Comrade Christopher and the breakup of Foodstuffs

In what appears to be a really rushed move National came out yesterday and proposed the compulsory carve up of Foodstuffs.

From Radio New Zealand:

National has made a supermarket break-up a key part of its election pitch, proposing to sever Pak’nSave from New World in a bid to drive down grocery prices.

The shake-up would be contingent on a six-month review by the Commerce Commission into whether the split would actually leave shoppers better off.

If the watchdog gave it the green light, National said it would legislate to force through the separation.

The significant policy was announced with little warning on Wednesday morning, and on the same day that Labour promised to ban big companies from charging excessive prices.

Foodstuffs – made up of two co-operatives – currently manages all New World, Pak’nSave and Four Square stores.

National’s plan would split them up, leaving the country with three nationwide supermarket chains: Pak’nSave, New World/Four Square and Woolworths.

The intent appears to be a desire to gazump Labour’s announcement of strengthened powers to prevent companies from price gouging.

Superficially it is good politics in that National managed to dominate the media cycle yesterday.

But as time goes by you really get the impression that it was rushed, poorly thought through and a policy is search of a media hit.

And it has annoyed National’s supporters.

From Radio New Zealand:

Director of advocacy Catherine Beard described the move as alarming.

“This is a very concerning move by the National Party and sends a chilling signal to businesses across New Zealand that the Government can break up businesses. It also sends the wrong signal to foreign investors looking to invest in New Zealand. We consider this to be in the same league as Labour’s ban on oil and gas exploration and New Zealand First’s promise to split up the gentailers.”

…

[T]he Employers and Manufacturers Association was also critical. Head of advocacy Alan McDonald said the policy undermined the foundations of business and private property rights.

“Seeing a right-of-centre, business-focused political party like National suggest this type of policy will sit uneasily with businesses in New Zealand. It might be a populist policy for a grumpy electorate, but that doesn’t make it a good policy.”

McDonald agreed it sent a bad signal to investors.

“It’s not quite nationalising a private business but it’s too close for comfort. And that’s a terrible signal to send when we’re currently trying to attract much-needed international investment through the government’s open-for-business mantra.”

The proposal has met some private resistance from within caucus with one senior MP saying the proposal was bonkers.

Act is furious. From Newstalk ZB:

ACT’s Leader is furious at the idea of breaking-up Foodstuffs.  

If re-elected, and if the Commerce Commission agrees, National would separate Pak’nSave from New World and Four Square to compete with each other and Woolworths.  

David Seymour told Kerre Woodham it’ll make the problem worse, but his party is standing alone.  

He says just because the focus group polling says people are upset, doesn’t mean you do something simple and wrong.  

New Zealand First has complained that it is already their policy and they had already announced this in April of this year.

Which makes you wonder. Why float this now? Why not put it up earlier and seek Labour or Green votes to get it over the line?

Also they have chosen the easier target. They would have been better to go for Woolworths.

Because Foodstuffs is a collective and has a number of different owners under its unbrella who compete with each other for sales. And the proposal may increase grocery prices.

From Radio New Zealand:

Dean Waddell, owner of Pak’nSave Tauranga and chairperson of Foodstuffs North Island, told Morning Report National’s proposal would drive prices up.

He said Foodstuff was “gutted and concerned” by the proposal.

” We’ve spent a lot of time educating political parties around our co-operative structure,” he said.

“We started with five co-ops, we’re down to two and that’s given us the scale and efficiencies and the buying power to stay competitive for our customers. So going back the other way and demerging for us just puts our member stores into a more higher-cost base and a potentially more uncompetitive situation in the years to come.”

Despite Foodstuffs and Woolworths having between them more than 80 percent of the market, he disputed they were a duopoly – saying Foodstuffs was actually “a combination of 500 independent businesses” which work together to achieve efficiencies of scale.

“Don’t forget it reduces our buying power as well, and we’re still a relatively small business from a global scale.”

He disputed claims independent Foodstuffs stores were avoiding competition with each other.

“We compete, you know, every day with our own sister members because, you know, that is how we’re, that’s in our DNA. We want to have more customers in our own stores to drive our own revenue.”

And the proposal is rather weak. All they are going to do is send a letter to the Commerce Commission to determine if it will actually reduce costs. Only if the answer was affirmative would they then legislate.

Fancy proposing something but then conceding that the rationale for it may not actually exist.

I don’t think this will get support from parts of the electorate that are hurting. They have long memories and can think about all of the shitty things this Government has done this term. This will not change that feeling.

Yesterday in Parliament Green coleader Marama Davidson started her question “Kei te Pirīmia, comrade …”.

Everyone in Parliament laughed. Except for the National backbench and the Act Party.

Luxon has as much chance of getting this through as he has of remaining Prime Minister in the next year. And his cynical approach to politics is clear for all to see.