Grocery Industry Competition Bill

I present a legislative statement on the Grocery Industry Competition Bill.

ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon Dr DUNCAN WEBB: I move, That the Grocery Industry Competition Bill be now read a third time.

What a great day it is for ordinary New Zealanders, because today this bill will pass into law. A bill which will clamp down on the excess profits that supermarkets have been making. I want to first of all want to recognise the work that my predecessor, Hon Dr David Clark, did getting this bill into the House and before the select committee. He has been a stalwart and done great work in respect of this bill. It is an absolutely momentous day as we proceed to the final vote, and to pass this important bill, to benefit New Zealand consumers—all New Zealanders—to put money back into their pockets by giving them a better deal at the checkout. This is a key step forward in addressing the cost of living.

I’ll say again that this bill is necessary because the Commerce Commission’s market study presented a clear finding: consumers aren’t getting fair deal at the checkout due to systemic competition issues. Consumers deserve a more competitive grocery industry, and this Government has taken action.

There are two clear signs that our grocery markets aren’t working as well as they should. First, excess profits. The profits being made by the big supermarkets, Foodstuffs and Woolworths—they’re taking home between them more than $1 million a day in excess profits, and that’s keeping grocery prices higher. And that’s money—that’s $1 million a day that could be, and should be staying in the pockets of ordinary New Zealanders to help relieve cost of living issues. Second, despite consumer demand for choice and ample room in the market for a third or fourth competitor, we have not seen a new entrant into the grocery market to compete at any scale for more than a decade. And only now that we are taking action are we seeing movement in the market as it becomes clear to prospective new entrants that the time is right, and the ground is fertile. So consumers do deserve a more competitive grocery industry.

This Government is advancing this Grocery Industry Competition Bill to give consumers a more competitive grocery industry. It signals how serious this Government is and how far we will go, as far is as necessary to ensure Kiwis can buy groceries at affordable prices, and can shop for the range of products that they demand. This bill will regulate the grocery industry to benefit consumers. It creates a Grocery Commissioner to monitor and regulate the industry and to keep the New Zealand public informed of what is happening.

It provides a platform for retailers to enter and expand in the grocery industry by imposing requirements on the duopoly to facilitate commercial arrangements for the wholesale supply of groceries, and there’s a flexible toolkit of backstop measures if it doesn’t work. So there’s more to be done. We will remain vigilant in this space. So this will allow the commission and the Government to impose additional regulation if necessary.

It also provides new protections for suppliers through introducing a grocery supply code to limit the ability of the duopoly to pressure suppliers into accepting contracts that are one-sided. The days of onerous contracts foisted on suppliers are gone. We recognise that a fair market for suppliers is a fair market for consumers, and we will look to ensure this.

This bill has real aims and real ambitions, and we are making progress. Success will exist when there are grocery retailers genuinely and vigorously competing against each other, and we are starting to see that happen, and we are seeing fairer prices already. Success is an innovative grocery industry that provides consumers with clever ways of shopping, saves time and effort. Success is that consumers have choice to do the full weekly shop at a single store beyond just those owned by both Foodstuffs and Woolworths, and paying a fair price at the checkout. Success is when small, locally owned suppliers have more options of grocery retailers that they can sell into for fair prices to get them to consumers. And success is when the excessive rise of grocery prices that we have seen, which have been rising faster than inflation, starts to level off—

Simon Court: Off you go then—off you go and take your inflation with you.

Hon Dr DUNCAN WEBB: —and that’s something that we are seeing now as well, Simon Court. Yes, that’s right. It’s working. We are making progress. We are a Government of change who sees a problem and addresses it. We are not a party that goes backwards and stands still like on the other side of the House. This is a problem that has been coming for a while and the other side of the House did nothing, has done nothing in the competition space because it likes to look after its mates. But we will not. We will take on the difficult problems of our economy, and we will use the Commerce Commission to do it.

Success looks like having a Grocery Commissioner in place, and I am very confident that it will be a highly competent Grocery Commissioner with a very specific set of skills, and a high degree of expertise in this sector, and also the passion, the desire, and the competence to make the change that is necessary. I want to say that, for suppliers, success looks like a grocery supply code that addresses the critical pain points they’re facing.

