Fuel or groceries? Parents forced to decide
OPINION: An MP from each side of the House gives their views.
In the red corner
Ihave seen mixed views on the Commerce Commission’s study into the grocery sector. Some believe an opportunity has been missed, others feel that the commission’s initial draft report had more teeth, and there are some who think the commission landed in about the right place.
My view, however, is clear: New Zealanders deserve a fair deal at the supermarket, and we should not stop pulling levers until this is a reality. This is too important to not get right on behalf of Kiwis. There is a serious case for change when it comes to competition in the sector.
Our supermarkets are making more than double what the Commerce Commission considers to be a normal rate of return on capital for grocery retailing. And New Zealanders are paying more at the checkout than most – out of 38
OECD countries we’re the fifth highest in terms of grocery prices.
With the global energy shock caused by the war in Ukraine and the inflation spike caused by Covid-19, it’s extremely tough right now for families in the middle and on low incomes. That’s why the Government is acting immediately to address the commission’s recommendations and to ensure that fairer prices are delivered.
The commission has found the freeing up sites for supermarkets is important for facilitating direct competition with the existing major supermarkets and that currently, restrictive covenants over land are a major barrier to supermarkets accessing new sites.
We want to ban this practice and see further competition. To address imbalances in bargaining power between the major grocery retailers and many of their suppliers, we are exploring how a code of conduct could be developed. And, to provide ongoing oversight of the sector, we are looking at the role a dedicated regulator for the grocery sector could play.
Given the importance of achieving healthy levels of competition in our grocery sector, the Government has not ruled out some of the other options that Commerce Commission tabled while developing its report.
If we are not satisfied that Kiwis are getting a better, fairer deal from the changes recommended in the report, we will look at different levers to pull.
Since 2017, we have worked to lift incomes and tackle the cost of living, including introducing the Families Package, raising the minimum wage and cutting fuel excise.
There is no silver bullet, but we will keep taking steps to help families get through.
In the blue corner
T he Commerce Commission releasing their report into the duopoly in New Zealand supermarkets is long overdue, and I welcome their findings.
Resetting the framework in which new supermarket or grocery chains can enter New Zealand is exactly what we need to do, and removing the various barriers to do this should be encouraged. The likes of the Overseas Investment Office and the tight zoning laws are all restrictions which need to be eased in order for overseas grocery companies to open up in New Zealand.
International retailers like Aldi and Lidl may well be keen to enter the New Zealand market, but it’s simply not worth their time and energy when we have such draconian restrictions on new entities entering the country and supplying goods.
The underlying reason that the price of butter is up 35 per cent and the price of eggs are up 33 per cent since 2018, isn’t just down to our supermarket duopoly.
The core issue fuelling increased prices of groceries and other essential goods is the growth in inflation due to poor fiscal management by this Government.
In the past 12 months it has got significantly worse, and Kiwi’s are feeling the pinch. Prices are rising twice as fast as wages and the average Kiwi family is worse off than they were a year ago. The cost of living crisis that we are currently facing is becoming truly dire.
We have parents who need to decide whether or not to fill their car up, or buy essential groceries. People are struggling to pay their rent and students are having to work multiple jobs to try and keep their head above water.
This is not the New Zealand we want, where we are forced to make decisions on which necessities we can afford and which we have to go without.
New Zealand needs to be seen as being ‘open for business’ to the outside world. We are now very much at the tail end of the pandemic, and how the Government react to this will determine how comfortable, or not, many New Zealanders lifestyles are going to be in the next five to 10 years.
The lack of competition in the supermarket sector needs to be fixed and a more competitive and dynamic grocery sector would be of huge benefit to New Zealanders. The Commerce Commission have proposed well-balanced recommendations, but the cost of living crisis facing Kiwis is actually the real killer.
Budget 2022 is only two months away, and the Government needs to look Kiwis in the eye and explain why they are paying so much for groceries and what they will do about it, rather putting sole blame on a duopoly that has been around for years.