The ACT Party has slammed the Government's announcement on the supermarket shake-up, saying the regulations it wants to impose are going to do the opposite of what they want.
Earlier on Monday, the Government said it had put supermarkets on notice, urging them to change at pace to increase competition or be prepared for regulation.
Minister of Commerce and Consumer Affairs David Clark said the Government had rejected the three-year review timeframe recommended by the Commerce Commission in favour of an annual one and is urging supermarkets to strike good-faith wholesale deals with their competitors.
"The Government and New Zealanders have been very clear that the supermarket industry doesn't work. It's not competitive and shoppers aren't getting a fair deal. The duopoly needs to change, and we are preparing the necessary legislation to do that," Clark said.
But ACT Party leader David Seymour said more regulation isn't the answer.
"An industry regulator, more codes of conduct, compulsory pricing - only Labour could possibly think those measures would increase competition in the supermarket industry," he said.
"Chucking even more regulations on the sector is going to do the complete opposite, it will disincentivise ambitious people from entering the industry and creating more competition."
Part of the Government's plan is calling on the supermarket duopoly - Foodstuffs and Woolworths NZ - to open up their wholesale arms to would-be competitors at a fair price.
Clark gave a warning that if supermarkets don't strike a deal with competitors, regulatory measures "will make it happen for them".
But Seymour said entering the market is already nearly impossible with the current regulatory barriers.
"If it's too hard to build a house, imagine a supermarket," he said.
"We should make it easier to develop property, easier to get foreign direct investment into the country, and easier to employ people.
"It's too hard to build, too hard to invest, too hard to do business in New Zealand. If we want a bustling, competitive supermarket industry, we need to attract big players by showing them an industry they want to invest in. Instead they'll look at Australia which attracts 80 percent more foreign investment per capita."
Seymour said while there's no doubt that Kiwis are being squeezed at the supermarket, the Government needs to admit that it's the inflation that it caused that's hurting New Zealanders.
"If the Government really cared about consumers and competition, it would stop making laws that make it harder to do business in New Zealand," Seymour said.
"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, not to mention the onset of 'fair pay' agreements which will make competition even harder with all workers in a sector on the same contract nationwide."
The National Party's commerce and consumer affairs spokesperson Andrew Bayly said moves to improve supermarket competition are welcome, but the changes are window-dressing and will do nothing to solve the cost of living crisis.
"Many of the moves announced by announced by the Government in response to the Commerce Commission's market study into the grocery sector are welcome and National would support them, just as we supported legislation to remove restrictive covenants on land by the supermarket chains," he said.
"But none of the changes announced by David Clark are likely to have a meaningful impact on the cost of living for households facing the highest inflation in 30 years."
Bayly said that while the Government is keen to "look tough", its own policies have contributed to the cost of living crisis.
"Even the grocery sector is unlikely to see meaningful change on the basis of the Government's moves. A mandatory code of conduct and an industry regulator are a step in the right direction, but new entrants are not holding back from entering the New Zealand market because these are not in place," he said.
"It is essential that the building blocks are put in place to ensure we achieve meaningful outcomes. This means the establishment of a regulator that has real teeth to make enquiries and oversee what is happening in the grocery trade.
"It also means a development of a meaningful code of conduct so that suppliers are adequately compensated for their products and are not subject to undesirable practices such as enforced promotional marketing and discounting by the supermarket chains."
Bayly added that New Zealand also needs a genuine reform of planning laws, "which appear to be on the go-slow", or changes to overseas investment rules, otherwise the changes announced by the Government will be "window-dressing".
"The Government should stop trying to pass blame for rampant inflation onto others when the current problems caused by economic mismanagement," he said.
The Green Party also said while the action on supermarkets is welcome, the right to food must be the core driver of action.
"Food is a basic human right and for too long the supermarket duopoly has made huge profits at people's expense, while also not giving food growers and makers a fair deal," said Green Party commerce and consumer affairs spokesperson Ricardo Menéndez March.
"Opening up supermarkets' wholesale arms to competitors, and potential separation of their wholesale and retail arms could be a game-changer. We've seen it drive better competition in sectors like telecommunications and it has real potential to bring food prices down for people in Aotearoa."
But it isn't just fixing supermarkets that will fix the problem. Menéndez March said farmers' markets, community markets, and urban food gardens can shorten the supply chain, which reduces transport costs and emissions.
"Aotearoa has excellent conditions for growing our own food. Supporting local food security helps communities break free from the supermarket giants and their volatile global supply chains."
The Māori Authority also welcomed the Government's announcement, with chairperson Matthew Tukaki saying it is a win for the country.
"The changes announced today have been a long time coming and to be frank about it we needed to break the backbone of the supermarket industry that has profited for a long time now and the detriment to suppliers, producers and consumers," he said.
"Food prices were 7.6 percent higher in March 2022 compared with March 2021 according to Stats NZ and according to Consumer New Zealand the supermarkets are making in excess of $1 million in profits per day - in the year ended to March that is more than $360 million. No one can tell me the fat in those profits has had an adverse impact on suppliers, producers and consumers.
"I acknowledge that food prices are going up for a variety of reasons but those reasons still do not justify the amount of profit coming into the sector and tempered with the fact that the behaviour in terms of land banking has been an absolute disgrace."
Tukaki added that while there is more work to be done, he's pleased that some steps have been taken.
Following the Government's announcement on Monday afternoon, Foodstuffs, which owns New World, Pak'NSave, and Four Square, said it is committed to working urgently and constructively to implement the new policies.
"Our two co-operatives, Foodstuffs North Island and Foodstuffs South Island, are focused on delivering better value for all New Zealanders and addressing the proven issues raised through the market study. We already have a comprehensive work programme underway to achieve this, and we’re making good progress," Foodstuffs managing director Chris Quin said.
"Foodstuffs has been actively engaged in the market study process, working constructively with the [Commerce] Commission, MBIE [the Ministry of Business, Innovation and Employment] and actioning several initiatives that improve the shopping experience for our customers."
Quin added that Foodstuffs will continue to work with the Government to implement the actions outlined in its policy response.
"The market study showed that we can do more to remove the genuine barriers to market entry that are within our control and deliver better competition and value for customers, and we are committed to being transparent and accountable for New Zealanders every day as we work to do that."
