Election 2020: Labour takes aim at supermarkets over grocery prices; pledges investigation into cost of building supplies

Labour has promised to launch investigations to make sure New Zealanders aren't being ripped off when buying groceries and building supplies.

Jacinda Ardern said a recently completed market study into fuel costs had shown prices were too high at the pump - and now two more studies would look into supermarket pricing of groceries, and building supplies.

Labour says there is "some evidence to suggest competition problems do exist in these markets".

"Groceries are one of our most regular expenses, and buying or renovating a home is the biggest investment many of us will make in our lifetime, so we want to make sure pricing is fair," said Ardern, who is in Nelson today.

"We want to ensure the cost of living in New Zealand is fair and these market studies have the potential to help, by providing us the information we need to act."

However, a Countdown spokesperson said the company "works hard every day to make food as affordable as we can for our customers", and the NZ grocery market was intensely competitive.

"This can be seen by the huge array of choice that is available for customers - including supermarkets, specialty stores, fruit and vege shops, butchers, meal subscription services and more.

"We welcome the opportunity to demonstrate this in an open and transparent way, and will cooperate fully with the Commerce Commission."

And in a joint statement, Chris Quin, chief executive for Foodstuffs North Island, and Steve Anderson, chief executive for Foodstuffs South Island, said the industry had worked hard to make sure New Zealanders had access to fresh food during the disruption caused by Covid-19.

"We are, of course, fully open to a Commerce Commission market study that takes into consideration the retail grocery sector and we are committed to doing all we can to ensure any future study is effective for the future benefit of all New Zealanders."

Asked if New Zealanders were being fleeced at the checkout, Ardern said, "I'm not going to predetermine that one", but it was important to check if prices were fair.

Consumer NZ chief executive Jon Duffy said the announcement was a great step forward, however, it would like to see whoever wins the election using the same initiative.

"The Commerce Commission can initiate inquiries on its own right, as well as being instructed to do it by the Government," he said.

"It would be really good if the Commerce Commission, regardless of who wins the election, takes this signal and pushes forward with these market studies, even if Labour is not part of the next Government."

Duffy is looking forward to seeing whether the inquiries find out if New Zealanders are paying a fair price for both our groceries and our building.

During Covid restrictions, there was feedback from customers who were concerned about prices, she said, and there were concerns about the market before that period.

Our prices were often compared to Australia, where groceries seemed to be cheaper.
Ardern wouldn't be drawn on what could be done if the Commerce Commission found problems with prices.

"This is a chance to get beyond just products, and say, let's look at the whole market."

Commerce and Consumer Affairs spokesperson Kris Faafoi said New Zealand had one of the most concentrated grocery retail sectors in the world, and a market study would answer concerns raised that Kiwis are paying more than they should.

Building supplies could make up about 20 per cent of the cost of building a house, he said.

"Over the past decade the costs of goods and services have gone up and there is a growing belief that New Zealand is becoming less affordable, with Kiwis contrasting costs in Australia versus New Zealand.

"Housing also plays a vital role in the wellbeing of New Zealanders. Good housing underpins a range of social, economic and health outcomes and we need to ensure that Kiwis have access to affordable and fairly priced housing and building supplies.

Labour leader Jacinda Ardern is in Nelson today. Photo / Mark Mitchell

"The information collected from these market studies will allow us to put in place any necessary regulatory and policy solutions that ensure consumers are paying a fair price, that innovation in the market is not stifled, and that access and competition are appropriate."

According to the CPI index for July 2020 compared with June 2020, fruit and vegetable prices rose 9.8 per cent (up 7.7 percent after seasonal adjustment), meat, poultry, and fish prices rose 0.5 per cent, and grocery food prices fell 1.1 per cent (down 1.2 per cent after seasonal adjustment).

There have been concerns over the duopoly in New Zealand, with supermarkets owned by Foodstuffs which owns New World and Pak'nSave, and Woolworths which owns Countdown.

Terms of reference for each market study will be developed by the Minister for Commerce and Consumer Affairs if Labour is re-elected, and the study into supermarkets would be initiated before the end of the year.

A market study is an in-depth, independent study into the factors affecting competition for particular goods or services. It can be initiated by the Minister of Commerce and Consumer Affairs or self-initiated by the Commission.

Faafoi said market studies "do turn into concrete action to make sure New Zealanders are getting fair prices".

Ardern is taking her campaign to Nelson today. She is visiting the Pics Peanut Butter Factory and Peanut Butter World - a recipient of Provincial Growth Fund money - before a walkabout in downtown Nelson, followed by a policy announcement at Nelson Budget Service.

'The Government gave the supermarkets a monopoly'

Act leader David Seymour criticised the market studies as showing Labour was a "fair-weather friend to small business".

"It claims to want competition, but it created a monopoly during lockdown.

"During the lockdown, the Government gave the supermarkets a monopoly by shutting down butchers, bakers and greengrocers. It wasn't concerned with competition at all.

"It then did nothing to change the rules for the second lockdown even though retailers could have opened safely. I heard of butchers crying on the side of the road as the second Auckland lockdown came into effect.

"Now Labour's done a complete 180 turn and wants to investigate the supermarkets. The Government has had the ability to initiate market studies for two years but did nothing. Labour is weaponising the Commerce Commission against business during an election campaign."