Ryan Bridge: What can Nicola do about inflation contributors?

Electricity and groceries are your two big ticket inflation targets. Punters want to pay less for both.

There are nuclear options available:

Cut the gentailers in half by force. Those pro-wrecking ball argue if you force them to separate out the generation side of the business from the retail, you’d create more competition and lower prices.

You could do a similar thing with the supermarkets. One idea is to force Foodstuffs and Woolworths to sell 120 supermarkets and a third of their six distribution centres to a third player. Hey presto. The duopoly’s dead. Long live Queen Nicola.

Now we’re still waiting to see what cat Willis will pull out of her shopping bag on this. She has advice and considering the options.

Here’s what I think she’ll do:

We can get clues from the way they’re handling electricity, which is basically minor changes to bits and pieces around the edges on stuff like the super peak hedging contracts, and if things don't change, look out - we'll regulate. We'll be meaner and tougher.

There's still the Frontier report of course, which Cabinet will decide on by next month.

In the mean time, you tinker and threaten. Sound tough enough that voters know you’re serious, but not actually go DEFCON 1 and risk spooking markets in which you’re actually trying to attract investment, particularly offshore. 

Plus, Chris Quinn told my show the other day they’d lawyer up to high heaven and fight anything like that. Messy. 

So on supermarkets I reckon they’ll tinker. Options on the cards? Put supermarkets on the fast-track list, ban pocket pricing, and empower existing franchises to be more independent - buying their stock from wherever they like, setting their own prices, etc. 

Slap a threat to legislate for the nuclear option across the headline of your press release if the tinkering doesn’t happen or isn’t working. 

Throw the ball back in the duopoly’s court. 

This would simultaneously satisfy ACT (who hate the nuclear options) and the politics of perception. 

It goes further than Labour went, but doesn’t risk the court battles and potential for major changes not actually working to bring prices down.

Which is the whole point. 

One thing’s certain, whether it’s electricity bills or checkout prices, the chances of a return to the good ol’ days of pre-Covid prices when we could butter the toast and fire up the heated towel rail with gay abandon are slim to none. 

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Episode Transcript

Speaker 1 (00:00):
Electricity and groceries are your two big ticket inflation targets.
Punters want to pay less for both, and there are
nuclear options available cut the gent tailors in half by force.
Those who are pro wrecking ball argue, if you force
them to separate out the generation side of the business
from the retail side, you'd create more competition, lower prices.

(00:20):
You could do a similar thing with the supermarkets. You
force food stuffs and woollies to sell one hundred and
twenty supermarkets sell two of their six distribution centers to
a third player, and hey, presto, thediopol is dead. Long
live Queen Nicola. Now we're still waiting to see exactly
what cat she's going to pull out of her shopping
bag on this. She has advice, considering the options all

(00:43):
that stuff. Here's what I think she will do. We
can get clues from the way that they're handling electricity,
the regulators and the government, which is basically minor changes
to bits and pieces around the edges on stuff like
the super peak hedging contracts, and if things don't age,
look out, we'll regulate, will be meaner, will be tougher.

(01:03):
There's still the Frontier report of course which Cabinet is
considering right now, and we'll decide on by the end
of the month. In other words, you tinker and you threaten,
you sound tough enough that voters know you serious, but
not actually go death con one and risk spooking markets
in which you're actually trying to attract investment, and particularly offshore.
Plus Chris Quinn told my show the other day, they

(01:24):
would lawyer up to high heaven and fight anything like this,
so it gets messy. So I reckon they'll tinker on
supermarkets options on the cards. You can put supermarkets on
the fast track list, get them built quicker. You can
ban pocketbook pricing. You can empower the existing franchises to
be more independent, buying their stock from wherever they like,

(01:45):
setting their own prices, et cetera, et cetera. Slap a
threat to legislate for the nuclear option across the headline
of your press release. If the tinkering doesn't happen or
isn't working, throw the ball back in the duopolies court.
This would simultane satisfy Act which hates the nuclear option
and the politics of perception. It goes further than labor went,

(02:07):
but doesn't risk the court battles, the potential for major
changes not actually working and bringing down prices, which is
the whole point, right, one thing certain, whether it's electricity
bills or check out prices. The chances of a return
to the good old days of pre COVID prices when
we could butter the toast and fire up the heated

(02:29):
towel rail with gay abandon while they're slim to none.
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