Nicola Willis: Finance Minister on the Government's upcoming announcement about the future of the supermarket sector

The Finance Minister says there will be an announcement in the next week on the Government's next steps to encourage more competition in the supermarket sector.

Nicola Willis has previously indicated intentions to encourage a third player into the market to challenge the two incumbents.

She explained while it's good to have a niche provider opening - unless someone is opening multiple stores, it's hard to get competition impact.

"I've been engaging with a range of smaller players, and that's something I've identified. It's clear to me that the Government will need to take further action."

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Episode Transcript

Speaker 1 (00:00):
Right now the Finance Minister Nicola willis minister. Good evening,
good evening, now the cook straight Fairies. We've got a
one week left on the countdown clock for Winston Peters.
Is there a solution in hand yet? Do you know?

Speaker 2 (00:11):
Everything's progressing well? And announcements will be made shortly.

Speaker 1 (00:15):
Which would indicate there's something to be announced.

Speaker 2 (00:18):
There will be, there will indeed.

Speaker 1 (00:20):
Be Oh okay, so where he's actually managed to do
a deal.

Speaker 2 (00:25):
Well, Kebnet will make decisions and when we've made them,
we will announce them. But I can report to you
that everything is progressing well.

Speaker 1 (00:33):
Okay. Interesting, So the talks were for obviously fruitful and
can okay, let me put it this way, because I
know you'll be tied up in riddles. Is it is
it your option that you'll be going with no?

Speaker 2 (00:46):
Well? What New Zealanders have always wanted to know is
can you deliver the fairies by twenty twenty nine with
a more affordable budget that is more deliverable than the
last government. And the answer to both of those questions
is yes, and we will be making announcements that demonstrate
that in a week. When we make the announcements, run Okay.

Speaker 1 (01:07):
Hey, Local Government New Zealand pushing back at the suggestion
of a cap on rates. Are you actually proposing one?

Speaker 2 (01:14):
Well, we are progressing work on that because we make
no apologies to the fact that we're on the side
of rate payers, and ratepayers have had a guts full
with massive rate increases, and we're not going to let
local government completely off the hook. We're going to continue
to demand that they show more discipline in their spending
and we are looking at options for getting them to
focus the spending they do on the basics, on infrastructure,

(01:38):
on waste management, on those things rather than some of
the things that they have been funding. I mean, here
in Wellington, our council has literally been funding stand up
comedy sessions, interpretive dance shows and pirate punk plays. That's
not what your rates should be spent on.

Speaker 1 (01:55):
You won't find that. You won't find anyone listening who
doesn't agree with you on that. But Local Government New
Zealand says it'll have a perverse impact on them if
you limit their rates. If you put a cap on rates,
their borrowing costs will go up. It'll actually make servicing
the much needed infrastructure even harder.

Speaker 2 (02:13):
Well, we do want to make sure that councils are
able to fund the infrastructure needed to support growth. Of course,
government funds a lot of that directly, whether it's roads
or the contribution we make to local roads, but we're
also expanding the council's funding options away from rates. So
that's both things like the development levy system which we've announced,

(02:34):
which is about growth in housing areas paying for the
growth in infrastructure costs. But it's also by looking at
the borrowing limits, ensuring that the local government funding authority
is able to extend good terms of lending to local
government authorities who are having to invest in infrastructure for
the future. So we're looking at a number of funding mechanisms.
We don't think the full burden of all costs should

(02:56):
fall on ratepayers. There are a number of other ways
of funding some costs, like what like levees on developers
who are developing land for new housing that they can
help meet those costs and the eventual homeowners can help
meet those costs.

Speaker 1 (03:12):
The Child Poverty Action Group, they've written your letter about
school lunches. When does the funding run out for that.

Speaker 2 (03:18):
Not until the end of next year, so we are
in contracts that don't end until next year, and we
won't be leaving those contractors off the hook. We want
to see them deliver what they promised to the schools involved,
and we want to get value for that money. The
other thing that the Child Poverty Action Group have forgotten
is that by making the savings that we did, we
were able to extend a food lunch, a food program

(03:42):
to ten thousand children in early childhood centers who were
particularly in need of nutrition, and we were able to
deliver an increase in working for family support to many
low income family So every dollar has multiple uses run so.

Speaker 1 (03:59):
That the basically though no funding running out till the
end of next year, so no decisions about whether to
either cut or to extend or whatever would be made
anytime soon. You continue continuing is.

Speaker 2 (04:11):
Yeah, continuing with the status quo about driving the contractor
to deliver. That should be our focus on. Behalf of
text path.

Speaker 1 (04:18):
Very good as it should now. The Australian Supermarket inquirer,
I don't know whether you caught up with this, but
the agrible C if I got that round the right
way or it's c triple a over the aguablecy. So
they basically came out and said things aren't as great
as we think they are. You know, we look at
Australia supermarket operation and think, oh, well, isn't that lovely.
Everything's so cheap over there. They came out and said, actually,

(04:40):
it's quite uncompetitive, it's overly profitable. It's not perfect over
there either.

Speaker 2 (04:46):
No, it's not. And in particular, they've identified something we
have identified, which is that there are real barriers to
a large scale new entrant. And the point is that
it's good having a a niche grocery provider open, but
unless you get someone who's opening up multiple stores, it's
hard to get that competition impact. So that's something I've

(05:09):
been engaging with a range of smaller players and that's
something i've ideentified and it's clear to me that the
government will need to take further action in this space.
Cabinet has made some decisions here and we will be
making announcements in the next.

Speaker 1 (05:22):
Week about super So that's about land Banking.

Speaker 2 (05:26):
About our next steps to encourage more competition in the
supermarket sector.

Speaker 1 (05:31):
Problem is the more I mean, you will never make
more profit out of a supermarket in New Zealand than
you do right now.

Speaker 2 (05:39):
So it's a super profitable sector and so it's coming
at the expense of consumers.

Speaker 1 (05:44):
Yeah, I get it. But if we can't attract I
mean you're talking about more regulation. If we can't attract
an entrant with the most profit you'll ever make and
the lowest regulation, now, what hope do we have with
more regulation and less profit?

Speaker 2 (06:00):
Your concern is precisely mine. I want to understand, and
the Government will have further announcements to make on this.
The structural market barriers that mean even a cashed up
investor looking to make profits goes, ooh, if you go
and invest in that sector in New Zealand, you're on
a hiding to nothing. And what the Australian report shows,

(06:21):
and what reports in New Zealand of Sean is that
there is such significant market power in the existing duopoly
that anyone wanting to enter our grocery sector goes that's
going to be a hard road and we need to
address that because if they're going to face predatory pricing,
if they're going to face problems that make them think
you just can't do it, I think we have an
obligation to New Zealand shoppers to do something about it.

Speaker 1 (06:44):
All right, mister, anything else do you want to drop
or leak on this show. You have a habit of
giving us a little nugget every week. I don't feel
we've had sufficient nuggets yet.

Speaker 2 (06:55):
This is a government with lots of nuggets. Today we've
announced Radical Resource Management Act reform that's going to make
it easier to build things in New Zealand. Very detailed
piece of work. And look that's been a massive head
one for our economy for many years and we're finally
the government who's going to fix it.

Speaker 1 (07:10):
That's a no nugget nugget from Nicola Willis, the Finance Minister.
Thanks for coming on the show every Monday, as you do.
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