If you wanted to do something useful, Mr Court, go and look at the exposure draft of that code and have some input into how to make the rules fair for everyone. Not just for big business, but for small and medium sized business as well, so that the economy works well and at the checkout people are paying the right price for the best goods and the best service. That’s the main thing, though. This is a massive shift for all of consumers so that they will get the best price, the best quality, the best range. I do want to thank the National Party for seeing that this is a useful piece of legislation, for embarking on this in a constructive manner.

You know, so what we are seeing—we are already seeing early signs of success. Costco—admittedly a large multinational, but it’s seen that the time is right to compete in this market. We haven’t seen a new entrant to the grocery sector for decades. The Labour Government signals that it’s making change and we see a new entrant. What’s more, we see Supie, an online-only retailer doing something innovative and new. The time is right. The ground is fertile, we are having a competitive market.

There are at least six retailers who have signed wholesale supply agreements in with these large supermarket chains, because we are making them do it, we’re making the supermarkets sell their groceries to other retailers at fair prices. The Warehouse is investing in a grocery range. It has aggressively entered the market. You’ll have seen their products at lower prices to entice people into their stores. It’s working. What we are doing is boldly addressing what’s been a long-term structural issue throughout this sector. We are laying the foundations for much-needed change. And as more players enter the market over time as unit pricing comes in—another step—this will increasingly stimulate competition on value, and customers will have better access.

But look, this is an important step. I do want to thank the select committee under the leadership of Naisi Chen and, prior to her, Jamie Strange for the hard work, and the members on that committee. But most importantly members of the public who had a say and who moved to make improvements to this bill and who will hopefully see the benefits of it. So thank you to all the New Zealanders who have written to me and spoken about your experiences in supermarkets, and the fact that the cost of living is causing a strain. We’ve heard you. We’re making changes, and you will see a difference.

I’m delighted to tell you all that this Government will be passing a bill—this bill, which will have a real and positive impact on your lives every day, and on your weekly grocery shop. We can all look forward to the grocery shop being easier on the pockets with less of the hard-earned cash of everyday New Zealanders going to supermarkets. It will stay where it should: in your pockets. I commend this bill to the House.

The question is that the motion be agreed to.

Thank you, Madam Speaker. It is a pleasure to be talking on this third reading of the Grocery Industry Competition Bill. I think that the Minister, who, with all due respect, has been a Minister for a very short period of time, will come to regret some of the statements he made in that speech. I think it was over-exuberant, and I suspect he’s got carried away with officials telling him what a great job he’s doing. Actually, I think a much more pragmatic and business-like focus should be applied to this particular bill.

So on that note, we have supported this bill, and we have worked closely with the Economic Development, Science and Innovation Committee. And I’ve got to commend the chair and the members of the select committee on both sides of the House who worked proactively to try and improve this bill as much as possible. But I’m not going to stand here tonight and say this is the panacea for everyone who is suffering from a cost of living crisis. What we hope to achieve by this bill is some improvements in the grocery trade.

I just want to go through some of the big issues for us. The first one, and we have repeatedly asked the Minister about this, and the former Minister who was responsible for this bill—the first critical success factor for this bill is the appointment of someone with the requisite skills and expertise as the Grocery Commissioner. What we mean by that is we do not want to see necessarily someone who’s a lawyer or an economist who has a smattering of knowledge around the grocery trade. Actually, what we prefer is someone with bucket loads of information and experience and who has worked in the grocery trade, who may actually have those other skills, such as legal or economic skills.

If the Minister does not make that a proper appointment, that will be the first and major failing of this bill, and I will hold him to his words—what he has just spoken about and what he said last night in the committee of the whole House—that the appropriate person will be recruited. Because if they are not, then this whole bill faces the prospect of actually not getting off and actually leading to a better outcome.

The second thing is it is necessary that an appropriate grower supplier code is put in place and, of course, there’s a tension between growers and suppliers and supermarkets. So what I’d just say to everyone is that this is not simply about making sure that we’ve got a fair price. It is also about making sure that there are fair terms and conditions, and it’s actually around the terms and conditions of supply and how that’s arranged and the fees that go alongside it—that is where you need an experienced Grocery Commissioner to be able to see through what is really happening and the different mechanisms that could be possibly imposed in the future.

Our view is that that document should not lie in the hands of the Ministry of Business, Innovation and Employment (MBIE), and National’s fought hard to make sure that that document becomes a living, breathing document. And I’m glad that the select committee agreed that the initial draft should be done by MBIE, in the interests of time, but the responsibility for updating it and keeping that document live should rest with the Commerce Commission and particularly the Grocery Commissioner. Because that person will see firsthand what is happening and be able to react to it quickly.

