“We must back the hard workers, those who go the extra mile, who toil day in day out to make progress for themselves and their families. The dairy owner who works twelve hours a day, six days a week, with one week off at Christmas.”
The above two paragraphs are inspiring; words I could have written in defence of the diligent, productive and determined Kiwis who have worked impossible hours to build and own their small share of the Foodstuffs co-operative and did so in a country that believed in protecting the property rights of its citizens.
Well. I did not write them. Nicola Willis did. They come from her maiden speech.
We are in the ferment of a hysteria. Food is expensive, we are being asked to believe, not because of structural drivers creating friction in the wheels of commerce but due to the avarice of a few who are profiting at the expense of the many.
This is not true. The Commerce Commission exists to suppress anti-competitive behaviour and is incentivised to find it. Despite their 420 staff and $95 million annual budget, they failed. Let me quote from the 2022 report:
This is not true. The Commerce Commission exists to suppress anti-competitive behaviour and is incentivised to find it. Despite their 420 staff and $95 million annual budget, they failed. Let me quote from the 2022 report:
Christopher Luxon and Nicola Willis. Photo: Stuff
“The three major grocery retailers’ profit to sales margins are broadly consistent with those of a sample of overseas grocery retailers. However, we have not given significant weight to this observation, as to reach a robust conclusion from a direct comparison would require a detailed examination of each overseas retailer’s business and operating context.”
That paragraph should have ended this debate. It did not. Despite the evidence of a competitive sector the Commission, in its 609 page report, had to fall back on a subjective assessment on the cost of capital in order to speculate that there was a possibility that these firms were enjoying $420m in excess profits.
“The three major grocery retailers’ profit to sales margins are broadly consistent with those of a sample of overseas grocery retailers. However, we have not given significant weight to this observation, as to reach a robust conclusion from a direct comparison would require a detailed examination of each overseas retailer’s business and operating context.”
That paragraph should have ended this debate. It did not. Despite the evidence of a competitive sector the Commission, in its 609 page report, had to fall back on a subjective assessment on the cost of capital in order to speculate that there was a possibility that these firms were enjoying $420m in excess profits.
We know from published accounts these profits do not exist other than in the bureaucratic imagination. Woolworths, an Australian company with close to a third of the NZ market, wrote down the value of its Kiwi holdings by $1.6 billion in 2024 on the back of rising cost of sales and weak profitability, just $108 million before taxes and interest on a whopping $8 billion in revenue.
We are not going to reduce grocery prices by harassing the people who sell groceries any more than we are going to make computers cheaper by regulating Noel Leeming and PB Tech. What the public want is a villain. Willis and Luxon have now delivered one.
Well. Let me point you, dear reader, towards the real culprit. This government has failed to significantly reduce state spending, deliver a fiscal surplus, reduce the number of core government servants, pass a replacement for the Resource Management Act, confront a crippling welfare bill, address the unsustainability of our universal pension regime and ignored the catastrophic funding gap bankrupting ACC.
But wait…didn’t we get tax cuts? Well. Yes. But. If you were earning 100k in 2023, the tax cuts were worth a shade over a grand. By now, with inflation, you would be on around 106k, and given a marginal rate of 30%, you will be paying an extra $2k in real terms.
National is willing to sacrifice the property rights of a group of citizens subject to vilification on flimsy evidence because it is politically convenient to do so. Think about this for a moment. What does it say about the leadership of this country that they are willing to adopt an economic strategy that they know will not work, is in violation of their principles, and at the expense of the rights of honest and law-abiding citizens for short-term political gain?
Now. To tone down my own rhetoric. This policy is measured. It will require the pro forma approval of the Commerce Commission, and those affected will be compensated. We are not replicating the sins visited on the kulaks and the Americans periodically undertake such ‘trust busting’ policies, without causing the sky to fall.
But we are not America. We are a small, isolated island nation at the bottom of nowhere. This announcement itself adds to the perception that New Zealand is not a safe place to invest and the political hostility to supermarket retailers is an active deterrent to new entrants.
I can forgive inchoate babble from our friends in the Greens because they understand economics as well as I understand fashion. What I cannot forgive is politicians knowing what they are doing is wrong, but choosing to do it anyway.
The only winner here is Chris Penk; who is not required to subject himself to the absurd contortions of his former colleagues defending this insidious policy and whose desire to force a change in party leadership has been vindicated....The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
We are not going to reduce grocery prices by harassing the people who sell groceries any more than we are going to make computers cheaper by regulating Noel Leeming and PB Tech. What the public want is a villain. Willis and Luxon have now delivered one.
Well. Let me point you, dear reader, towards the real culprit. This government has failed to significantly reduce state spending, deliver a fiscal surplus, reduce the number of core government servants, pass a replacement for the Resource Management Act, confront a crippling welfare bill, address the unsustainability of our universal pension regime and ignored the catastrophic funding gap bankrupting ACC.
But wait…didn’t we get tax cuts? Well. Yes. But. If you were earning 100k in 2023, the tax cuts were worth a shade over a grand. By now, with inflation, you would be on around 106k, and given a marginal rate of 30%, you will be paying an extra $2k in real terms.
National is willing to sacrifice the property rights of a group of citizens subject to vilification on flimsy evidence because it is politically convenient to do so. Think about this for a moment. What does it say about the leadership of this country that they are willing to adopt an economic strategy that they know will not work, is in violation of their principles, and at the expense of the rights of honest and law-abiding citizens for short-term political gain?
Now. To tone down my own rhetoric. This policy is measured. It will require the pro forma approval of the Commerce Commission, and those affected will be compensated. We are not replicating the sins visited on the kulaks and the Americans periodically undertake such ‘trust busting’ policies, without causing the sky to fall.
But we are not America. We are a small, isolated island nation at the bottom of nowhere. This announcement itself adds to the perception that New Zealand is not a safe place to invest and the political hostility to supermarket retailers is an active deterrent to new entrants.
I can forgive inchoate babble from our friends in the Greens because they understand economics as well as I understand fashion. What I cannot forgive is politicians knowing what they are doing is wrong, but choosing to do it anyway.
The only winner here is Chris Penk; who is not required to subject himself to the absurd contortions of his former colleagues defending this insidious policy and whose desire to force a change in party leadership has been vindicated....The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
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