to end the state of panic that is engulfing the political class, and rediscover belief in the future.

We need to think like engineers. Define the problem, design the solution, and pick the most effective, efficient, and elegant solution with ethics in mind.

Wages aren’t keeping up with inflation. We need innovation and investment to boost productivity. We’re all facing the same basic problem so let’s stop picking on each other.

The best win we can have is to remove stupid rules that stop investment and innovation. Only then will we discover win-win solutions that make it easier to afford the weekly shop, and everything else we need.

We’ll also achieve something else. A sense of confidence and belief in the future. A sense of togetherness that our fellow New Zealanders don’t sweep the floor and stack the shelves to rip us off, they’re doing their best, too. If we can solve a problem like this in a mature way, there’s no reason we cannot be the wealthiest, most confident little country on earth.

That's the future ACT is fighting for.