There’s growing potential for a new player to tackle New Zealand's two-horse supermarket race.
The Government's laying out intentions to encourage a third player to challenge the two incumbents of Foodstuffs and Woolworths.
It's planning to remove regulations discouraging other supermarkets competing.
Economic Growth and Finance Minister Nicola Willis told Kerre Woodham the Government has the power to make the market more attractive.
She confirms there's interest, and says she’s been informed there has been a proposal.
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Speaker 1 (00:06):
You're listening to the Kerry Wood and Morning's podcast from
News Talks.
Speaker 2 (00:10):
He'd be the government seeking to bolster supermarket competition. And
a speech to the New Zealand Economics Forum, the Economic
Growth Minister Nicola Willis says that studies have shown New
Zealand shoppers pay more for kitchen staples than their counterparts
in the UK, Ireland and Australia, and we need more
(00:33):
competition to put Dalnwood pressure on prices and deliver a
better deal from shoppers. Economic Growth Minister Nicola Willis joins me, Now,
good morning to you.
Speaker 3 (00:41):
Good morning Carrie. Great to be on the Shark.
Speaker 2 (00:43):
Well, thank you for taking the time. What's new about this? Though?
I was kind of I said before at the start,
I was thinking if it was Trump, you know, you'd
have an LD in the four main centers and then
the others would be opening and the times with the
stroke of a pen.
Speaker 3 (00:57):
It's Kerry.
Speaker 4 (00:58):
I would love that. I finally my Ken could deliver
that tomorrow. I would do that because that would be
brilliant for Kie shoppers. But look what we've had in
New Zealand is a situation where people have felt uncomfortable
about what has been happening in our supermarkets for some time,
as they've merged and consolidated down to what is really
essentially a duopoly. And so you had the last government
(01:20):
try and pass some new legislation, do a few reforms,
and last year we had the first review of whether
that was working, and essentially and the view of the
Commerce Commission, not much has changed. So that's the impetus
for action. And what I'm saying today is that I
think the best way to disrupt this market would be
for a third entrant. But I'm really alive to the
(01:41):
fact that third entrants who have sniffed around and had
a look say, oh my gosh, it would be so
difficult to do it in New Zealand, because of your
Overseas Investment Act, because of the Resource Management Act, because
of all the regulation we'd have to go through that
is really risky. And then even if we got through
all of those hurdles, then there's the question of whether
(02:03):
we could find a site for a supermore Well, that's right,
the last many cases have been land bankeed. So what
I'm saying today is I want that third entrant and
I would like to see us address all of those
regulatory barriers that could stand in their way, so it
doesn't look as risky a proposition. And to my mind,
that includes looking at things like the land banking and
(02:26):
doing something about it. It means looking at predatory pricing
and doing something about it. It means potentially saying to
a third entrant, we will ease your way. Don't you
worry about all that red tape. We're on your side.
So that's what I want to happen. But then the
next thing you have to say is, well, while we're
working that out, what are we going to do for
qwis in the meantime, And so the next thing that
(02:47):
I've seen today is that this year we will be
making sure that the supermarkets are better held to account.
And that's both in terms of what they owe consumers
but also what they owe suppliers, because you know, if
you're a New Zealand food business, it can be really
difficult because if the supermarkets try and screw you on
the price and you fight back too much, you know
(03:07):
what you might fear is they might just take me
off the shelf.
Speaker 2 (03:10):
Well, we certainly heard that from some supplies when the
Commerce Commission was conducting its first inquiry into the practice
of supermarkets. But isn't it just economies of scale. I mean,
surely an overseas supermarket chain would put up with red tape,
would find its way around, it would find the right
land if it was worth their while to do so.
Speaker 4 (03:32):
Well, you know, sometimes it's little things that tip the balance.
So maybe they look at it right now and they
go maybe not quite. And so my view is, let's
lean hard to make that look more attractive. And we
have the power to do so. And my view is
the government should be using that power on behalf of
Kiwi shoppers. And the key thing here is I don't
(03:55):
think we can accept the status quo. Is it really
good enough that New Zealanders are in a situation where
our Commerce Commission, where the international economists at the OECD,
where report after report says, you know what, you're not
getting a competitive price for your groceries? Is that really okay?
And I don't think it is. So I think we
(04:15):
need to head strongly down the path of changing it
and being open to all options to do so.
Speaker 2 (04:21):
Is there a subtext to this speech? Is there an
international player that you are talking to already or that
you know of who is wanting to enter the market,
and you're saying all systems go, because otherwise it's just
building on what has been said already.
Speaker 4 (04:38):
Look, I am aware that we have received what's called
an unsolicited proposal. We have this year Kerry set out
something called National Infrastructure Funding and Financing Company, and we've
said to all comers, if you want to come and
invest in important infrastructure, bring us a proposal. And I've
been informed that we have had a proposal. I have
(05:01):
not had an assessment of that proposal yet, so I
can't speak to the detail of it. But I also
know that the Commerce Commission has spoken about the fact
that they've been approached by people looking at the market.
