GST on food to stay but Jacinda Ardern wants inquiry into high food prices

Labour leader Jacinda Ardern takes part in a live Q+A with NZME Focus presenter Tristram Clayton. Photo/Jason Oxenham

Taking GST off fruit and veg is not on the table for Labour - but party leader Jacinda Ardern does have high food prices in her sights.

Ardern said if elected she wanted to look at why food in New Zealand cost so much compared to other countries, particularly Australia.

Speaking to NZHerald Focus this evening for a Facebook Live Q+A session, Ardern said Labour had already looked at the issue in 2011.

Removing GST on fruit and vegetables was a key plank of the party's election campaign that year but it was later scrapped.

"It does create complexity," Ardern told Focus presenter Tristram Clayton. "We've got a very straightforward GST system which makes it very easy to run."

Labour was not proposing any changes to GST, Ardern said.

"I think one of the issues is that you can't necessarily guarantee, if you take it off, that food prices will stay down."

Ardern said removing GST from some foods would complicate what is currently a very simple tax system. Photo/Jason Oxenham

"What I do actually think we should look at is why our food prices are so high, relative particularly to Australia - I think that's the question we should be asking ourselves."

Yesterday Herald business journalist Liam Dann said he was mystified that food prices were not an election issue.

He suggested Opposition parties were reluctant to advocate for government regulation of food prices, which was why the topic had not been raised by Labour.

Ardern told Clayton high food prices should be looked at but "when you've got the levers of government it's much easier to review some of these issues. It's one of the reasons I want to get out of Opposition."

In 2011 Labour ran on a policy of removing GST from fruit and vegetables under then-leader Phil Goff, but it was not a part of the party's 2014 election campaign.

Other parties still have policies on GST on food. The Maori Party wants GST taken off milk, fresh fruit and vegetables, while NZ First wants the tax taken off "basic food items".

The Opportunities Party recommends a three-tiered tax system for foods that are grouped in to good, neutral and bad categories. Junk food would get a 20 per cent tax, which would help subsidise removal of tax on healthy foods like fruit and veg.

Both Australia and the UK have the equivalent of zero GST on fruit and vegetables.