The second thing is we were concerned about having an effective dispute mechanism. I’m glad again that the committee agreed to the change. We wanted to make sure that there was a quick process to resolve disputes, so not to rely on a court process, and, of course, that was what had been envisaged originally in the bill. There was some resistance. I’m glad now that we have an alternative dispute procedure for disputes under $5 million, because I think if there is a dispute between a supplier and the supermarket, having a quick resolution around that is absolutely crucial. And I think that is an improvement to the bill that we were happy to push through.

The next area is the role of the Commerce Commission in monitoring the activities of supermarkets. This has been widened, this monitoring role, not only in terms of overseeing the grocery aspects of the supermarkets, but also to deal with potential new markets or products or services they provide, such as the sale of TVs. Obviously, supermarkets do fuel sales, and we agree with the change which futureproofed the legislation by allowing the Commerce Commission to have regard for all products and services sold by the supermarkets.

Now, the next thing I want to turn to is the issue of wholesale supply. This is where I think the Minister, himself, got carried away in his speech because this is a significant issue. It was proposed that by the Commerce Commission that supermarkets should be required to offer wholesale pricing arrangements and supplier arrangements to competing companies that want to offer grocery around the country. This now enshrines the involvement in supermarkets and wholesale supply—so, obviously, it’s not arranging their own supply but offering it to third parties. This is the most contentious, in my view, and the most dangerous part of this bill, and we have some concerns about this particular aspect. Because if we get it wrong and we enshrine that right, and it ends up not delivering the outcomes for competitive suppliers, what this bill has done and what the whole intent of this is to actually legitimise a downstream movement by those supermarkets from the supplier right through to the end retail. And, of course, there’s the logistical aspect involved in the delivery of wholesale products.

Labour was very keen to support that. I think our support is much more reticent around that, and I think one of our major concerns about this is that it removes the opportunity for third party markets. If I give an example: for the supply of groceries or vegetables such as lettuces or whatever, traditionally they used to go to a market such as Turners and Growers in Auckland, and it was an open, transparent market. With these new wholesale arrangements, those suppliers will now have to bid into a Countdown or a Foodtown arrangement. They will know their personal bid and the volume they’re prepared to do, but only the supermarket will know what the result of the entire bid process is.

That means that there’s a potential that we’re going to lose the independents and the transparency of those important markets, such as the fresh vegetable market. Again, what this means is there’s an enshrinement of a further degree of control by the supermarkets. So I’d just say to the Minister, in his wonderful enthusiasm, that this is a key issue. And again, if the Grocery Commissioner does not have good oversight and does not ensure that this aspect of competition is protected and nurtured and continues, then we really have ended up in a poor situation in respect to these bill proposals.

The other side of this is that we were very keen that in terms of wholesale the definition included not just the supermarket itself in terms of its wholesale arrangements but any arrangements they may have either through subsidiaries, through partnerships, or any entities which they may control. That’s not necessarily an ownership issue. It might be through market control of that entity. And that was, again, a very specific change that National pushed for in the legislation.

But look, in the interests of time, I want to say that we are supporting the bill. It’s essential that we get the right person. We will monitor the wholesale aspect very, very closely. But the last thing is, if it fails, the Minister said we’re going to regulate more. That is not what National supports. This bill already has a significant amount of legislation. The prospect of just legislating more, in my view, will not work. We believe that there may be a need to look at restricting some activities of the supermarket, but if this does not work well in future, we’ll keep an open mind on that. However, only time will tell whether this will deliver discernible benefits for hard-pressed families in New Zealand.

Thank you, Madam Speaker. I’m incredibly proud today to be in the House to pass such an important bill. And I do congratulate the Minister, Hon Dr Duncan Webb, and the Hon Dr David Clark, as well, for shepherding through this bill, and incredibly proud to have been chairing the Economic Development, Science and Innovation Committee. As my colleague across the House has painstakingly gone over all of the details that our select committee has considered during the process, I won’t go over it again, but I do thank the National Party as well for their cooperation during the consideration of this bill.

