Business hits back at Bollard's 'cut prices' call

Reserve Bank Governor Alan Bollard Photo / Mark Mitchell

Business leaders have bit back at Reserve Bank Governor Alan Bollard after he took a swipe at oil companies, power companies, local authorities and banks, among others, for not pulling their weight in these hard economic times.

In a speech entitled "Everyone needs to play their part" yesterday, Dr Bollard called for price drops for almost all life's essentials.

Food, electricity and petrol could all come down in price, he said.

But leaders in the major industries returned fire last night, rejecting the criticism.

Petrol companies were quick to defend their position.

Shell spokeswoman Jackie Maitland rejected the accusations, citing close to 20 petrol decreases since July. The pump price had dropped 83 cents in that time, she said.

Both Ms Maitland and Gull general manager Dave Bodger said the Government's inquiry into petrol prices this year had found the local market to be competitive, and that international prices were the main factor in setting the price here.

"I am not aware of Dr Bollard's full understanding of the oil industry," Mr Bodger told the Herald.

Claire Shaw, spokeswoman for Meridian Energy - New Zealand's largest state-owned electricity generator - said the company had an obligation to its shareholders, the Government, and the public to ensure security of supply.

"To do that, we need to perform as a business," she said.

Food and Grocery Council executive director Brenda Cutress said Dr Bollard did not need to tell the industry to pass on lower commodity prices.

The food industry had seen an "incredible" rise in commodity prices in the past year, and the New Zealand supermarket industry was "highly, highly competitive".

As about 35 per cent of consumers shopped on price alone, there wasn't a lot of opportunity for suppliers to artificially inflate prices.

"No retailer wants to hike up the price of food because they think they will make a buck."

Though the Food and Grocery Council deals with producers of processed foods, the whole food industry was at the mercy of external forces including overseas prices, transport costs and even the weather.