from the Green Party website:
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The Green Party has today announced a plan to break up the supermarket duopoly by creating a publicly owned supermarket chain called KiwiMart, as part of its Affordable Kai election policy.
“Our country produces enough food to feed 40 million people. There is no shortage of food in Aotearoa, but it’ssomehow becoming too expensive for too many New Zealanders,” says Green Party Co-leader Chlöe Swarbrick.
“Two companies control what almost everyone in this country eats, and they take about a million dollars a day in excess profit out of our shopping baskets. That is money that should be in people’s pockets.”
“Everyone agrees we need competition in the grocery sector to drive down prices, but successive Governments have failed to lure one. That’s why today we are announcing the real solution: a supermarket owned by all New Zealanders, for all New Zealanders.”
“There are only so many places in a town where a supermarket can go, and Woolworths and Foodstuffs have seen to it that these sites are locked up. We’re not short of supermarkets, we’re short of competition. As experts have noted, divestment – that is, buying already existing stores – is key to breaking up the duopoly.”
The full policy includes:
- Breaking up the supermarket duopoly, requiring at least 120 stores and distribution centre capacity to be sold into public ownership.
- Establishing KiwiMart, a publicly owned supermarket chain with the mandate to prioritise affordability.
- Banning price gouging at supermarkets, through a bill to ban excessive pricing. The ban will be extended to other uncompetitive sectors, including energy and fuel.
- Increasing funding, penalties and powers for the Commerce Commission, including a mandatory pricing accuracy code with automatic compensation when shoppers are overcharged.
- A National Food Strategy, including a legislative right to adequate and nutritious food.
- A $150 million a year Fair Food Fund for community-led food security, and a doubling of the cap on food grants.
- Restoring and permanently funding Ka Ora, Ka Ako, and expanding it to 150,000 more children.
Modelling by the Parliamentary Library puts the cost of acquiring 120 stores and two distribution centres at $1.3 billion, with a further $1.5 billion to capitalise KiwiMart as a commercially viable competitor.
“Successive governments have studied this problem to death. There have been market studies, codes of conduct and stern letters, while the price of groceries skyrocketed. The Greens will not sit on our hands. We will ensure New Zealanders get the affordable groceries they deserve,” says Swarbrick.
Green Party Co-leader Marama Davidson says the plan also rebuilds the parts of the food system that governments have run down.
“One in five children in this country live in a household that runs out of food. The Luxon Government’s response was to cut what it spends on a child’s lunch, hand the job to a handful of big companies, and destroy up to 2,000 local jobs doing it.”
“Half of those lunches now fail to meet nutrition standards. Children who miss meals are two to four years behind their classmates in maths, reading and science. We will restore Ka Ora, Ka Ako, put it back in the hands of schools and local providers, and expand it so 150,000 more tamariki get a decent lunch every day.”
“We will also put $150 million a year into the food rescue organisations, food hubs, marae and social supermarkets already doing this work on the smell of an oily rag, because they know their communities better than any Minister does.”
“We will lift funding for food banks and regional food distribution from up to $8 million to $25 million while we fix the system that made them necessary.”
The Green Party launched the plan at Everybody Eats in Glen Innes, where meals made from rescued food are served on a pay-what-you-can basis.
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Honestly, I quite like this.
It’s ambitious, it’s legible, and most importantly it’s an actual attempt to solve the structural problem rather than commissioning another market study, tweaking a code of conduct, or hoping a third entrant will eventually appear.
I also have no particular ideological objection to the state owning supermarkets. If we think the duopoly itself is producing bad outcomes, creating a publicly owned competitor is an entirely legitimate market intervention.
My question is whether owning and operating 120 supermarkets and two distribution centres is the most effective way to achieve the underlying objective.
The obvious risk with KiwiMart is that we spend $2.8 billion creating a perfectly functional third supermarket chain, perhaps offering somewhat cheaper groceries to its customers, without putting enough downward pressure on prices across the rest of the market to justify that investment.
Or, even worse, it falls victim to the Kiwibank effect: too expensive to scale into a genuinely disruptive competitor, but too politically important to let fail. So it gets stuck in an awkward middle ground: minimally profitable as a going concern, but periodically needing substantial injections of public capital to remain competitive.
I wonder whether another tool could sit alongside KiwiMart, or achieve some of the same objectives much more cheaply: a government house brand of essential groceries.
The Crown could competitively procure a standard range of staples at very large volumes, require the major supermarket groups to stock them, and regulate the margin they can charge for distributing and selling them. Rather than owning the whole retail stack, we effectively hijack the infrastructure that already exists.
It also gives us some useful price discovery. We don't actually know that every expensive grocery item is expensive because of excess supermarket margins. It could be market power, genuine production costs, transport and distribution, upstream supplier power, or some combination of them.
If the Crown can procure and sustainably put a tin of tomatoes on the shelf for $1.50 while comparable products sell for $3, we've learned something useful about the market. If it turns out that $2.80 really is the sustainable price, we've learned something different.
And if we decide $2.80 is still socially unacceptable for an essential food, subsidise it. There's nothing inherently wrong with that either. But now the subsidy is explicit and targeted at the difference between the sustainable price and the price we want people to pay.
The government brand doesn't even need to dominate sales to work. If Foodstuffs and Woolworths respond by dropping the prices of their own brands to compete with it, that's a successful intervention too.
So I think there may be a broader package here: structural competition policy, a public competitor where it provides useful competitive pressure, a government house brand using existing retail infrastructure, and explicit subsidies where affordability rather than market power is the problem.
KiwiMart has the considerable virtue of actually doing something at the scale of the problem. I'm just not convinced we should jump immediately from "the supermarket duopoly isn't producing acceptable outcomes" to "therefore the state needs to own the entire supermarket stack".
I'm assuming the objective here isn't necessarily to own supermarkets. It's to make food cheaper.
The question is which combination of interventions gives us the greatest downward pressure on prices for the public money we're putting in.
Are you implying the Greens haven't already considered the question and that they're just blindly jumping into this?
No, I assume the Greens have a perfectly rational and politically defensible case for KiwiMart.
I'm simply wondering whether there are other or complementary mechanisms that might achieve some of the same objectives with less capital and greater national coverage.
Like every political party, they also come to policy with prior ideological commitments. A party already comfortable with public ownership and direct state provision is naturally more likely to reach for a publicly owned supermarket chain than, say, a regulated public house brand using the existing retail infrastructure.
That doesn't make KiwiMart irrational or poorly considered. It just means it's still worth asking whether the preferred mechanism is the most effective one.
My own view is that KiwiMart is a good idea, but possibly an incomplete one. A third competitor addresses concentration, but doesn’t necessarily address every reason food might be expensive, guarantee downward pressure on prices outside its own stores, or ensure the benefits are equally available nationwide.
That’s why I’m interested in what else could sit alongside it.
A public house brand seems to be popular tonight, you're the second one to bring that up.
So how do you see that working?
On second thoughts, I think this is actually what is making me increasingly sceptical of KiwiMart.
For an apparently radical policy, it's a strangely conventional solution.
The diagnosis is that the supermarket market is structurally broken: two vertically integrated firms have enormous market power and ordinary competition isn't producing acceptable outcomes.
And the solution is… build a third vertically integrated supermarket firm to compete with them.
Sure, it's publicly owned and has an affordability mandate. That's important. But we're still accepting the basic structure of the market and spending billions to insert another participant into it.
I'm increasingly wondering why we should accept that structure at all.
A public house brand could take a different approach.
Pick a relatively small basket of essential groceries. Stuff like flour, milk, bread, rice, pasta, canned tomatoes, frozen vegetables, etc, and have the Crown competitively procure them at enormous scale from existing suppliers.
That has another potential benefit: long-term Crown contracts create predictable demand that manufacturers can invest against. Rather than the state building the entire supply chain itself, we’re giving existing and new suppliers a reason to expand capacity and compete for a large, reliable customer.
Then use the regulatory state.
Require the major supermarket groups to stock them and provide access to their warehousing, distribution and retail networks on regulated terms. Set an allowable margin or maximum retail price based transparently on procurement and distribution costs.
If the Crown can sustainably put a tin of tomatoes on the shelf for $1.50, every supermarket in the country now has a $1.50 tin of tomatoes.
Foodstuffs and Woolworths can continue selling theirs for $3 if they like. Or they can suddenly discover that their own house brands can be sold for something closer to $1.50.