I love supermarkets—I do have emotional connection to them. The only Pak ’N Save in North Shore was open in Albany, which used to be quite a far away place. But my piano teacher used to live in Albany, and so once a week I would go to my piano lesson and then after piano lesson our whole entire family—my parents and my grandparents—would come and pick me up and go to the supermarket in Albany. So it was always a great experience, and I would always get to pick up an ice-cream or something—a treat at the end to reward me for having practised my piano that week. And as we went into lockdown, the supermarket became the only place I could go to leave the house, really, and to have some sort of excitement in life.

But as we went through the market study for supermarkets, we saw, I guess, a more sinister side, a darker side to the supermarket industry—that $1 million of profit per day that the two supermarket chains are now harvesting. In a hard time like this, we have to do something about it.

As the Minister has mentioned, this is a bill to make sure that all New Zealand consumers are being given a fair deal at the checkout. But to me, also, this bill is about making sure we give our suppliers, our farmers, and our growers a fair deal as well. I can never forget the time when I went into one of my colleagues Ingrid Leary’s electorate and met with some of our farmers, and they said, “Well, milk prices haven’t grown and the prices are getting more expensive in the supermarket. Where has the money gone?” Well, here it is. We’re showing it. And this is also to our growers who are market gardeners. I come from a community full of market gardeners, and we have a proud tradition of feeding New Zealand in the Chinese community. So this is to our dairies, to our veggie shops, to everyone here in New Zealand, this is a great bill that will change New Zealanders’ lives, and I commend this bill to the House.

Thank you, Madam Speaker. It’s a good thing to be able to rise and talk on this bill, the Grocery Industry Competition Bill. I’ve listened to the Minister and the chair of the Economic Development, Science and Innovation Committee and also our fantastic Andrew Bayly, talking on this so far. The sentiment in the House is that this is something we support, and I will reiterate that.

It is a true statement that people are paying far too much for their groceries at the moment. It is a really significant undertaking for families, and they go in there and they are coughing up. I looked at a block of cheese the other day. I was stupid enough to pick up the Tasty from Mainland, the 1-kilo block—it’s a great cheese; yes, it is—but the price of $20 really smacked me, and I thought “Crikey, that is an extremely expensive block of cheese.” I rightly put it back and went for the more budget block Colby version. I’m sure there are many families around the country who are doing exactly the same, or probably going even further and just leaving the cheese altogether. And it’s not just cheese; if we look across all grocery items, over the past 12 months, they are up over 12 percent. We are in a cost of living crisis—we really are. We look at fresh fruit and vegetables: up 22.5 percent over the past 12 months. That is significantly above the Consumers Price Index (CPI), which is running incredibly hot anyway, the hottest it’s been for 30 years—since I can remember anyway. Families out there are doing it really tough, so it is prudent upon this House that it does take some steps to make it a little bit easier.

New Zealand is quite unique in the situation that over 90 percent of our supermarkets come under a duopoly: Foodstuffs and Woollies. That does enable them to enter into arrangements, or whatever it may be, where prices are kept high and kept probably a little bit higher than where they need to be. At the moment, the sentiment coming back is that they are well above what families can tolerate. I mean, that is also just the net result of a cost of living crisis that has been largely fuelled by a reckless Government that has spent far too much money and fuelled inflation—reckless monetary policy that has pumped significant sums of money into the economy—and inevitably that has flowed into what is now persistently high inflation, and a lot higher than what our peers have, who have dropped away. We are still persistently high, and groceries are no exception; in fact, they are above the CPI, and they don’t really show any sign of abating. So, look, it is a good thing that we are here to encourage a bit more competition in what is a very stifled industry, and it is generally supply-side constraints that are leading to this.

I like the way that the Commerce Commission did stop covenants that prohibited the development of new supermarkets in certain areas. There needs to be developments of those new supermarkets. There are high entry barriers, so breaking them down is a positive thing. I recall my time living in Sydney. There were numerous supermarkets around. Down the road, there was a Woollies, and it had a fantastic cheese room, probably not one that you’d want to go into these days, although I do note that prices over there were significantly cheaper due to the competition. When I went back there earlier this year, I noted the same again. You walk into a New Zealand supermarket and you get a bit of a shock, which is what I try and do at least once a month. I get out there and take the shopping list off my wife and go out there and fill up the trolley. Not only is it an excellent way to get a bit of publicity with a National Party jacket on my back, looking like the everyday man, it gives my wife a break, and I get to understand what the current prices are.