So what that tells me is there is some interest,
and I'm sending a very clear message today that we
should be engaging with that interest. We as a government
(05:25):
want to take those proposals very seriously.
Speaker 2 (05:28):
Kiwi Bank was supposed to be a disruptor when it
came to the banking industry. Another thing that another industry
that the Commerce Commission's been looking long and hard at.
That the government's looking long and hard at. That didn't happen, well,
there'd be somebody else wanting you, that's probably, that's probably
and drive wanting you.
Speaker 3 (05:46):
Well. Look look in the case of Chemibank.
Speaker 4 (05:48):
It's a really interesting example because the broader point I
was making today and this is dry economics, but it matters.
Is it actually regulations, which is the rules that the
government sets around markets, have a real impact on people's ability.
Speaker 3 (06:02):
To compete effectively.
Speaker 4 (06:03):
And the banking sector is one where I've had the
view that the reserve banks regulation has made it really
hard for some smaller players, and that's why last year
I assued a new Financial Policy remark making it clear
that my expectation was that they would be taking more
account of competition and that they would be looking at
(06:24):
some of their regulatory settings because this stuff can be expensive.
It adds cost, it makes it more complex, and it
means that the big guys have even more of.
Speaker 3 (06:34):
An advantage than they did to start with.
Speaker 4 (06:36):
So this is an area where you know, if you're
in a really big country, you don't need to think
about it as much. New Zealand we've only got five
million people, and so it's really important that we support competition.
We're a country of small businesses and I want some
of our small businesses to become bigger businesses.
Speaker 2 (06:54):
All right, So basically you've had expressions of interest. Your
speech today was saying, come on in the water's fine,
it's going to be easy for you to come in
here and have a go at take competition to our
existing players.
Speaker 3 (07:08):
Yeah.
Speaker 4 (07:09):
Look, and not only come on in, but let's sit
down and talk turkey about what the regulations are that
vex you and let's look at what we can do
about that.
Speaker 2 (07:18):
Lovely to talk with you. Thank you very much for
your time.
Speaker 3 (07:21):
Great to be on the show. Thanks Kerry.
Speaker 2 (07:23):
That is Nicola Willis's Economic Growth Minister, with her Economic
Growth Minister hat on. It sounds promising, doesn't it.
Speaker 1 (07:30):
For more from Carry Wooden Mornings, listen live to news
talks that'd be from nine am weekdays, or follow the
podcast on iHeartRadio.
You're listening to the Kerry Wood and Morning's podcast from
News Talks.
Speaker 2 (00:10):
He'd be the government seeking to bolster supermarket competition. And
a speech to the New Zealand Economics Forum, the Economic
Growth Minister Nicola Willis says that studies have shown New
Zealand shoppers pay more for kitchen staples than their counterparts
in the UK, Ireland and Australia, and we need more
(00:33):
competition to put Dalnwood pressure on prices and deliver a
better deal from shoppers. Economic Growth Minister Nicola Willis joins me, Now,
good morning to you.
Speaker 3 (00:41):
Good morning Carrie. Great to be on the Shark.
Speaker 2 (00:43):
Well, thank you for taking the time. What's new about this? Though?
I was kind of I said before at the start,
I was thinking if it was Trump, you know, you'd
have an LD in the four main centers and then
the others would be opening and the times with the
stroke of a pen.
Speaker 3 (00:57):
It's Kerry.
Speaker 4 (00:58):
I would love that. I finally my Ken could deliver
that tomorrow. I would do that because that would be
brilliant for Kie shoppers. But look what we've had in
New Zealand is a situation where people have felt uncomfortable
about what has been happening in our supermarkets for some time,
as they've merged and consolidated down to what is really
essentially a duopoly. And so you had the last government
(01:20):
try and pass some new legislation, do a few reforms,
and last year we had the first review of whether
that was working, and essentially and the view of the
Commerce Commission, not much has changed. So that's the impetus
for action. And what I'm saying today is that I
think the best way to disrupt this market would be
for a third entrant. But I'm really alive to the
(01:41):
fact that third entrants who have sniffed around and had
a look say, oh my gosh, it would be so
difficult to do it in New Zealand, because of your
Overseas Investment Act, because of the Resource Management Act, because
of all the regulation we'd have to go through that
is really risky. And then even if we got through
all of those hurdles, then there's the question of whether
(02:03):
we could find a site for a supermore Well, that's right,
the last many cases have been land bankeed. So what
I'm saying today is I want that third entrant and
I would like to see us address all of those
regulatory barriers that could stand in their way, so it
doesn't look as risky a proposition. And to my mind,
that includes looking at things like the land banking and
(02:26):
doing something about it. It means looking at predatory pricing
and doing something about it. It means potentially saying to
a third entrant, we will ease your way. Don't you
worry about all that red tape. We're on your side.