That's success either way.
It also gives us something we currently lack: price discovery.
If competitive Crown procurement tells us the sustainable shelf price is actually $2.80, then we've learned something. Perhaps the problem isn't primarily supermarket margins and we need to look further up the supply chain.
And if $2.80 is genuinely the sustainable price but we decide an essential food should cost $2, subsidise the remaining 80c. At least we're explicitly subsidising the affordability gap rather than throwing money into the system and hoping it reaches consumers.
It also avoids the postcode lottery of 120 KiwiMart stores. Using the existing supermarket networks potentially gives you national coverage from day one.
The more I think about it, the more I wonder whether KiwiMart risks preserving the very market structure we're trying to fix.
We're proposing to spend billions duplicating supermarket infrastructure because the people who own the existing supermarket infrastructure have too much market power.
Why not regulate the infrastructure?
That doesn't mean KiwiMart has no role. In fact, the credible threat of the Crown building KiwiMart if the incumbents refuse reasonable access terms could make the regulatory model considerably stronger.
But I'd reverse the emphasis.
Don't start by spending billions to become another player in a broken market. Start by shaping the market.
Use procurement to discover costs. Regulate access and margins. Use competition policy against market power. Subsidise explicitly where the underlying problem is genuine affordability. Keep direct public provision in reserve where the market refuses to deliver.
And weirdly, I think that may actually be the more radical proposal.
KiwiMart says: the state can compete in this market too.
I'm asking: why does the market have to work this way at all?
I haven't dug into the details yet, but my first thoughts beyond, wow nationalising something!, are how will this conflict with regenerative food production.
In your example, it's not possible to produce a tin of tomatoes that cheaply without the additional costs being paid somewhere else. Food miles, biodiversity loss, GHG emissions, pesticides, pollution from canning. Not that this policy has to solve all those things, but I do wonder how the Greens will reconcile this with moving in the right direction on regen and environment (and relocalisation)
Good point!
I guess I was more focused on the regulatory and market-design aspects, and didn’t stop to think too hard about where the food would actually come from.
And there is a genuine tension there. If the objective is simply to make a basic basket as cheap as possible, you could easily end up externalising a whole bunch of costs that the Greens otherwise want the food system to internalise.
It may well be that the two aspirations pull against each other in the short term. And I’d argue that, for the average voter the Greens presumably want to win over, regenerative agriculture comes a distant second to reducing the price of butter and milk.
That doesn’t mean abandoning the former. But it probably does mean recognising the political priority: first make the essentials materially more affordable, then work out how to progressively shift the system producing them in a more sustainable direction.
completely agree about what new voters will be interested in. Core green voters like me are going to vote green anyway.
I see it not so much as political priorities (col isn't more important than climate even in the short term), so much as the pathway. Can't get climate action with Just Transition, can't get Just Transition without socioeconomic justice.
But agree that a major push on regenag isn't going to win votes even at the best of times 😁 They can work on that in the background. I hope we see some major environmental policy soon and that there in integration with just transition work.
Woolworths and PaknSave both sell house brand tomatoes for about $1 per can.
that's not the true cost though right?
Thanks for your reply
Supermarkets already procure at an enormous scale so can't see that making too much headway.
Subsidising in the manner you are suggesting will come with on going taxpayer costs that will quickly add up.
At least the Greens will be able to recoup their expense overtime.
They also plan to regulate, giving the effect of that wider reach in locations that won't initially have their stores.
But due to their mandate, their own stores should be able to do a better price than that
I think you’re making a fairly big assumption that the stores will be able to materially undercut the supermarkets and recover their costs over time.
Maybe they can, but that’s the part I’d want to see demonstrated. A different mandate lets them accept lower margins, but it doesn’t make procurement, distribution, staffing, property or inventory costs disappear.
If the taxpayer ultimately has to make up the difference anyway, I’d rather directly subsidise a basket of essential goods than mediate that subsidy through an enormous vertically integrated retail operation.
The stronger argument for the public stores, to me, is whether they can change the structure and competitive dynamics of the market.
That might justify the additional cost and complexity.
This should clear things up a bit
https://thestandard.nz/open-mike-06-09-2026/#comment-2071730
Keep in mind procurement, distribution, staffing, property or inventory costs are all operating costs not profit
Quoting your own heroic assumptions to justify your heroic assumptions isn't much in the way of evidence.
Yes, there's excess profit in the current supermarket market. I don't think that's particularly controversial.
But the Commerce Commission estimating that the existing operators could earn a normal return at 5.5% doesn't establish that a new entrant can simply reproduce their cost structure and then dial its profit margin down from there.
You can't magic away overheads, capital costs, inventory requirements, distribution costs or economies of scale by fiat. In fact, a new entrant starting without the incumbents' scale, supplier relationships, property portfolio and distribution network may initially face higher unit costs.
And "they only need profit to cover their loan" isn't really how either profit or debt works. Servicing debt is a financing requirement, not the sole determinant of the return a business needs to be financially sustainable.
I was directing you to what I was basing my assumption on. I see you found it.
Yes, it's no guarantee they could automatically replicate that 5.5% but it shows what kind of return is possible. Thus, something to work off rather than just your reckons.
Further, as one assumes they are taking over as a going concern, there is a very good chance they will exceed that 5.5% due to their completive pricing and lower cost of borrowing.
Note: Buying a business as a going concern means purchasing a fully operational, active enterprise that you can step into and run immediately without any interruption in trade
I'm not magicking away overheads, capital costs, etc, merely pointing out the difference between operating costs and profit. Of course a financial return is not the sole determinant of a business's viability, I was just keeping it simple.
Which is the strength in the Greens proposal is not having to make a return (profit) apart from making enough to repay the loan. Giving the benefits of the majority of it to shoppers via savings
Nevertheless, I’ve lost faith in the Greens proposal as it seems they can’t tell us how much we can expect the average shopper is going to save.
Thus, I can’t believe they want to spend so much money without calculating how much it is expected to save. Unbelievable!
They make the left look incompetent
https://www.rnz.co.nz/news/politics_election-2026/1279360/greens-can-t-say-how-much-cheaper-kiwimart-would-be-say-government-won-t-set-prices
Only us geriatrics will remember when milk and bread were subsidised.
The downside was the choice. Brown, white and full cream.
This is the first time any party has said anything sensible regarding breaking the supermarket duopoly. This plan is the absolute minimum required to have any effect on the price of food. But not only that. Also and importantly the quality. This is the path to local food production initiatives that we saw develop around the healthy school lunches but on steroids.
If the left fail in November, it is no longer possible to say that we weren't offered a radical and life affirming alternative.
If you are on the Maori roll, vote Te Parti Maori for your candidate vote and Green with your Party vote. The resulting overhang wil give the highest Maori MP numbers ever seen and when all the tamariki are fed and full of nutritious food, produced in NZAotearoa locally our full potential can be reached
Agree. But Sanctuary just said they're prob going to vote Green for the first time, so there is hope.
Have they given any examples of what people can expect to save on an average shop?
Have they given an expected timeline to have it up and running?
Can employees expect a living wage?
Unless a living wage is also required for competing supermarkets, the "Kiwimart" will be on the back foot.
not necessarily. If the duopoly is raking it in atm (excess profit), in part by underpaying staff, then if KM doesn't need to make that kind of profit, they can spend on fair wages and conditions as well as lower prices.
They can, yes. But they can't simply handwave away the infrastructure and operating costs of the grocery sector.
Not having to generate excess profits gives Kiwimart some room to offer lower prices and/or better wages, but that doesn't mean there's enough room to do both to any meaningful degree: particularly while establishing a new nationwide grocery operation with all the logistics, property, distribution, inventory and staffing costs that entails.
That's why I'd quite like to see some actual modelling. What prices are they expecting Kwimart to achieve? What wages and conditions? How much capital will it require, and how long before it's operating at sufficient scale to materially affect the market?
Those aren't objections to the idea. They're the questions you need answered to know whether the idea actually works.
Or the front foot via productivity gains
Paying a living wage is said to attract better talent, boosts business productivity by lowering turnover, reducing sick leave, and increasing employee motivation and engagement. Moreover, enhances brand value with conscious consumers.
If we needed an alternative to a vertically integrated structure, we would just load more food subsidy onto Gold Card and Community Services Cards. You have a housing subsidy, a fuel subsidy, a doctor subsidy, a prescription subsidy, and a public transport subsidy already.
