Labour's Arena Williams argues any response to grocery sector competition should ultimately be judged on prices

By Arena Williams*

New Zealanders have been telling pollsters since early 2022 that their number one issue is the cost of living. This, above all else, was the ground the 2023 election was fought on, and the issue that National told New Zealanders they could fix. But close to halfway through the current term of Parliament, it is increasingly apparent National are unwilling to seriously tackle it. 

The Government has been actively running Labour’s successful school lunches programme into the ground, forcing more of the cost of food back on to parents when this cut-back service isn’t delivering for children. National scrapped Labour’s policy to extend 20 hours free ECE to two year-olds and have replaced it with a scheme that only delivers for a fraction of the households that National promised. They scrapped free prescriptions and half price public transport. 

And National’s number one answer to the issue of cost of living– tax cuts – was quickly absorbed into the family budget, as most people didn’t get the big numbers they were promised on the election trail. What’s clear, is National has run out of easy answers and is unwilling to do what it takes for real change. 

If the Government was serious about tackling the cost of living, then two years after they started talking about bringing down the cost of groceries they would have more of a plan than simply asking for information and advice – which is what their long-awaited big announcement turned out to be on Sunday.

Let’s not forget that during the 2023 election Christopher Luxon repeatedly belittled the role of the Grocery Commissioner and the idea that the Government should be monitoring the prices New Zealanders were paying at the checkout. But they’re yet to make any meaningful changes as we come up to the halfway mark of their term in government. 

Just as they have with the banks and with energy generator-retailers, all Nicola Willis and National has done is repeatedly put a sector ‘on notice’ or declared that their ‘cosy pillow fight’ of non-competition is at an end. The problem with these words is that they are not being followed with any serious actions. It begs the question, of whether the party of big business has any intention of actually reining in big business. 

A genuine response to the costs that the duopoly imposes on the New Zealand economy would build on the work that Labour started while in government. Labour tasked the Commerce Commission with a market study into competition in the grocery sector. On the back of that report, Labour implemented unit pricing to increase transparency for consumers, banned restrictive covenants on land that could be used for competing supermarkets, and started opening up the wholesale market. 

But as the Grocery Commissioner’s landmark report last year established, we need to go further, and we had plans to do that. At the 2023 election Labour was talking about the potential for another big supermarket operator in New Zealand to break up the duopoly and other means of increasing competition. 

That work continues now, and is guided by the following objectives. 

First, reforms need to be directed at increased competition from multiple sources. The Grocery Commissioner is undertaking further work on the wholesale market, which may include stronger measures to ensure that independent retailers are treated on equal terms with the duopoly’s own stores. 

Second, a competitive and dynamic grocery sector is not just about consumers, but suppliers as well. The stranglehold that the duopoly has over innovative new food and beverage companies is a major concern. If we want New Zealand to have more fast-growing, export-oriented businesses that capitalise on our world-class produce and clean, green reputation, then we need to make sure that these businesses have fair access to the domestic market in a way that supports their growth. 

Finally, any response to grocery sector competition should be judged on prices, above anything else. A third entrant to the market is something Labour supports, but it is not an end in itself, rather a means to bring down the prices that New Zealanders pay. The presence of another player may well take years to reach a meaningful level of competition – as is the case in Australia – and even longer before it is felt outside of the main centres. 

In that case, the Government needs to consider direct action on prices, as well as hoping that greater market competition makes a meaningful difference. 

*Arena Williams is the Labour Party MP for Manurewa and the Party's Spokesperson for Commerce and Consumer Affairs.