Follow the podcast on
Didn’t you always know that this Government, in clamping down on something, would involve a working group, a watchdog, a commissioner or a report?
Turns out they’ve gone with a mix of all four. ‘Grocery Commissioner’ is the official title of the watchdog being set up. Supermarkets must be quaking in their boots. Not.
It will take a while to establish – first they need to set up legislation round it, then there’ll be a mandatory code of conduct drawn up, so by the time the legislation goes through the House and the a commissioner actually gets appointed it’ll be mid 2023.
That’s if they work to time, which they won’t, so that’ll be delayed. And in terms of when we the consumer will actually see the results of all this watchdogging?
They’re only just at the ‘discussion paper’ phase. And when it finally comes down to the grocery commissioner appointment part – how many people flank up this new department with the fancy new title? Have you ever encountered a government more bogged down in layers of bureaucracy and paperwork and codes of conduct than this one?
Here’s the small print we need to be really wary of though. While appearing to wield a big stick, will all this bureaucracy just mean higher prices at our end? It was reported that MBIE admitted there was a risk that the code could “limit the ability of the major grocery retailers to negotiate fairly and firmly with suppliers”.
MBIE also said that “this could contribute to higher costs for the major grocery retailers, which would make it harder for them to provide consumers with the range of products at competitive prices.”
So there is a risk of compliance costs getting passed onto us at the checkout.
Comparing it to the UK model, it’s reported that based on their numbers, the “cost to the Government of implementing the regulatory functions associated with a code of conduct could be roughly $1.5 million per year. Compliance costs for retailers and suppliers are estimated to be around $750,000 to $800,000 per annum.
That includes costs associated with disputes, complaints and queries from the regulator.” And while the Government’s pointing the finger directly at fat cat supermarket retailers, the opposition says the Government’s missing the point.
Act’s deputy leader said that ‘the reason Kiwis pay too much for food was ”rampant domestic inflation fuelled by Government spending". She said that.. "the Government needs to admit that it’s the inflation it caused, that’s hurting Kiwis.” Act also says it’s nigh on impossible to enter the grocery market with all the regulatory barriers here, it’s just too hard for many players.
So how much competition will we really get? And how much teeth will this new watchdog really have? Will the benefits of having it offset the cost and time spent setting it up and administering it?
And in all this bureaucracy and paperwork, will we the consumer in the end actually be any better off?