So you add a food subsidy.
how would a CSC food subsidy work? Scan at checkout?
Like all the others ones that are loaded onto cards.
My favoured soolution is something like this. Effectively a card that can provide a form of universal rationing, with a fixed dollar limit for a range of designated goods. So, for example, for fresh meat up to $20 a week per person would be GST free. Same for dairy, up to $20 a week GST free. Now, that is a $6 weekly saving there on just two item types. For a family of four across ten items that would be up to $120 a week off your groceries.
GST – Sanctuary names the tax that goes further down the pit than others.
GST – Gross Swivel-eyed Tariff.
how would that work in a dairy or small retailer? eg for people that live in a small down without the big supermarkets.
Like any other Gold Card or CCS retailer.
have you ever lived on a really tight fixed budget? can you imagine going round the supermarket at 5 o'clock with hungry kids and needing to get home, and having to calculate how much discount you are going to get at the checkout?
Old people do it all the time.
All main power companies vary charges according to time.
Same with movies. telco companies, etc.
Would the government legislate that all supermarkets have to sigh up? What about dairies?
does that mean you don't know?
CSC GP discount is a one off load onto your file, you don't have to do anything after that unless you go to a clinic you are not registered at.
Supermarket shopping doesn't work like that at all.
My opposition to subsidies is philosophical – while I see that they are a practical solution to an existing problem.
Just like the accommodation supplement – they just transfer the money from the State to the corporate owner, via the medium of the individual.
This results in the State propping up prices (or rents) and benefiting the corporate owner, rather than (or in addition to) the individual.
Yes, the individual has the option to eat, or somewhere to live (and those are the solution-to-the-problem pieces); but also, the government is providing a direct subsidy to supermarkets and landlords (which is part of the bigger issue).
Subsidies don't provide a mechanism to drive down costs. They act as a support to retaining existing costs.
exactly. Facepalm that a centre righty has to explain this to the left.
I also object because it's further ghettoises low income people. And benefit cards are a nightmare when the right get hold of them.
Subsidized food is just a stupid as Subsidized housing,
The duopoly will grin all the way to the bank and people will be no better off.
A government brand that is mandatorily stocked in supermarkets at set prices would be better than Subsidie or nationalization.
$2.6 billion plus ongoing operations of hundreds of millions a year is a big taxpayer subsidy for quite uncertain public food bill savings.
Easier to regulate customer cards than customers into a nationwide chain store.
except you haven't explained how such a card would work.
And B's point stands, what would stop supermarkets from just keeping on increasing their prices?
Maybe a Pam's card, loaded with x amount weekly strictly for use on the supermarket house brand, . I know irlts very Act sounding but I don't hate dedicated food cards. As part of a benifit.
The poor can do what they are told
Back in my dole days I used to wake up the day after dole day broke and hung over, so would do black work and live in spuds.
It would have been good for me if all I could by with 50% of my dole was food
Now imagine a young mum with a child on a specialised diet due to allergies. Or someone on a benefit whose car broke down and they need their benefit to pay for urgent repairs. Or someone whose rent takes up most of their benefit and they need the rest freed up to buy food wherever they can.
I don't know what the solution is to your situation, but food cards are demeaning and create all sorts of barriers to people surviving or improving their lives. And the right love them, because they get to set all sorts of conditions.
What subliminal says. The problems are structural, and if we keep putting bandaids on that, the problems will get worse.
The problem is structural. If you aren't prepared to disrupt the structure, nothing will change and any monetary subsidisation will just be sucked out in the same way that accommodation subsidies get sucked out by rising rent. By structurally breaking the duopoly with the provision of a state run competitor these problems are averted
Yes. Lets just subsidise private rent seekers, even more!
I don't think it will make much difference to the average grocery bill. I think one of the major problem is we pay the same price for NZ products as farmers can get for export. The more world food shortage the better prices for farmers but not so good for locals.
I would propose an export tax on food. Say one percent. Considering we export 80 to 90 percent of our food production its a lot of money to subsidise local food.
A reverse tarraff, all income spent on poverty.
Good idea Richard
According to chatgtp its not such a great idea. It would only raise 400 to 450 million not the 1.5 to 2 billion to remove gst from veg meat poultry fish and dairy.
We could replace parliament with AI and that would save another 200 million.
In addition, it invites reciprocal tariffs.
NZ also imports a lot of food – especially foods which are a luxury item here, while being a cheaply produced stable overseas (e.g. Olive oil – NZ grown is substantially more expensive than the same product imported from Spain or Italy). So increased tariffs are likely to make shopping more expensive.
Would it be possible for a buying agency be set up to buy our own dairy and meat at the prices McDonalds or Sainsbury’s pay?
You cannot get a clearer picture in Chloe S's intelligence than in this policy. It is awful. Pure clickbait politics. Even if it is accurate that the supermarkets are making $1m in excess profits per day, that equates to less than 20cents per person per day. So, removing that excess profit through either a windfall profit tax or the Greens current nonsense of more competition, it is hardly going to make a difference to the average Kiwi or Kiwi at the bottom.
Removing GST from food or alternatively subsidies for certain baskets of goods would make an actual difference to how much people are paying for groceries.
To be fair, it’s not necessarily about the immediate effect on prices. It’s about how you address the fundamental problem of a market that is clearly distorted and generating persistent excess profits.
If supermarkets are making $1m a day in excess profits, dividing that by five million people and saying “well, that’s only 20 cents each” rather misses the point. Excess profit is evidence that the market isn’t producing the competitive outcomes we should expect from it.
You can certainly argue about whether Kwimart is the right intervention. But “the excess profit isn’t large enough per person” isn’t really an argument for leaving a dysfunctional market structure alone.
And removing GST or subsidising particular goods addresses affordability, but it doesn’t fix the underlying market problem either. In a poorly competitive market, some of that subsidy can simply be captured elsewhere in the supply chain.
They’re different policy problems, and there’s no particular reason we can’t address both.
Well put RP
I don't think that the figure quoted is excess profit – just profit. Which, on the scale of the business in question, is just BAU.
Remember that they have to factor in growth, and return on investment to shareholders into this. And, if they are not profitable, then they'll go out of business. Which is not a good alternative for food-affordability, either.
Excess profit would be something like the windfall that some companies took during Covid.
https://www.rnz.co.nz/national/programmes/ninetonoon/audio/2018828257/the-cost-of-the-pandemic-the-financial-winners-and-losers
RNZ report that the Commerce Commission said it was excess profit.
https://www.rnz.co.nz/news/politics_election-2026/1279360/greens-can-t-say-how-much-cheaper-kiwimart-would-be-say-government-won-t-set-prices
Have they given a division between 'profit' and 'excess profit'?
If not, I suspect that it's just all one pot. And 365 million profit is not huge for a company the size of the supermaket chains. We're not talking billions here (which is the size of the bank profits in NZ)
https://www.nzherald.co.nz/business/companies/banking-finance/nz-bank-profits-hit-72-billion-kpmg/GMLZCWYP7ZA7JC66A7ASAQM3C4/
Looks like excess profit refers to how much more they make because of the duopoly situation than if there was a competitive market.
https://www.rnz.co.nz/news/politics/465212/supermarket-sector-needs-to-be-reined-in-after-huge-food-price-rise-minister
presumably $1m per day less than in the year the study was done?
It looks as though they are comparing the rate of profit with other food suppliers. And ignoring the fact that the supermarkets are still managing to be cheaper for customers (otherwise we'd all be abandoning PskNSave and shopping at Farro).
I don't love the duoploy – and think that the government made a substantial mistake when tgey allowed it.
But I can't see that a government run supermarket is really going to be an effective solution.
And, it will certainly have no impact in rural areas – where you pay through the nose at the local dairy – because the nearest supermarket is an hour's drive away.
Aldi have had a look and decided not to enter the NZ market. If they don't think it's viable and they are experts in the grocery industry (unlike the Greens), it should be a no brainer.
Pretty hard to find new player they would need a massive govt incentive to attempt it. We have really high market saturation and a comparably tiny number of people doubt anyone could recoup the startup costs.
Isn't there a fundamental difference between this Aldi coming here and setting up a new chain of shops on new sites across the country plus set up distribution centres, etc. and the Green's proposal to buy existing shops and distribution centres?