One of the good things about living in Sydney was that there were numerous supermarkets. You had your Coles, you had your Woollies, you had your ALDIs—you also had Costco. One of my best mates over there was going out to Costco. He signed up and he got the card—and, TJ, if you’re watching this on the northern beaches, I’m sure you enjoy going there and stocking up your freezer full of meat, and he certainly did. But I was quite lucky where I lived, in Edgecliff. There was an ALDI and a Coles very close by. So I’d go into the ALDI occasionally and top up—

Simon Court: They’ll never come to New Zealand while the foreign direct investment rules sterilise them.

SAM UFFINDELL: And I like the point that’s come out of the ACT party. They occasionally pipe up with some good rhetoric, and that was good from Simon Court. There are challenging foreign direct investment rules, and there are challenging Resource Management Act (RMA) rules. The RMA is extremely prohibitive in New Zealand, and it really—

Hon Rachel Brooking: Let’s reform it.

SAM UFFINDELL: “Let’s reform it.”, we hear from the other side of the House. I agree; let’s reform it. Let’s just not reform it with what this Government is proposing. We will have the opportunity hopefully very soon. But the competition is as essential—it really is—and, without it, it’s extremely difficult for everyday Kiwis to get ahead. We saw on the news tonight they’re now paying over $600 a week in rent. It’s gone up about 10 percent in the last year. I mean, that’s a really, really tough environment for families. You’ve got core staples, accommodation, and food prices that keep going up.

I just want to note to a point that Andrew Bayly very sensibly raised when he spoke, and that’s about ensuring that the appointment of the commissioner is the correct appointment. I’ve mentioned in this House before my reservation and trepidation about the appointment of people on to the board of the Reserve Bank of New Zealand probably lacking the experience, the prudential understanding, to govern what is one of our most important institutions. If we can’t get it right there, I’m not necessarily filled to the brim with confidence that we can get it right in this instance. But I note the Minister—and also the Minister who I was chatting with in the gym a little bit earlier this evening. We were talking about this bill. I know the Minister will be very keen to see this succeed, as we all will be, to make sure that the right appointment is made into the role of the commissioner, because that is really important, to give confidence to the sector, to give confidence to the National Party, which is, in good faith, backing this bill, because we do want to see more competition. We do want to see the cost of living on staples come down—on everything but on things that are unavoidable: food, groceries being absolutely essential—and also to make sure that, when the commissioner does insert themselves into the market, they do so in the right manner.

Hopefully, we get the nod in a few months’ time and we can continue working with this commissioner. So let’s all work together on this and make sure that we get the right person in there for continuity’s sake and to ensure that the robustness of the system can continue. I support this bill. Thank you.

Madam Speaker, I thank you for allowing me to take this call. It’s lovely, as the previous speaker Sam Uffindell, the everyday man, spoke about his Tasty cheese. I’m impressed he does go to the supermarket occasionally. I like to admit that I am the everyday man as well. Even though I am a member of Parliament now, I still shop the same way I’ve always shopped, and that is that bargain hunter that goes from supermarket to supermarket and from grocer to grocer to get that deal of that small block of cheese or that lettuce or that carrot.

So when I when I look around and do my shopping, it is always interesting to see what is around and what we have. Hence, this piece of legislation around the Grocery Industry Competition Bill is necessary, as I get around and look at the different suppliers and look at the different retailers.

I want to acknowledge Roebuck Farm, who is a local supplier. I know the piece of the legislation I want to mention briefly is around how this bill provides new protections to suppliers in terms of how the code is to limit the ability of the duopoly to pressure suppliers into accepting contracts that are wholly one-sided. In the small growers—the small makers—that is important and that is necessary.

I also want to acknowledge the Hon David Clark, who initially brought this to the House, and then the Hon Dr Duncan Webb. I believe this is his first piece of legislation as a Minister that will be becoming into law—so congratulations on that.

We in the Economic Development, Science and Innovation Committee worked hard on this. I was grateful that we were able to bring it back to the House in support, working together, which is something that generally happens—we get on most of the time. But I’m excited that the Grocery Industry Competition Bill will become legislation, and I commend this bill to the House.

It is an honour tonight to be here for this bill and to have the two Ministers responsible for its passage through the House. The bill itself does claim to seek to improve competition and efficiencies in the grocery sector on behalf of the benefits of consumers, and it responds to some of the recommendations of the Commerce Commission’s market study into New Zealand retail grocery stores. I did invite Mr Webb to come to see Costco with me, but he never took me up on that, and I was just wondering, had he been there yet or not to finalise this?

