“The Government’s expected announcement that it will force supermarket groups to supply wholesalers shows they completely misunderstand why groceries are expensive,” says ACT Leader David Seymour.
“Only Labour could think more rules would increase competition, when those rules will require them to price perishable goods in highly variable circumstances. In reality they’re disincentivising ambitious people from entering the industry and creating more competition.
“The Commerce Commission rejected this idea when it was tasked with investigating the grocery sector, stating the regulation could reduce rather than improve price competition and introduce “significant additional costs”. The Commission also said it had “little support” from submitters and was subject to “well-founded” concerns from the two supermarket chains.
“Whether the Government is capable of executing such a plan is another question. In the supermarket sector there are thousands of products that range in cost and quality by the day, policing a regime where these products are distributed in a fair and equal fashion has potential to be a bureaucratic nightmare.
“For the regime to work, the Commission will have to ensure that groceries are sold for a ‘fair’ price to potential distributors. How much should six pottles of yoghurt sell for? Does it matter how close their expiry date is? What if the location is more or less remote? Does the size of the order count? What about the condition, damage and refrigeration? Policing supply contracts for Fast Moving Consumer Goods is something no Government would try if they thought about it.
“Faced with this bureaucracy, new players considering entering the New Zealand market will be dissuaded. What will happen to Costco, will they now, having invested into New Zealand, have to be a distributor? If not, how can an exemption be justified? If yes, what message does that send to any other entity even considering entering the New Zealand market?
“This is just another dangerous stunt policy that is made for PR but sure to backfire. Labour wants to distract from the real cause of rising food prices – rampant inflation caused by their economic mismanagement.
“ACT agrees that New Zealand needs more supermarket competition, but in order to achieve this we need to make New Zealand an attractive destination for investment. ACT would:
- Repeal and replace the Resource Management Act to make it easier to build new supermarkets, logistics infrastructure and farm improvements
- Exempt OECD members from the Overseas Investment Act, allowing foreign supermarket chains to invest in New Zealand with certainty.
“We’d also make our society productive again by tackling the labour shortage that is reducing production and pushing up prices. We’d do this by dumping the labour market test, industry specific wage requirements, and transfer restrictions. Foreign workers should be able to work for accredited employers so long as they are employed consistent with New Zealand law.
“If we want more competition, it must be possible for investment to come into the country, sites to be developed for property, skilled people to come through the border, and new employers to employ people without endless bureaucracy. It’s time to move on from toothless stunt policies and start thinking practically to address the cost-of-living crisis Kiwis are battling.”
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