The fundamental difference is that one is government owned and operated, and the other is a commercial enterprise.
Yes, there is a fundamental difference. Foodstuffs and Woolworths have all the best sites. So if the Greens compulsory purchased say 60 sites from Woolworths and 60 sites from Foodstuffs, Woolworths may decide it is no longer viable staying in NZ after losing 1/3 of their stores, then we may again end up with a duopoly.
how many supermarkets does WW have in NZ?
About 187 or so.
ta. If WW had to sell 1/3 of their supermarkets to KM, and then decided to exit NZ, how would that work? They just shut down the supermarkets and sell the land? Or they try and sell the supermarkets? or what?
Losing possibly a 1/3 of their revenue (depends on which sites they were told they had to 'sell' to the government and at what price). Don't think they would like to lose their Greenlane store to the government. But losing that much revenue, they would re-examine the business model. Many companies would not survive losing that much revenue. A lot of the supermarkets also are long term leases, so they would try terminate those, more / entire Head office would be integrated in to Australia and run from there while they run down and reduce operations.
Im not sure how effective this will be and I cautiously favour a 'homebrand' type arrangement where the govt bulk purchases basic food supplies gets them to supermarket distribution centres and requires supermarkets to stock and display them with a set margin to hold the costs down.
There are a few reasons why I dont think a govt owned supermarket will work as intended.
1, Supermarkets make huge amounts of margin on junk food in part because its easy to store, zero wastage and high turnover Chips, Soft drinks, lollies, biscuits etc a govt owned supermarket will come under severe pressure if they are seen to be driving down prices on junk food.
2, There isnt huge margin on things like fresh fruit and veges wastage is high and to be frank the duopoly use some very heavy handed tactics to hammer growers down. I dont think a govt owned supermarket could operate in the same way it would be politically very unpapaltable to have endless stories about how it was miss treating suppliers. The growers are to scared / reliant on the duopoly to complain. A third supermarket may free the growers but will likely see prices increase.
3, There will be a clamour for staff to be paid living wages etc which if implemented will put Kiwimart at a competitive disadvantage.
I also suspect my homebrand idea will struggle to work in that alot of homebrand products are used as a lossleader to get people in the door so may not make much of a difference. Only other thing that might help is to reduce the ticket clips in the supply chain but Im not sure how thats best acheived.
Absolutely bonkers policy, almost gaurentees a coc government, bet chippy banged his head on the desk when he read it.
Well Chippy is doing his best to get a coc government back.
Wanting to take supermarkets by force is batshit crazy, gutted the greens went there.
why is it crazy?
The supermarkets would be bought out, not taken by force.
It will be a forced aquisition without doubt, sure they'll get brought out but under duress.
I hate people throwing communist comments around but this is getting close.
Is AirNZ communism? Kiwibank?
I saw Swarbrick explaining this policy to Ryan Bridge. Ryan Bridge actually put some maths to the idea, which showed how little benefit there would be for the costs involved.
The maths went something like this:
Swarbrick was banging on about the excessive profit of $1 million per day taken out by supermarkets now. Lets assume this profit was completely eliminated by the proposed "kiwimart". That is $365 million per day. Divide that by 5,000,000 kiwis equates to $73 per year, or $1.40 per week per kiwi. That isn't even taking into account the interest cost of the money borrowed to set this structure up, which I assume would need to be covered by the profits. So, once that is taken into account, there will likely be bugger all in savings for all this effort.
Air NZ at the moment is demonstrating why it is a bad idea for governments to own businesses. That is Air NZ has just reported a $242 million dollar after tax loss. So, nothing is guaranteed when setting up a business.
Swarbrick was also arguing that the government had been begging for a 3rd player to come into the NZ market. This hasn't happened.
Maybe that is because our market isn't big enough to support three players. So, lets assume that we set up "kiwimart" to generate this competition. That may mean there are then too many supermarket chains in NZ to be supported by the market. So, one or both of the other supermarket chains may decide to exit because there is no longer the market size to make it worth them staying.
Hence, we could go to all this effort and expense, and end up no better off than when we started.
if the excess profit isn't just profit after expenses, but instead profit currently gained because of the duopoly, then there is more profit in the system right? Which makes your and Bridge's argument off.
I wasn't asking your personal opinion about AirNZ and KM, I was asking what teh differences are in terms of government involvement. AirNZ doesn't have a charter that says it must make flying affordable for everyone. It was bailed out by the government as a strategic assed, and govt retained a majority share, but AirNZ isn't an SOE and there is no mandate for it to operate in a specific way.
KM is intended to be an SOE, with the mandate to keep food prices down. That would be done through a range of regulatory and commercial tools and strategies.
The $1.40/week per person line seems spurious to me and completely out of context of the whole policy. Res has been making good critique of the policy, Bridge not so much but favouring superficial gotchas.
You realise this sort of stuff has been tried in a much more pure form already?
Just take a look at the lessons from East and West Germany. Sure, what is being proposed isn't as controlled as East Germany. But, it is heading in a similar direction.
It probably isn't the intention of the policy. But, I think we end up in the same place because private businesses won't hang around where the state sets up the game in a way that they effectively dictate market conditions using the arbitrary power of the rules they can set.
You might have a point except that NZ isn’t a communist country and the policy isn’t about state control and domination.
Sure, and I made it clear that we aren't the same. Only that it is heading in that direction.
Here is an informative Duncan Garner interview with the Retail NZ Chief executive Carolyn Young. Well worth the watch if you want to push this idea seriously. Because, there are a lot of fairly strong points made that will need to be answered if the Greens want to sell the policy.
Does Garner understand what communism is? Did he call Kiwibank communism? Why is Kiwi Mart a slipperly slope but Kiwibank isn't?
So much crap to unpack here!
First, the duopoly has about 600 supermarkets throughout the country. The Greens propose to acquire 120 0f them – about one fifth. These, I imagine, will be in lower socio-economic areas so the right people can benefit most – and not those in Remuera or Fendalton.
Proportionally, the benefits going to locals will be proportionally greater – by about 5 times?
There can be no comparison between Air New Zealand and KiwiMart. AirNZ made a loss this year largely because of engine problems (purchased by one C Luxon when he was CEO). You know, the same bloke that lost AirNZ landing rights at Gatwick.
As for private enterprise being better at delivering services to the public, take a close look at the NZ power companies, or Thames Water in the UK.
Private companies are legally obliged to consider their shareholders first, not the public. That is largely the reason we have 26 billionaires in NZ, up from 18 in 2024.
The Greens proposal will break the duopoly (even if it does smack of the Soviet era (courtesy of one C Luxon today).
In theory. So long as we don't end up in a duopoly again because one of the players doesn't think the market can justify three supermarket companies, and decides to leave. But, even if I accept what you say, the 5x amount is still trivial.
Of course there can. Businesses often make losses. For many and various reasons.
The point is, that if "Kiwimart" loses money, then taxpayers are on the hook for it. What happened to all the money dished out under the NZ First regional fund for example? I understand most of that has just been flushed down the toilet.
One doesn't exist without the other. Shareholders won't reap the benefit of profits unless the companies generating those profits pay attention to the needs of the public they serve.
dunno, you didn't give any examples, but also the Greens aren't NZF. What is your point exactly?
If the point is to make food affordable again, in this case by breaking the price gouging by the duopoly, just see Kiwi Mart as a public good rather than a private business with a shareholder driven motive (the point Tony made). You don't have to make a profit, you just have to run the business so it works. Think social enterprise model rather than shareholder profit as priority model.
Why would one of the big players leave? They'd just abandon all their infrastructure and stock?
This report from the audit office was highly critical of the fund.
And it appears that over half the loan book is at risk of default.
I could respect the idea (not agree with it), if the aim was to make a commercial profit, then say feed those profits back into communities.
But, have you seriously thought of the consequences of the government running a business at zero profit, or even a loss in terms of the effect on the overall market? Do you think that privately owned supermarket chains are going to hang around in the market while a government owned one uses the power of the state economy to effectively undercut them?
IMO the result will be that the privately owned companies will bugger off, and we will be left with a state-owned monopoly supermarket chain, which will end up being far worse than the duopoly we have now.
And, to answer your last point, they probably wouldn't have much option but to leave. Because staying in an environment where they had no option but to make a loss or zero profit would be far worse than the one off hit of abandoning their infrastructure and stock.
