Kai is getting expensive. Recent figures have food prices up by 12.5% year-on-year, with fruit and vegetables up 22% since 2022. In the lead up to the election, the expense of simply existing in New Zealand has been a hot topic of conversation, and recently, GST on fruit and vegetables has been in the spotlight.
It’s a policy that has been on the table before, with research from Newshub Reid last year showing that 76.6% of New Zealanders wanted GST removed from food. Te Pāti Māori (TPM) has long backed the policy, proposing that kai become GST-free in 2022.
Yet with all eyes on TPM following its recent tax policy announcement, economists have quickly jumped in to have their say on the matter. Over and over, tax experts say that a GST exemption on kai is bad tax policy and unlikely to benefit lower-income whānau. It’s advice that’s backed by a report released from the Tax Working Group in 2018, which found that removing GST is “a poorly targeted mechanism”, which would “generate large compliance and administration costs”.
Finance Minister Grant Robertson agreed, telling Newshub Nation the policy was removed from Labour’s wheelhouse because “it just doesn’t deliver the difference… there are better ways of us delivering support”.
In response to these concerns, TPM party co-leader Debbie Ngarewa-Packer called the debate a “red-herring”. While it’s true that targeted support might make a more meaningful difference to low-income families, I am a big fan of universal policy, and I think the popularity of the policy with the public points to the urgency of the situation. Whatever the mechanism, people need solutions for their food bills – now.
I’m not qualified to say whether or not a GST exemption on kai is good policy (though all signs point to no) but in my humble opinion, Ngarewa-Packer is right about one thing: the recent discourse in the news on kai and GST is a distraction from the real issue at hand – a rise in food insecurity.
It’s a reality experienced not just in New Zealand, but globally. The war in Ukraine, lingering Covid-driven supply-chain issues and rampant climate change, among other factors, are driving food prices up. Our current food system is highly industrialised and siloed. While theoretically efficient, it means that when one step of the process is disrupted, massive amounts of waste result, and global markets are subject to unpredictable pressures. Recently, the war in Ukraine wiped out a 60,000 tonne shipment of grain, enough to feed 270,000 people for a year.
Closer to home, the wild weather in produce-growing regions has further driven up the price of fresh fruit and vegetables. Increasing fuel costs and the price of imported fertiliser means the price of producing and transporting that kai to those who need it is also going up. But mitigating these factors doesn’t require complicated policy. There are interventions that we know work: investing in local, community food systems using hardy, diversified crops and implementing a circular economy where we recycle organic material back into rich fertiliser that can be used to grow the next lot of kai. With the recent roll-out of urban compost collections, we’re already on the road toward making that last point a reality.
Additionally, New Zealand households waste 157,389 tonnes of food a year, or enough to feed all of Dunedin for three years. And that’s not even counting food wasted at supermarkets, restaurants and at manufacturing points. Although there are several food rescue charities and organisations attempting to get this wasted food to those in need, there’s always more to be done.
With the price of food in Aotearoa, you’d think it was scarce. But it’s just the opposite. We have so much, we could be giving it away for free. With a more localised and interconnected food system with more efficient distribution methods, that could become a reality. Instead, people and households suffer under the weight of weekly grocery bills.
The current debate around GST is at risk of being bogged down in arguments over tax theory and high-level economic analyses. It all sounds very complicated, but in essence it’s arguably simple. To improve food security for those in low-income brackets, we need to be investing in a secure and resilient food network right here in Aotearoa.