So that's what I want to happen. But then the
next thing you have to say is, well, while we're
working that out, what are we going to do for
qwis in the meantime, And so the next thing that
(02:47):
I've seen today is that this year we will be
making sure that the supermarkets are better held to account.
And that's both in terms of what they owe consumers
but also what they owe suppliers, because you know, if
you're a New Zealand food business, it can be really
difficult because if the supermarkets try and screw you on
the price and you fight back too much, you know
(03:07):
what you might fear is they might just take me
off the shelf.
Speaker 2 (03:10):
Well, we certainly heard that from some supplies when the
Commerce Commission was conducting its first inquiry into the practice
of supermarkets. But isn't it just economies of scale. I mean,
surely an overseas supermarket chain would put up with red tape,
would find its way around, it would find the right
land if it was worth their while to do so.
Speaker 4 (03:32):
Well, you know, sometimes it's little things that tip the balance.
So maybe they look at it right now and they
go maybe not quite. And so my view is, let's
lean hard to make that look more attractive. And we
have the power to do so. And my view is
the government should be using that power on behalf of
Kiwi shoppers. And the key thing here is I don't
(03:55):
think we can accept the status quo. Is it really
good enough that New Zealanders are in a situation where
our Commerce Commission, where the international economists at the OECD,
where report after report says, you know what, you're not
getting a competitive price for your groceries? Is that really okay?
And I don't think it is. So I think we
(04:15):
need to head strongly down the path of changing it
and being open to all options to do so.
Speaker 2 (04:21):
Is there a subtext to this speech? Is there an
international player that you are talking to already or that
you know of who is wanting to enter the market,
and you're saying all systems go, because otherwise it's just
building on what has been said already.
Speaker 4 (04:38):
Look, I am aware that we have received what's called
an unsolicited proposal. We have this year Kerry set out
something called National Infrastructure Funding and Financing Company, and we've
said to all comers, if you want to come and
invest in important infrastructure, bring us a proposal. And I've
been informed that we have had a proposal. I have
(05:01):
not had an assessment of that proposal yet, so I
can't speak to the detail of it. But I also
know that the Commerce Commission has spoken about the fact
that they've been approached by people looking at the market.
So what that tells me is there is some interest,
and I'm sending a very clear message today that we
should be engaging with that interest. We as a government
(05:25):
want to take those proposals very seriously.
Speaker 2 (05:28):
Kiwi Bank was supposed to be a disruptor when it
came to the banking industry. Another thing that another industry
that the Commerce Commission's been looking long and hard at.
That the government's looking long and hard at. That didn't happen, well,
there'd be somebody else wanting you, that's probably, that's probably
and drive wanting you.
Speaker 3 (05:46):
Well. Look look in the case of Chemibank.
Speaker 4 (05:48):
It's a really interesting example because the broader point I
was making today and this is dry economics, but it matters.
Is it actually regulations, which is the rules that the
government sets around markets, have a real impact on people's ability.
Speaker 3 (06:02):
To compete effectively.
Speaker 4 (06:03):
And the banking sector is one where I've had the
view that the reserve banks regulation has made it really
hard for some smaller players, and that's why last year
I assued a new Financial Policy remark making it clear
that my expectation was that they would be taking more
account of competition and that they would be looking at
(06:24):
some of their regulatory settings because this stuff can be expensive.
It adds cost, it makes it more complex, and it
means that the big guys have even more of.
Speaker 3 (06:34):
An advantage than they did to start with.
Speaker 4 (06:36):
So this is an area where you know, if you're
in a really big country, you don't need to think
about it as much. New Zealand we've only got five
million people, and so it's really important that we support competition.
We're a country of small businesses and I want some
of our small businesses to become bigger businesses.
Speaker 2 (06:54):
All right, So basically you've had expressions of interest. Your
speech today was saying, come on in the water's fine,
it's going to be easy for you to come in
here and have a go at take competition to our
existing players.
Speaker 3 (07:08):
Yeah.
Speaker 4 (07:09):
Look, and not only come on in, but let's sit
down and talk turkey about what the regulations are that
vex you and let's look at what we can do
about that.
Speaker 2 (07:18):
Lovely to talk with you. Thank you very much for
your time.
Speaker 3 (07:21):
Great to be on the show. Thanks Kerry.
Speaker 2 (07:23):
That is Nicola Willis's Economic Growth Minister, with her Economic
Growth Minister hat on. It sounds promising, doesn't it.
Speaker 1 (07:30):
For more from Carry Wooden Mornings, listen live to news
talks that'd be from nine am weekdays, or follow the
podcast on iHeartRadio.
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