Most businesses accept the reality of fair competition. But few are willing to hang around in an environment where the market is effectively rigged against them by the state.
you seem to be missing the central point. NZ isn't like other places where these supermarkets operate. It has an advantage here because of the duopoly. If that is broken, then they have to operate like they do in other countries within a competitive market. Why would they leave when it's like other places they operate?
Where does it say that the environment would be zero profit, or making a loss?
I think the issue is that the proposal hasn't been well thought through in terms of unintended consequences. A major hurdle for example would likely be the impact on our CER with Australia.
And, whether the market can actually support more supermarket chains at all. If two is the max a country with a population about the size of Sydney with an awkward geographical distribution can support, then that may be the inconvenient truth of the matter, and artificially adding a government competitor may not improve the situation because the market may naturally revert to a duopoly if one of the players decides it isn't economic to stay here.
two is the number where large chains want to invest to make excess profit. It's not the number that can exist and make normal profit.
Why? We had the Ministry of Works, which build all the infrastructure and the hydro damns before Roger Douglas gave it away.
You assume the typical blinkered capitalist view that only a profit makes things possible.
Also, Foodstuffs are a franchise operation; local owners will adapt, or sell up the the state, not simply walk away as you seem to think Woolworths would do.
Well, they can indeed sell to the state – and walk away with the profits – leaving the delivery headache to the government.
Running a major business – which even a small supermarket is – is a stressful working life. Without both an operating profit, and a potential capital gain – why would anyone bother?
Why would existing supermarkets not keep making a profit?
Because the profit isn't large enough for the risk. Especially if a government can change the market any time they please.
We see the former happening all the time. Watties are in the process of closing down their freezing works operations. They won't have been losing money on them – but not making enough to stay in the business in NZ.
https://www.rnz.co.nz/news/business/590812/heinz-wattie-s-to-proceed-with-closing-factories-discontinuing-some-products
For the latter – businesses are averse to risk in the operating environment- without the prospect of a high rate of return. The fact that Aldi wasn't interested tells you that there actually aren't super profits currently being made in supermarkets in NZ.
Here's some more ecomically literate responses to the announced policy
https://www.interest.co.nz/public-policy/140129/greens-pledge-publicly-owned-supermarket-chain-called-kiwimart-foodstuffs-and
The point that excluding GST from the staples would achieve an effective cost cut – without upending the industry, is well made.
Perhaps compensating by doubling it on junk food and fast food (yes, I know, a cost accounting nightmare – but we should have the tools to do it in the 21st century).
Also, determining just what are 'staples' is not an easy task, either. Fresh fruit/veggies seems simple – but I don't really see a reason to make imported cherries cheaper for the wealthy….
What is the evidence for both of those things?
There's a significant difference between opening new supermarkets, and taking over existing ones.
As someone pointed out, we don't have a shortage of supermarkets. We have price gouging because of an anomaly in the market.
TBH, no answer I can give you will be sufficient – for someone with an emotional attachment to he policy.
I've given you examples of businesses exiting NZ because the profit margin wasn't high enough.
I've given you examples of the type of people who invest in and run supermarkets – reacting negatively (in a rational, not emotional way to the economic consequences).
I can't run a time machine, and show it failing spectacularly. Although, the fact that the only governments running similar schemes are authoritarian, with minimal internal business operations (e.g China) should be a clue.
If we had price gouging in reality, then Aldi would have been in with boots on, welding price scalpels. The fact that they’re not indicates that the price gouging is in the minds of the politicians.
Not so much an emotional attachment to the policy as an attachment to robust debate. You put up arguments, other people challenge them, that's how it works.
For instance, re your point about Watties. This from the GP policy,
You gave an example of Watties closing because it wasn't profitable to stay open. But you didn't discuss why it's no longer profitable, after decades of being profitable. As if these things just happen and this some how proves your point.
The GP are proposing a commercial SOE that competes in the market, with regulation to make the market fair again. That's the thing to argue against, not vague handwaves to the big two abandoning their stores in NZ because their EXCESS profit drops to normal profit.
The policy isn’t to create no profit.
Why would they leave?
That's the reason. They're not longer competing against another company, with the same shareholder-profit requirements, but against a government – who can choose to make a loss. And, can engineer the playing field against them – as you mentioned
Businesses move out of competition all the time. If you don't see a reasonable chance of profit – then it's not worthwhile continuing to invest.
Ground rent, product inventory and salaries are huge expenses. If you're not making a profit – then you stop throwing money into the same hole.
What may be trivial to you might be a welcome relief for someone on the bones of their backside!
I'm not sure where you're getting the 5x benefit.
AFAICS, the 'excess profits' is across the whole of the supermarket revenue stream.
If you're talking about the government supermarket providing lower cost staples – these are often the things which are already loss leaders for supermarkets (bread, tinned tomatoes, frozen veg). It seems unlikely that the government supermarket can do much better.
Where do you see this 5x better coming from?
Yes, my logic deserted me a bit there with the x5 claim.
Nevertheless, it is safe to assume a government owned supermarket in a lower-socio economic area could, in times of cost of living crisis, be prepared to run losses so one of the basic needs of humanity could be met – to be fed – something this punching down government has apparently decided is not necessarily always the case.
So, why isnt removing GST from the staples a better solution?
It doesn't require a whole new supply chain – and a lottery to see whether you have a Kiwimart in your neighbourhood.
Do you envisage that the government owned supermarkets will be selling junk foods, snacks and drinks?
Because, that's where a lot of the profit is.
And, I can see enormous pushback from healthy eating advocates to hike prices for these, rather than lower them. Which will, of course, make people less willing to shop at the government supermarkets.
A lot of what is being described as 'staples' are already loss leaders for supermarkets (cheap bread, tinned tomatoes, etc).
The really expensive things are largely out of the supermarket control. Dairy and beef have international pricing. The farmers aren't going to sell locally for less than they can get internationally.
So the government has two choices. Force farmers to sell locally (to them) at a cut price; or subsidise these directly in the government supermarkets.
Ryan Bridge interview here btw.
$365 million per year not per day btw lol.
I am not sure this is well intentioned, its not going to get much beyond the vapourpaper stage. The issue with a government run supermarket within a capitalist system is the supply chain. I can see success only with workers cooperatives from the farm/factory to the store. Alternatively a policy of mandating a certain percentage of primary output to the domestic market at a controlled price is far more practical. Govt farms, need govt finance and so on… i.e a rethink about the entire system which as good little capitalists NZ'ers will not tolerate. Alternatively the hard work of legislating and enforcing effective anti trust practice in NZ is politically a hot potato. A practical alternative is to assist other players such as Aldi to enter the market.
what's the problem with an SOE supermarket chain and the supply chain?
I think the issue that irks Belladonna and myself with this proposal is that the government appears to be able to interfere in the market to drive prices down artificially in this proposal. This is the sort of thing that free markets hate for the reasons discussed in some depth already above. I think the effect would not only be in private supermarket chains leaving NZ, but a wider capital flight and NZ being avoided like the plague by investors because the writing is on the wall.
We already have several models of how it could work. That is Air New Zealand and Kiwibank. Note that the government doesn't step into these organisations to force airline ticket prices down, for example, so that poor people can afford to fly. The government essentially owns shares, but the board of the organisation is independent in its decision making in terms of pricing, routes etc.
Why not propose a model like that for KiwiMart? Or even just buy shares in the existing supermarket chains. Then distribute the profits to the needy.
I am still philisophically opposed to that sort of idea, because it involves people who might have no idea about making successful investment decisions investing taxes generated in part by my income being invested on my behalf, regardless of whether it is a good decision or not. And I would still have questions about how it was to be funded, and how the interest costs on that investment would be covered.
But, if KiwiMart was running as a true market driven business, it would have no more impact on the market structure than Air NZ or Kiwibank does now.
the irony of calling the current situation a free market while objecting to a third commercial supermarket entering the market.
I haven't objected to a third player. Where have I said that? In fact, I gave some examples of existing models of public ownership that might succeed.
then what's the problem with a third player that is an SOE?
Dont threaten us with a good time….
Your thinking is part of the problem, fiddling around the edges while keeping your class interests more or less untouched.
If you think that supermarket chains leaving NZ is a "good time" – you literally have no idea of the cost savings passed on to shoppers by the economies of scale and negotiating power of the chains.
