The Government is ready to support a new entrant into the grocery market to boost competition and support economic growth, Finance Minister Nicola Willis says.
In a speech to the Waikato Economics Forum, Willis released an 80-point economic growth plan focused on education, competition, trade and investment, innovation, and infrastructure.
The Minister gave a particular warning to the supermarket duopoly, saying that Kiwis were getting a raw deal and felt ripped off. While the Government would keep putting pressure on supermarket conduct, it wants to see a third competitor in the market.
“If a new grocery chain opened up here it would deliver massive gains for Kiwi shoppers. So I’m up for actions needed to help make it happen,” she said.
“Over the past 12 months, international supermarket chains and local investors have expressed interest in entering the New Zealand grocery market. I want to help them succeed”.
However, it was difficult for a foreign company to get through complicated resource management and overseas investment rules. If they do clear those hurdles, the duopoly has landbanked much of the suitable land for new supermarkets.
Willis has told possible entrants that she was willing to remove unnecessary regulations from the Overseas Investment Act and elsewhere, make good development sites available, and to ensure they would have fair access to product supplies at good prices.
“If a new grocery chain opened up here it would deliver massive gains for Kiwi shoppers. So I’m up for actions needed to help make it happen”.
Speaking to media after the speech, Willis said the Government's arms were "wide open" to international and local competitors.
Arena Williams, Labour’s commerce and consumer affairs spokesperson, said the announcement was weak and had no new ideas.
"New Zealanders struggling with the cost of their weekly grocery shopping don’t need more vague promises from Nicola Willis, they need real action," she said in a press release.
"When Labour was in government, we took bold action to break up the supermarket duopoly. We banned restrictive land covenants, enforced mandatory wholesale access, and introduced a Grocery Commissioner to hold the industry to account. We didn’t just talk about competition, we legislated for it”.
Sue Chetwin, chair of the Grocery Action Group (GAG), said the speech was welcome but the group would be watching to see those words turn into action.
“Nevertheless this is the first plain indication the government is prepared to act over the lack of competition in the supermarket sector,” she said.
Willis should require the supermarket duopoly to divest any land or buildings they are not currently using and split up some parts of the businesses.
“Similar to how our telecommunications market was freed up in the 2000s, the supermarkets should be required to divest themselves of part of their operations so that early competition is achieved. For example, the Four Square stores under separate ownership could form the basis of a competing chain,” Chetwin said.
80-point plan
Willis also released a list of economic growth initiatives the Government will pursue as part of its focus on expansion. The 44-page document includes 80 individual initiatives.
She said the plan was to remove barriers which have held back growth, whether that is regulation, competition, or tax settings.
“New Zealand must ensure our tax settings are competitive with other countries who seek to lure our talent, ideas and jobs. We need to ensure the New Zealand tax system does not discourage businesspeople from investing in their businesses and does not deter foreign investment”.
Without going into specifics, she said she was considering a range of proposals to make tax settings more competitive. This could possibly include cutting the corporate tax rate and reforming the foreign investment funds rules, although either would require spending cuts.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.