Government’s fast track supermarket plan criticised as ‘tinkering’

The Government is promising cheaper groceries by making it easier and quicker to build supermarkets, but critics warn the reforms fall short of delivering meaningful change.

Economic Growth Minister Nicola Willis says the Government will streamline the approval process for new supermarkets, reducing the consent time from around 18 months to less than a year.

She says the reforms include clarifying eligibility for fast-track approvals, establishing a single building consent process, removing restrictions on MultiProof applications for standardised designs, and amending the Commerce Act to better handle predatory pricing.

Willis is also considering whether to force Woolworths and Foodstuffs to sell off some of their assets. Speaking to William Terite on Pacific Mornings, Sue Chetwin, the Chair of the Grocery Action Group (GAG), welcomes the fast-track measures.

But she says they do not go far enough. “That's all good, but tinkering, it probably is that,” Chetwin argues.

“We don't see this as being a game changer. She is getting a consultant's report on structural reform, and I understand that it is a complicated one. But I feel that we've reached the point now that all of these things happening around the edges are nice, but unless we take a serious look at the structure of supermarkets and force incumbents to divest, then we aren't going to get cheaper prices for Kiwis at the checkout.”

Listen to Sue Chetwin's full interview below.

Chetwin says overseas companies have been discouraged by the dominance of the two major chains, which hold 80 per cent of the market. She argues that legislating for the structural separation of retail and wholesale is the fastest way to greater competition.

Labour’s finance spokesperson Barbara Edmonds agrees that the reforms lack urgency. In an interview with RNZ, Edmonds echoes Chetwin’s sentiments, saying that while the changes are sensible, immediate action is necessary.

“It won't make any immediate difference for New Zealanders who will keep paying high prices at the checkout today. The Government has basically waited two years to come up with their announcement today, which we still don't have a bill or piece of legislation until possibly November. I'm not sure why the Minister of Finance is dithering, but Kiwis can't wait."

Barbara Edmonds. Photo/Supplied

The debate comes amid mounting cost-of-living pressures, particularly affecting low-income families. The 2023/24 New Zealand Health Survey found that 54.8 per cent of Pacific children lived in households where food ran out often or sometimes in the past year, compared with 27 per cent of all children.

Over half of Pacific children lived in households that had to eat less because of lack of money. Last year, Health Coalition Aotearoa pointed out that these figures are “devastating”, linking them to rising housing and utility bills that leave families with less money for food.

Stats NZ reports that housing costs rose 8.3 per cent in the year to June 2024, with average weekly rents increasing to $465.50 and mortgage payments to $658.20. Nearly 20 per cent of households spent more than 40 per cent of their income on housing costs, with Pacific families being the hardest hit.

Sue Chetwin, founder of the Grocery Action Group, says breaking New Zealand’s supermarket duopoly with a third player, although difficult, is needed. Photo/Unsplash/Facebook

About half of all Pacific people lived in households with incomes in the bottom 40 per cent of the population.

Chetwin says the cost of groceries is closely linked to wider economic pressures. She believes that bold reforms, including forcing the divestment of supermarket assets, are the only way to provide relief to households.

“In Australia, the government's got an enquiry or has had enquiries where the two biggies have got 60 per cent of the market. So you can imagine from the perspective of an international player, where do they start? They've got to get up to scale basically within the first 18 months of setting up here.

“The problem in New Zealand is not the lack of bricks-and-mortar stores, because we have enough supermarkets essentially, but what we don't have is competitors. Those competitors are looking at New Zealand and saying, ‘How do we break that’? Of course, the incumbents with 80 per cent of the market that is a very high barrier to entry.

“A structural separation, a legislated separation, is the fastest route for us to see more competition and cheaper prices. If you lowered the barriers by doing that, you might even attract a fourth player.”