Try shopping in a little local store in a rural area – to get some idea of what the cost to shoppers would be. Prices are regularly double – and often higher. And no, the shopkeeper isn't ripping off the community – those are the operating costs of single store Mom and Pop operations.
Of course the supermarkets aren't doing this for our benefit – they're working for their shareholders but we get to enjoy the lower costs.
yes, but the situation in NZ is that the duopoly allows the two chains to keep prices artificially high. That difference between ordinary profit and excess profit.
We're just going to have to agree to disagree about the concept of 'excess profit'.
The reality is that capitalism charges what the market will bear. And competitors all cluster around the same cost. The doesn't make it collusion. Look at the energy market (despite government part-ownership).
I understand that the reality and philosophy of capitalism are both difficult for socialists to accept.
lol, no we understand capitalism, we just disagree that it's a good way to organise things when it means kids and disabled people and elderly go hungry.
What does that even mean? We all know that capitalism unchecked will let people starve. Are you really arguing for that?
You probably should have led with "I fundamentally disagree with all the different people who believe the duopoly is a problem and should be broken up".
Not at all. I'm an advocate of breaking up the duopoly (and think it never should have been allowed in the first place – thanks Helen Clark).
But, I'm not in favour of a government backed supermarket. For lots reasons. I think it will cost a lot of money to set up and operate. I think that it will end up needing additional government funding. I think that there are better mechanisms to address food insecurity. I think there are better mechanisms to address "excess profits" (if someone cares to make a definition of what these are). I think that, historically, in NZ, the government does a very poor job of running anything (and SOEs aren't much better). And, I think that it will result in less competition (due to the exit of the international players).
Of course unbridled capitalism isn't a good idea. Straw man. No one was suggesting it was. But the way that governments handle it is to regulate the industry, prevent monopolies and subsidise the poor. Not prevent competition by creating a government backed player. Really, I don't know why the GP stopped at nationalising only part of the chain – nationalise the lot, and be done with it /sarc/
Perhaps you should have led with "I fundamentally disagree with the capitalist model of business, and will approve of anything which has a chance of destroying it – even if society is worse off as a result"
I think its a little alarmist to predict the main players will exit NZ, in fact I put it happening at zero.
Mom and Pop in the sticks… yeah right! Clearly you dont know to much about how the system works. M & P are just as likely to gouge as the big guys.
Shareholders = profit takers = rent seekers. You pay so they can buy a bigger (insert trophy acquisition). The supermarket biz in NZ is more or less a closed shop, tightly held with the plum jobs (manager/owner) going to connected individuals. How many yachts and properties can be purchased by an owner of a big store- LOTS! That is all profit, dare I say it superprofit from a highly controlled industry that we all need.
Capitalism is meant to deliver via the free market low prices and choice, but instead these capitalists have slowly stifled all opposition including by legal means, to the point that its extremely difficult without govt intervention for a competitor to enter the market.
Our anti-trust laws and the com com are as weak and wishy washy as Hipkins public image.
While this initiative of the greens has almost no, in fact no chance of going ahead it keep the issue in the spotlight and I applaud them for it. Labour OTOH have the usual centrist middle class manager approach which amounts to nothing, no change just more of the same (with handwringing)
If the GP policy were enacted, I'd put the chances of the main players exiting, a lot higher than zero.
But, you were the one claiming that this would be a good thing. Are you now walking that back?
However, I agree with you, its a dead duck policy, IMO.
Perhaps the greatest achievement of this election to date is the Greens have completely stolen and grown the policy momentum for the left in this election.
Big congrats to the Green team for that.
Agreed. This is a core purpose, to change the narrative and shift the Overton Window.
"This is a core purpose, to change the narrative and shift the Overton Window."
So, are you trying to say that the Greens aren't really serious about buying up 120 grocery stores and manipulating the market government force, but really just want to use the proposal to stimulate debate?
Because, if that is the case, I have news for you. At one point of time, Green's proposals (and that of many fringe parties including ACT even) could be seen as cute but impractical ideas that never had a chance of actually becoming policy because they would never actually be adopted in a coalition arrangement.
But, at the moment, with the state of Labour polling at around 25-26% in the latest Curia poll, and National as well, actually, then minor parties are starting to look a lot less minor, and may have much more negotiating heft in any coalition arrangement.
Hence, I think voters are going to have to look much more closely at policies proposed by minor parties because there is much more chance they could be adopted given the relative weakness of both Labour and National.
So, there is a good chance the Greens might get the opportunity to actually try and impliment this idea. And, then, we will actually see who is right.
No.
I'm making the observation that the Greens use their values, principles and policy platforms to influence politics. They do this from the power they hold as a party left of Labour. They've been doing this consistently for decades.
Climate and poverty are the most obvious. This isn't the Greens not being serious about climate and poverty, it's them being very serious and producing costed policy every election that also raises awareness of the issues, stimulates debate, changes the narratives and shifts the Overton Window.
I would argue they've done this on wealth taxes too.
It opens the door for Labour to inch leftwards. It's very smart politics, and few people understand how it works, instead seeing the Greens as not winning because they're not inside Cabinet.
You may see Green policy as cute, but that's ridiculous when you look at their costings and work, they produce the best policy of any party in parliament every election year.
Not just the Greens, but other minor parties as well of all stripes. They were previously on safe ground to propose somewhat extreme ideas with the hope that some flavour of that might be adopted in coalition negotiations. Not so much now with the relative strength of minor parties now. So, I think it behoves the Greens to really do their homework on this. And critiques from some of us on this forum are probably doing the Greens a favour in this respect.
BTW, have you read the Stuff article on the Green's proposal?
I would concur with the article where it says:
Of course. Robust debate is the kaupapa of the site.
Calling the policy communist or posting to Duncan Garner vids don't count as robust debate imo.
There are lefties critiquing the policy.
You and Belladonna from the centre right also, I'm just pushing back on the bits I think aren't fully developed as arguments. I don't think either of you have made the case that an SOE supermarket chain is inherently a problem. It comes across as more an ideological objection and then trying to find the arguments to support that. Which is fine. I start at the other end with my own ideology and find the arguments to support that too. That's what we do here.
also going to note that the Greens both say 'we want feedback' and they change policy in response to feedback (eg the wealth tax policy has evolved in significant ways in recent years).
I didn't call the proposal "communist" when I pointed to the East Germany/West Germany lessons.
I think the philosophy behind the system is irrelevant. It is more how it was attempted to be implemented, through compete government control of the system. For example, having a committee that decided how much bread families needed etc, determing production centrally and setting wages accordingly. The result, as I understand it, was that people essentially were equal. But equal in their poverty.
Now, no way does the Green's proposal go that far. And I am not making that accusation. But, once policy lurches into the area of aiming to exert government control of prices in a competitive environment, it is definitely a step in that direction.
As I said, I wouldn't have the same objections if the Green's were to promote the idea of a supermarket set up along the lines of kiwibank or Air NZ. I would have different objections, but not as strong.
ok, you didn't call it communist, you just compared it to a communist country despite it not being anything like what the Greens are proposing.
Ideology is inherent in the argument. It drove policy in East Germany, and it drives policy in NZ (neoliberalism). Nothing wrong with being honest about ideology.
We don't have a free market, so it's all a matter of degree and direction.
How are tariffs not government control? Was Muldoon heading towards communism with tariffs in the 70s?
"Ideology is inherent in the argument. It drove policy in East Germany, and it drives policy in NZ (neoliberalism). Nothing wrong with being honest about ideology."
Sure. But, it was a specific way of implimenting the policy. Not necessarily the only way. And policies that head towards more government control are heading further in that direction.
And, it doesn’t need to be “Communist” either. For example, the Trump style of government is heading in a similar direction IMO.
"How are tariffs not government control?"
Definitely they are. I am not a fan of those either.
"Was Muldoon heading towards communism with tariffs in the 70s?"
Don't get me started lol. All I would say is that "if it walks like a duck and quacks like a duck…."
ok, this isn't a serious conversation if you think Muldoon was heading towards communism.
what you appear to be saying is: anything that isn't a free market is heading towards communism. Which would include NZ as a neoliberal social democracy. Sorry, but that is just daft.
Take the word "Communism" out of the conversation. That isn't relevant to me.
As I pointed out, the overt attempted government control over markets can occur from the left or the far right (as per Trump).
That is what I object to. The more those dynamics are introduced into a free market, the more it becomes distorted and less free. Once governments start trying to control pricing overtly, then capital will flee.
