Ministry drives locals to the wall

Whiteware purchase scheme diverting trade from retailers

The Kaikohe Business Association has cried foul over the Ministry of Social Development's preferred supplier regime for whiteware, which it says has severely impacted on local retailers, potentially to the point of liquidation.

The association says it is inconceivable that a government department should be allowed to operate in direct competition with retail businesses that not only pay tax but were effectively paying the wages of their opposition.

Beneficiaries who applied to the MSD for loans to purchase whiteware were forced to purchase their appliance through the ministry, which passed the goods on to the buyer at cost.

The MSD has an unfair competitive edge as they do not have to take overheads like rent, wages, electricity and other related costs into consideration when determining the selling price of the goods, and they don't have to show a profit," association secretary Elodie Vujcich said.

"The government/taxpayer is subsidising unfair competition in the market."

Kaikohe's whiteware retailers had lost 30 to 60 per cent of their income because customers who had previously bought locally could now buy only through the MSD-operated system. Some of those businesses could face liquidation, which could have a domino effect, resulting in their employees becoming beneficiaries themselves, adding to the burden on the taxpayer. People would also have to travel to larger centres to buy what they needed.

"Kaikohe residents would be forced to travel at least half an hour to a Noel Leeming store. West coast residents from Omapere would have to travel for one and a half hours. There is no public transport. This could well lead to many people moving to larger population centres, adding to housing pressures there and to even more depressed small towns," Mrs Vujcich added.

"There may be short-term financial gain from a national perspective, but social considerations and higher costs for individuals have not been considered."

Ministry spokesman Rob Brown said the preferred supplier initiative had been part of the government's 2013 budget, with whiteware the first commodity to be supplied. The ministry now had the same arrangement with optometrists and opticians in some urban areas.

People could still buy outside the programme if they did not need assistance from the ministry.

The former process had been cumbersome and time consuming for applicants and the ministry alike, the MSD having had little "visibility" of the item purchased, its quality or price. The preferred supplier system improved control over price, reduced the buyer's debt, reduced complexity and provided a new, quality product that would last for many years.

The buyer also benefited from free delivery and installation, removal of packaging and if necessary the old appliance, support via a 24/7 customer care help desk, a two-year warranty and a full after-sales repair service.