Spending billions on a state-owned KiwiMart is unlikely to lower food prices – Editorial
You may have noticed the Green Party wants to nationalise supermarkets.
It is promising to create a new Government-owned supermarket, called KiwiMart, if elected.
While Green Party co-leaders Chlöe Swarbrick and Marama Davidson are guaranteeing lower prices with this idea, the policy itself won’t be cheap.
The Green Party says the Parliamentary Library costed the policy at $2.8 billion. This includes the cost of the state forcing the sale of 120 existing stores and two distribution centres at $1.3b. It would also require a further $1.5b to capitalise KiwiMart as a commercially viable competitor.
That’s a hefty receipt. But Swarbrick says it’s worth it.
“Everyone agrees we need competition in the grocery sector to drive down prices, but successive governments have failed to lure one,” she said when announcing the policy.
She is right that New Zealand’s lack of competition is an issue. And this is a problem across several sectors, not just groceries and supermarkets.
The Green Party also wants to give the Commerce Commission an extra $104 million to help crack down on what it says is corporate greed and cites the commission’s report that supermarkets are earning $1m in “excess profits” per day.
This proposed funding boost would basically double the baseline operational funding and turn the Commerce Commission into the Supermarket Commission, with a bit of competition regulation on the side of the plate.
The lawyers would love it.
When challenged on the idea during an interview on Ryan Bridge TODAY, Swarbrick could provide little detail beyond the promise that things would be cheaper. How much cheaper? Who knows?
KiwiMart, she said, would also have a mandate to prioritise affordability, not profits. But without additional revenue above cost, as Bridge queried, how would KiwiMart be able to introduce more goods, handle distribution needs or advances in technology?
Who pays for any extra costs of running the scheme? Likely, it would seem, that gets passed on down to us, the taxpayer. So, either way, you’re still paying for that hefty grocery bill.
This policy instead looks more like the state forcibly acquiring billions of dollars in assets rather than a viable plan to lower food costs.
It is in theory akin to an idea floated by the socialist New York Mayor Zohran Mamdani, who wants something similar for America’s biggest city. His plan has already been controversial before a single state-owned bodega has opened.
In New York, it is proposed that staple goods subsided by the taxpayer will be available at a handful of stores. It has already led to legal action, with grocers and businesses arguing the city will distort the market and create an unfair competitive environment, while also threatenening smaller family-owned markets.
In the Green Party’s own advertising for its policy, it talks about how New Zealand makes enough food to feed about 40 million people. The suggestion being there is ample supply and therefore our prices should be lower.
However, the party conveniently ignores the fact that we export almost all our food. We do that because it is a key component, $64b in the year to June 30, of our economy. Stopping this would make us all be poorer.
According to the Situation and Outlook for Primary Industries report, that total is expected to hit $70b by 2030.
This is a good thing. These aren’t excess profits, like the claim being made against supermarkets, and we should celebrate our rural communities who create the bulk of this wealth.
The Green Party policy also ignores the fact that while New Zealand has a strong export supply of dairy and meat, we still need to import a lot of staples too, such as wheat.
Will the Government be able to import goods like that at a cheaper price? Or perhaps the next idea is large swathes of family-owned farmland being acquired by the state?