That doesn't mean there shouldn't be any government control. Health and Safety regulations. AML regulations for financial institutions are all instances of where the government intervenes to ensure the market does operate in a fair and open way despite the fact that it does distort the market to some degree.
"…but he doesn't actually explain why this particular proposal would destroy business confidence in NZ."
I have no idea about your background, and whether you have any experience and starting and running a business.
But, lets say for arguments sake, that you were running a business selling some widget or another. And you just found out that a competitor down the road had just been purchased by the government and had been mandated to sell the same product at 30% less than your own cost of purchasing the widget, to make things fairer for people. How would you feel about that?
Once you have that answer, you have answered your own question.
where does the 30% come from?
The amount doesn't really matter. Or whether a government would actually mandate such a thing. The important point is that it can do that.
That is the sort of thing that scares businesses.
Any business, no matter what size, will go broke eventually if it continually makes losses. So, businesses tend to be very sensitive to their costs and make adjustments if it looks like things aren't going well.
Government owned businesses aren't like that. They could potentially make losses forever, and they would continue to survive regardless so long as the tax payer continues to prop them up.
And, because of this, there is much less motivation to control costs etc and adapt to the market. Say freight cost went up by 50% overnight, say due to a fuel crisis such as is being experienced at the moment. Would a government owned business respond to that by increasing their own prices and cutting costs? Or would they just plough on as if nothing had happened?
At least with the likes of Kiwibank and Air NZ they are run as competitive businesses in a competitive market. So, the same distortions are unlikely there. But one where it is established to reduce prices for social objectives? Not so much.
this is magical thinking. Pleas explain how that would work that Kiwi Mart would drop food prices across teh board by 30%.
Also, supermarkets already run loss leaders and are able to do so because of their size and the duopoly. Do you think they should be regulated to prevent that? How would that even work? Are you saying no business should ever undercut another.
look I get you are scared of the idea. This is why honesty about ideology matters. You are arguing vague handwaves to terrible things, but I can't see the basis in reality.
From the GP policy document,
Sue Kedgley said on the Panel yesterday that the policy also says to empower the Commerce Commission, which would also keep KM inline just like the other chains.
Invoking East German bread lines is fearmongering. I will again note the irony of free marketeers freaking out at a policy that wants to make use of the market and remove anti-market structures like we have now.
"Pleas explain how that would work that Kiwi Mart would drop food prices across teh board by 30%."
Ok. The government decides that the price of milk is too high for consumers. So, Kiwimart will drop the price of milk by 30% forthwith.
"Also, supermarkets already run loss leaders and are able to do so because of their size and the duopoly. Do you think they should be regulated to prevent that? How would that even work? Are you saying no business should ever undercut another."
Now you are conflating government mandated price drops with competititive behaviour.
When supermarkets or whatever run loss-leaders, they knowingly do this to attract customers with the hope that they will purchase products with better margins while they are there, or become longer term customers. But, these businesses knowingly forsake some profit with the hope of generating more profit in the future. In the end, they have to make a profit.
A government-owned and controlled business isn't like that. It doesn't ever have to make a profit, and could run at a loss forever so long as tax payers prop it up.
Businesses that operate in a free market accept that other businesses might be able to find cheaper sources of a given product. That is just part of being in business, and requires innovation and differentiation to survive.
But that is different to having a government competitor that can simply mandate a price because it wants to, regardless of its input costs.
Where does the GP policy say that government would set prices of individual products? Please quote.
From the policy:
"Establishing KiwiMart, a publicly owned supermarket chain with the mandate to prioritise affordability."
So the mandate of Kiwimart is to prioritise affordability. So, if it is decided the price of milk is "unaffordable", what should it do according to its own mandate? Reducing the price of a specific product, for instance milk, is an obvious way to achieve its mandate.
You mean like how the two big chains use loss leaders to achieve their aim (of shareholder dividends)? Or did you mean something else?
I think the issue is that the mandate is for KiwiMart to sell at an affordable price, not a profitable price.
So, there is no need for KiwiMart to adjust its prices up elsewhere to cover the cost of its loss-leaders. It can simply cut prices to make them "affordable". Bugger making a profit. Who needs that?
I think the issue is more that you can't see that affordable can happen in a market situation. Which is quite the admission.
Did you watch the Ryan Bridge interview? Swarbrick clearly says that it will be a for profit business owned but not run by government
https://www.nzherald.co.nz/video/herald-now/ryan-bridge-today/nobody-has-been-able-to-find-the-third-player-greens-govt-owned-supermarket-ryan-bridge-today/POKEAPQ3NJKGFJH6WX72C4RWAM/
Ok. As I said, if it were to run as a kiwibank style of model that would be a different thing.
But there are several concepts that are quite woolly at the moment. What does "affordable" mean? What does she mean by claiming it will run at a "profit". Does that mean say at the average profit of similar overseas chains. Profit, less the duopoly extra profit the Commerce Commission has identified?
But, if it is to run at a profit, then we get back to the earlier criticism about whether it is worth the effort given all that will theoretically be saved is the duopily profit being saved that amounts to bugger all for the effort and expense of setting this up.
It's getting difficult to reply to this chain.
But a loss leader is a strategy to increase market share. It is compensated by profits from increased sales (of other items at full markup) to those customers.
That is not at all what is proposed for Kiwimart. They can just drop the prices to customers across the board – with no expectation that the costs will be made up elsewhere.
That's not an environment that commercial players can compete in.
Except they can't. If they dropped the price of milk by 30% permanently (as was the suggestion), the Commerce Commission would step in. Kiwi Mart is intended as a commercial operation.
What part of Kiwi Mart being a commercial business is not getting through here? Are you thinking the government would control grocery prices directly?
That's not what the policy statement says
https://www.rnz.co.nz/news/politics/1271645/greens-vow-to-break-up-supermarket-duopoly-set-up-publicly-owned-kiwimart
Nothing in there about running a commercial operation. If they are mandated to prioritize affordability – they can decide at any time that milk (for example) isn't affordable – and cut it below cost price – without having to make up the profit elsewhere.
It seems to me there is a degree of "making this up as they go". I agree. If it is to be run profitably then their mandate should reflect that.
But, I think they are caught between running something to be affordable regardless of profits. Then it will be a shitshow for the market, with blatant government interference likely.
Or they run it at a profit, perhaps less the duopoly profit.
But then it runs into the criticism of “what’s the point” because the benefits will be negligible for the expense. And, it will have to cover the interest cost for all this in order to be profitable. So, there might be no benefit whatsoever.
I agree there is a degree of making it up as they go, but not from the Greens 😉
Why are you still ignoring what ‘excess profit’ is?
SOE runs as a business, makes an ordinary profit, uses that to keep prices affordable. What it doesn’t do is price gouge and keep prices artificially high (excess profit) and take out half a million dollars a day over and above its ordinary profit.
Until you understand what the policy actually is, your assertions that it can’t be done can’t be taken seriously.
From the GP policy document,
the idea that KM could just drop prices as it wanted appears to be made up. How would it continue to function if it didn't even cover its costs?
Ok. So, it is to be profitable. But, what does that mean? Does it have to cover the interest cost on the investment to set all this up? And, if so, will it be any better than the existing supermarkets by the time it does cover the interest costs.
And, I think it should. After all, its competitors have to cover their cost of financing through their profits. So, if it is to compete on a level playing field the same rules should apply.
And, if the best it can do is remove the duopoly profits, then that is only saving several dollars per week per person as per the earlier analysis.
So, it all seems expensive and pointless to me.
The government would bail it out. After all, it's mandated to prioritize affordability.
Kiwirail. Air Nz. Too big to fail….
do you think Watties should be bailed out?
Of course not.
The fact that Swarbrick did not fare well when interviewed by Bridges and challenged on the economic costs and assumptions – indicates that this is not an example of a well costed and thought through policy.
that would be another example of you not making a particularly good case. It’s basically an ad hominem. If you think she didn’t do well and this equates to poor policy then explain that.
I mean, you do generally make good arguments. That one is beneath you.
The point is the Swarbrick generally <em>does</em> do well in presenting GP policy. The fact that she didn't on this occasion – inclines me to the belief that this policy is not well thought through and costed.
seems fine to me. He's asking valid questions about the price of milk, she's pointing out that they can't know at this time what the pricing would be.
