Have Your Say

Wakey, wakey everyone. It’s Monday, and another week awaits your input. It’s breakfast time, and for those who like ‘light reading’ this FB article from on might be of interest.

KiwiMart: A $6 Billion Socialist Gamble With Other People’s Property
The Green Party has correctly identified a serious problem: New Zealand’s supermarket sector lacks effective competition. The Commerce Commission has found that competition is not working well for consumers and that the major supermarkets retain 82 percent of the national market.
But identifying a problem does not make every proposed solution sensible.
The Greens’ answer is KiwiMart—a government-owned supermarket chain created by forcing Foodstuffs and Woolworths to sell 120 existing stores and two distribution centres into public ownership. The proposed acquisition and establishment cost is approximately $2.8 billion, while the complete “Affordable Kai” package would cost taxpayers more than $6 billion over four years.
This is not simply another government assistance programme. It is a substantial expansion of state ownership into a major private industry.

Changing ownership is not creating competitionThe Greens say New Zealand needs more supermarket competition, yet their plan would not initially build 120 new stores. It would transfer ownership of existing stores to the government.
That distinction matters. Changing the name above the door does not automatically create additional retail capacity, improve productivity or reduce the wholesale cost of food.
The Greens would be taking stores from existing operators and placing them inside a taxpayer-backed chain. That is a transfer of ownership, not the same thing as attracting a genuinely new competitor that brings additional capital, stores and distribution capacity into the country.

What happens if the owners refuse to sell?These would not necessarily be voluntary commercial transactions.
If Foodstuffs or Woolworths refused to sell the selected assets, Parliament would have to establish a compulsory-divestment process. Legislation could authorise court or regulatory orders requiring the sales to proceed, with the purchase price determined through negotiation or an official valuation process.
That would almost certainly create disputes over which stores were selected, what they were worth and whether the owners were being fairly compensated.
Foodstuffs also differs from a conventional corporate chain because it operates through cooperatives whose supermarkets are owned by individual members. Compulsory divestment could therefore affect local owner-operators—not merely one large overseas corporation.
Whatever people think of supermarket profits, these are lawful businesses operating under New Zealand law. Forcing them to surrender assets because the government wants to operate a competing chain would create a troubling precedent.
Investors would reasonably ask: if a government can compel supermarket owners to sell today, which industry could be targeted tomorrow—banking, fuel, electricity or insurance?
New Zealand depends upon businesses being willing to invest, construct buildings, employ workers and accept commercial risk. Investment becomes less attractive when successful assets can later be earmarked for compulsory sale.

Who pays when KiwiMart loses money?The $2.8 billion estimate may only be the beginning.
KiwiMart would require management, branding, computer and payment systems, employment arrangements, supply contracts, insurance, regulatory compliance and working capital. Integrating 120 stores taken from different businesses would be a substantial commercial undertaking.
If KiwiMart sold groceries below sustainable commercial prices, the difference would eventually have to be recovered somewhere. It could come through reduced services, pressure on suppliers, additional borrowing or continuing taxpayer subsidies.
Customers might pay less at the checkout only to pay again through taxation and government debt.
The policy also creates an obvious conflict of interest. The government would own KiwiMart, regulate its competitors, strengthen penalties for “price gouging” and decide whether prices charged throughout the sector were acceptable.
Would ministers protect consumers when doing so could weaken the value of the billions invested in their own supermarket chain?

Government ownership does not guarantee affordable pricesNew Zealand already has evidence that public ownership does not automatically place consumers first.
The Crown owns 51 percent of Genesis, Meridian and Mercury. These electricity companies still operate commercially, and government ownership has not guaranteed cheap household electricity.
Air New Zealand is also 51 percent Crown-owned. That ownership has not eliminated expensive domestic fares, service reductions or the financial risks associated with running an airline. Calling Air New Zealand a complete failure would overstate the evidence, but it remains a clear warning that government ownership by itself does not guarantee affordability, competition or consistently good service.
State ownership does not make wages, fuel, freight, electricity, maintenance or imported goods cheaper. Nor does it remove the need for competent management and sound commercial decisions.
KiwiMart would face exactly the same economic realities.

More than $6 billion has an opportunity costEvery dollar committed to this programme is a dollar that cannot also be spent on hospitals, roads, policing, debt reduction or tax relief.
The full policy includes expanded school lunches, larger food grants, increased food-bank funding, community food programmes and a legislated right to adequate food. Some of those measures may assist struggling families, but collectively the programme commits more than $6 billion over four years.
New Zealanders deserve more than a promise that such enormous spending will somehow make food affordable. They deserve credible evidence that the programme will deliver lasting savings greater than its cost.

Fix the barriers insteadThe supermarket market does need reform. The Commerce Commission has identified practical barriers, including difficulty obtaining suitable store sites and competitively priced wholesale supplies.
Government should address those barriers directly. It could free up suitable land, prevent restrictive covenants, strengthen wholesale-access rules and make it easier for new domestic or international operators to establish stores.
That would create additional competition instead of purchasing existing shops and placing politicians in charge of them.
KiwiMart is being presented as a supermarket owned by every New Zealander. In reality, New Zealanders would carry the financial risk whether or not they ever shopped there.
The Greens have diagnosed a genuine competition problem, but their proposed cure is a socialist gamble involving compulsory asset sales, political control and billions of dollars of public money.
New Zealand needs more competition—not another protected state enterprise that begins with promises of cheap food and ends with consumers paying at the checkout and taxpayers paying the losses.
The market and ownership details are supported by the Commerce Commission’s grocery findings, Treasury’s company classifications and Air New Zealand’s shareholder information.