Hon Dr Duncan Webb: If you yield—I’ll answer if you want.

DAMIEN SMITH: No, I asked you to come with me.

Hon Dr Duncan Webb: Do you want me to answer that question?

DAMIEN SMITH: No. You know, we’ll have ultimate confidence in this bill once Michael Wood buys shares in the Australian supermarket industry, so we can get some piece of the action here in New Zealand. So as a Labour Party broker—and, as David Seymour says, a broker could be his next profession. We believe that that would be a confidence measure of extreme standards.

Tex Edwards, from the consumer-busting-commerce organisation, said this is “fantasy legislation” written by lobbyists and would create a “Disneyland” department within the Commerce Commission. It represents what’s weak about public policy in New Zealand. And his view, and I tend to share this, is that instead of having bitty business models like Costco does—a certain type of structure—what the public is looking for is a like-for-like third party operator that comes to New Zealand to give consumers a better offer, and I don’t think this bill facilitates that.

Does the Minister believe that forcing supermarkets to act as wholesale suppliers to their competitors would discourage the international food retailers from entering the New Zealand market? I think it would, and I think if you look—it needs a complete repeal of the Resource Management Act. Nobody from the Overseas Investment Office was consulted about this bill, and, you know, we’d certainly like to see some work in the future to build on this document which would cover those areas.

Hon Dr Duncan Webb: Welcome to the 1970s!

DAMIEN SMITH: You’re the one that was talking about fixing profits for an organisation like a supermarket.

So the Minister doesn’t show any concern that all that requiring supermarkets to act as wholesale suppliers to their competitors would encourage existing new retailers to raise their prices to cover losses—this may occur as a result, but nobody’s done that analysis. In terms of international examples, nobody in the advisory panel has been able to show compulsory Government pricing isn’t effective to increasing competition. So, will this bill provide for greater incentives for international food retailers to come here; enter New Zealand? Well, if you don’t remove the overseas investment approval process for OECD countries—which my bill proposed, which was shot down by the Labour Party, or easing the consents process to build new supermarkets, what is the possibility over the next 10 years of new entrants coming here? And I don’t think the answer is rosy.

Does the Minister believe also that to increase new market entrants, the Government should have actually opened the door to embrace new business models? I’m a big fan of the Asian supermarket chains in this country; I think they could be expanded into something quite competitive, and I looked at their prices, and I’m sure Naisi Chen would support me on this: they are very competitive in terms of domestic produce. So there is something going on there which we don’t know about.

But a box is a box; and IT systems, fridges, a management system, and staff is what makes supermarkets in the right location work. So food price inflation comes from regulating farmers, it being too expensive to get water, local regulation bodies—and that’s why we’ve got food price inflation in this country. It isn’t that there isn’t enough supermarkets and where they’re situated; it’s the input side of the process. Local suppliers with big brands and lazy product development: are they going to provide price competition? Well, supermarkets is a good example where it’s the fast-moving consumer goods product marketers that said that and the margins are pretty standardised. So what you’re paying for is either a smaller impact now or a bigger price, which is set by the international conglomerates to profit from New Zealanders, not necessarily the supermarket chains.

In terms of where we go from here, we believe that over the next five years for new entrants, even if the Commerce Commission has recommended against designation, that would mean an entrant like ALDI could be compelled to supply all of its competitors with products from all these global supply chains at regulated prices. But if the Minister believes it to be in the public interest, does the Government believe that it should encourage potential entrants like ALDI—and why would ALDI even consider coming here with the kind of risks hanging over it to get a supermarket chain built? In terms of capital, you probably need $100 million just to buy sites in this country; trying to get through the regulatory process and local authority level is next to impossible. And, you know, some of those things are what is stopping people coming to this country, and that is stopping competition.

Just to talk about Land Information New Zealand, it reported no conversations as of October 2022—and I stand to be corrected on this by the Minister—with the Government about grocery entries. If more grocery retail entries is in the public interest, shouldn’t the Overseas Investment Office be directed to consider grocery retail entry as being the public interest? And isn’t that the role of the Minister to direct that organisation to facilitate new entrants to this market to fulfil the bill’s ambition, which is more consumer choice, more consumer confidence, and better prices? How does this Government believe that a regulator can set and enforce regulated prices across thousands of individual grocery products—many of which will be perishable and of varying quality? Mr Clark, when he gets his bike and goes cycling round Dunedin, and maybe he can put the white coat on in the afternoon and go and check the prices and report back through an algorithm about what is actually happening in the real world. Because I know Mr Webb goes to Moore Wilson’s and doesn’t see the harsh reality of life in New Zealand for the public.