She's trying to explain a policy that is quite complex, for a situation that is very complex, in a situation where Bridge is wanting to ask questions that don't elucidate the policy. That's fine, it's hard.
https://www.nzherald.co.nz/video/herald-now/ryan-bridge-today/nobody-has-been-able-to-find-the-third-player-greens-govt-owned-supermarket-ryan-bridge-today/POKEAPQ3NJKGFJH6WX72C4RWAM/
What's interesting, remarkable in fact, is that both you and I assume tsmithfield both watched that interview and apparently missed that KM would be an SOE not govt run, and would be for profit.
Not what she's reported as saying elsewhere.
https://www.rnz.co.nz/news/politics_election-2026/1279360/greens-can-t-say-how-much-cheaper-kiwimart-would-be-say-government-won-t-set-prices
There is a very big difference between a "for profit" and "not for profit" organisation.
Apologies – I mis-read her statement.
But its not clear what she means by 'profit' especially when she refers to self-sustaining in the next sentence – which implies a break-even model, rather than one designed to make a return to shareholders (in this case, the government).
And a mandate for affordability – definitely creates conflict with a for-profit model.
I've not seen any suggestion of KM providing dividends to government. Presumably the dividends (ordinary profit) go back into the business to lower prices. But the SOE decides that, not the government.
Again, I think the sticking point is 'excess profit'. The commerce commission appeared to say that the $1m per day was over and above profit that would happen if the supermarkets weren't a duopoly. I haven't seen what that 'ordinary' profit is (as a number)
how so? I mean, it would create a conflict for the duopoly's excess, above ordinary profit, that's the whole point. But that doesn't mean they can't still make a profit to pay out shareholders.
Again, running out of commenting room.
But if there is no mandate to return profits to the government, then they are proposing a not-for-profit model.
The GP have to pick one!
And competition against a supermarket which doesn't have to make a profit – would be a very strong reason for the existing chains to leave NZ.
Again, look at the Watties example. Major international businesses can exit the NZ market at any time. And having a government backed competitor, would be a prime reason to exit.
why can't Watties make enough profit and has to close?
You'd have to ask them!
I think I've explained this, but let me see if I can write a synopsis,
Current situation: Duopoly keeps prices artificially high, because it's a duopoly.
Because of that it makes ordinary profit, and excess profit.
Lots of people can't afford food.
Most people across the economic spectrum agree the duopoly needs to be broken
Lots of people think a third player would help do that. No third player wants to establish in NZ by building more supermarkets (which aren't actually needed and therefore wouldn’t be profitable).
Proposed solution:
Kiwi Mart, SOE, owned but not run by government. Govt doesn't set food prices, but it does use legislation to make Foodstuffs and WW sell a % of their stores to KM. That's how a third player enters the market. Not by building new supermarkets that aren't needed, but by taking over existing supermarkets from companies that are price gouging.
Kiwi Mart would make ordinary profit. It wouldn't make excess profit because it would be charging less for food at the checkout.
Foodstuffs and Woolworths would be free to compete in that market. They could continue to make ordinary profits.
Hi Weka,
I do understand the issues. And it looks like this has now morphed into something closer to the Kiwibank model. It would have been helpful to know this a lot earlier as it would have saved a lot of typing.
I think one of the issues with these type of policies is that it assumes that all else stays the same once a change is made. But, that often isn't the case.
As is pointed out previously, what happens if the market actually can only afford a duopoly? Perhaps due to the low population and geographical distribution in NZ. And, that arguably may well be the case. Otherwise, the efforts of previous governments to encourage additional competitors into the market would have reaped fruit by now.
So, if Kiwimart ever does get established, and there is in effect only room for two players, then one will drop out, and we will be back to square one. But taxpayers will now be on the hook for Kiwimart.
To Tsmithfield:
If that is the case, wouldn't that necessarily increase the reach of the other two? Kiwimart could buy up the 'redundant' supermarkets for a song and be part of a state owned/franchise supermaket duopoly, assuming Woolworths cuts and runs. No foreign ownership.
Good summary, weka. Highlights the urgent need for anti-trust laws like in the USA in the early 1900s.
Who is to say one of the private competitors ends up dropping out in that scenario? It could just as easily be Kiwimart that folds because the government can't make it profitable, and gets sick of pouring in taxpayer money to keep it afloat.
Which underscores how risky the proposition actually is for taxpayer funds.
There are an awful lot of assumptions here.
The concept of excess profit has yet to be established. If it were extraordinarily profitable to operate in NZ, Aldi would have been in, boots and all (especially as the government was clearly poised to remove regulatory barriers).
The profits include *everything* supermarkets sell. Highly processed snacks, fizzy drinks, sweets, etc. Many of which are the most profitable lines. I gather the GP, in other policy, would like to make these more expensive, rather than less. How does that work in Kiwimart?
Many of the staples (bread, tinned tomatoes) are already sold as loss leaders, or minimum profit items – so little change in prices can be expected.
Other price-point-pain items (cheese, beef) are set by international markets. The supermarkets aren't making excess profit, here. Unless the government is going to legislate local supply costs – then a government supermarket will do no better than the existing ones.
Local supply/cost of perishables (e.g. veggies) is largely seasonable and weather dependent. The current supermarkets are notoriously hard-nosed over their negotiations with suppliers. I doubt that the government- faced with the OIA- would be similarly cut-throat.
Do all of the government policies about living wage, etc apply to Kiwimart? That will increase their costs.
How does the government decide what is excess profit? Do they just mandate a percentage? What happens if there is a bad year? Does the government bail them out?
If the government is prepared to establish a principle of 'excess profits' then why not just tax excess profits more highly? (And fund CSC card-holders for food cost support out of this tax)
If no new physical supermarkets are needed, then how does the government address affordability in one supermarket towns? Or don't they matter?
It was an absolute treat to hear that oleaginous twat Wallace Chapman invite Tex Edwards on RNZ last afternoon to discuss the Greens supermarket proposal with a smug expectation that Edwards, who according to Chapman "knows a thing or two about capitalism", would give the idea a good kicking only to have Edwards endorse it. Chapmans squirming was delicious, he couldn't end the interview quickly enough!
oleaginous /ō″lē-ăj′ə-nəs/
adjective
1. Of or relating to oil.
2. Falsely or smugly earnest; unctuous.
"oleaginous flattery."
3. Having the nature or qualities of oil; oily; unctuous.
Great word!
I think a more fundamental issue here is that the cooking habits of many have changed a lot.
I know this because I am on the board of a trust that runs a community garden, and cooking lessons for people from the community. So, they learn how to grow their own food, and then what they can do with it once they have it.
I think a lot of the problem is because people have become very dependent on the processed, preprepared stuff. And, hence, I can't see that another supermarket chain will make much difference, as all the supermarkets will be hooking into the same or similar suppliers of that stuff.
If people can learn to cook their own food from scratch again, then there are lots of options for buying or growing the basic food items such as fruit and veges.
For instance local farmers markets and the likes of Kai Co here in Christchurch:
https://kaico.co.nz/
this is a nonsense. I'm skilled at cooking and gardening, I learned both growing up, from parents who were kids during teh depression, and whose families knew how to cook and garden. But I have a disability, so I can't grow enough food to make a difference.
My parents had a quarter acre section, tools, and family around to help look after the kids. They didn't have to drive far to work. Meaning they had time to garden.
Now consider a solo Mum, no garden in her block of flats, the nearest community garden is in the opposite direction from the her social circle who can look after the kids, and she can't afford the time and petrol to drive both ways.
These are not difficult things to understand. But also, if everyone grew their own food and cooked from scratch wouldn't the supermarkets stop making so much money? 😱
If you want people to grow their own food and cook it from scratch, you have to remove the barriers.
Surprised as you may be, I have no love for the Supermarkets either.
We are fortunate to live near Marshland road where there is a local New World supermarket. But we only buy small quantities of veges from there because we have a number of vege shops up the road that sell local produce.
Also, there are quite a number of farmers markets around the place where a lot of people can buy locally grown veges. It is also possible to purchase "Ugly Boxes" of produce that was too misshapen to go on the Supermarket shelves but is fine otherwise. And there is also the likes of "Hunters for Hope" which supplies locally hunted venison to charities to give away. Turning an environmental pest into good food is surely a win-win.
I think the big thing is for people to at least be able to source basic produce and know what to do with it. And, I think that is where a big gap is these days.