Thursday, August 25, 2022

Mike Hosking: Government's moves won't mean cheaper groceries

Communism has finally arrived and it's lobbed into Countdown.

Or New World or Pak'nSave.

Anyway, your can of beans will now be priced by David Clark.

I am assuming suppliers will be happy. Under the Government's threat yesterday, and that’s all you can call it, supermarkets have to cut a deal with anyone and everyone at commercial rates.

What's a commercial rate? Well, once upon a time in a free and open country that was an arrangement between a person selling something to a person buying something.

Under the Labour regime, if they don’t like that arrangement they will step in and tell you what the commercial rate is.

The irony of this is the Commerce Commission, who was told to step into the supermarket market and have a snoop about, didn’t recommend this step.

Why not? Because they are not communists and saw in their usual way that the market wasn’t perfect but it certainly didn’t need a regulatory sledge hammer.

So the obvious question is - if you were going to regulate or threaten to regulate why ask the Commerce Commission to waste everyone's time?

Unless, of course in the usual Machiavellian way in which this Government operates, they were hoping the Commerce Commission would make the recommendation so they could then blame them for the move they wanted to make all along.

But, and here is the next irony, will that mean we end up with way cheaper groceries?


And that's because a wholesale arrangement isn't a retail price.

If the wholesale arrangement, whether completed by mutual agreement or David Clark sticking his nose in, encourages new players to the market, it doesn’t mean the new player automatically prices their goods a mile below everyone else.

If Countdown prices beans at $3.49 and you want to beat that you might price them at $3.39. You might be able to price them at $2.79 but why would you when you don’t have to?

There is already competition in food and lots of it. The idea this is all a massive rort on the supermarkets part is the commentary of the Government, not the reality of the market.

If you think a Government that can't build houses, build light rail, deliver health services or be open, honest and transparent can sort your grocery bill - and this is the same bloke who cocked up the CCCFA and is now sorting your flour and biscuits - then you need to wake up.

You're being had.

Mike Hosking is a New Zealand television and radio broadcaster. He currently hosts The Mike Hosking Breakfast show on NewstalkZB on weekday mornings

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