So we will not be supporting this bill. The overview of industry competition is very simplistic, and we believe there’s still an iteration after this where the major entities—which are the supermarket chains—should be made to face up to a like-for-like third party operator who can give them a run for their money and who actually can bring real competition to the New Zealand market.

Thank you, Madam Speaker. I’d like to begin by—I won’t even try to begin my speech by having some anecdotal account of shopping at the supermarket, because the reality is, it’s not so much about our experience shopping that has led to this bill, the Grocery Industry Competition Bill, but many low-income communities who are struggling to put food on the table has created a conversation in Parliament and now legislative measures to ensure that there’s better competition in the supermarket industry.

We have supported this bill through the different stages of the House, and I acknowledge the collegial nature of the select committee process to have a bill that would create better regulation and oversight around the behaviour of supermarkets, also being able to have measures to address disputes where, for example, a grocery supplier or a wholesale consumer and a regular grocery retailer may be having issues. And all is well and fine, because it will, in the long term, ensure that the smaller players are able to—should capitalism work as intended—provide cheaper goods and services for people.

I know a lot of the conversation here has been around access to fresh kai, and I acknowledge that supermarkets also serve as a point of sale for other types of products. But focusing on the food and fresh produce more specifically, I do think that supermarkets, as a concept, where our communities access fresh food, a relatively new construct. I think it’s worth understanding that, actually, for many of our communities, you don’t have to go back that many generations ago to realise that the supply chains were not so controlled by a duopoly and one that, despite all of the attempted green-washing efforts to work with food-rescue operations and what not, ultimately is putting profit as paramount. That is what has led, in my view, beyond the inflationary pressures to supermarkets putting food prices up at the expense of people while people are facing a high cost of living.

This is why, particularly with this sort of profit-seeking behaviour at the expense of everything else, it is important that we do have things like regulatory backstop tools that can be applied to start looking breaking up some of those bigger players and ensuring that they don’t control such a big share of the market.

But beyond that, I think we need to ask—after the passage of this legislation—what comes next? Because it will take some time for the impacts of this bill to be seen in our communities, but we also need to—and I acknowledge that no one here has said that this bill be some sort of panacea or silver bullet, but we still, as a country, don’t have a long-term food strategy. We don’t have enough funding for even things like mahinga kai or urban food gardens or greater strategies around publicly-owned food markets, where growers can take their produce directly to consumers.

And so, I guess, in having support of the Government’s measures of this bill, I do want to leave my final contribution in this legislation as a point of encouragement for the Government to treat access to food as a fundamental human right and to invest in access to food beyond the control of supermarkets to ensure that this doesn’t happen again.

I guess I want to give a shout-out to, well, the previous Minister, but the current one, Duncan Webb, specifically, because I think we’re going to have a conversation that I think will, ultimately, be so related to this bill and Duncan Webb’s other member’s bill, Companies (Directors Duties) Amendment Bill, and I look forward to having the conversation about whether we can force to company directors to look at things beyond profit, because I think this will, actually, really marry up what we’re trying to do in this bill, to actually put forward those really, really important questions.

We support this bill, we look forward to improving the regulations set out here and, hopefully, continue receiving feedback from consumers and our communities around the impacts of this bill when it comes to access to affordable food.

The problem that this bill solves or seeks to solve is that until now the supermarkets have been making in excess of $1 million profit per day. I think there’s agreement across the House that this is unacceptable. How to dismantle the duopoly is a much more difficult question, and this legislation seeks to do that.

The work of the select committee was to really ensure that the legislation was fit for purpose. I sat on that select committee—on the Economic Development, Science and Innovation Committee—and we looked particularly at the wholesale supply regime. I want to commend the collegiate work that happened, especially looking at the contractual arrangements and the complex business arrangements that major players in the market have done in order to be able to work around the rules.

Because, at the end of the day, we as politicians can stand here and say that it is unethical or immoral to get excess profits, but actually that’s how capitalism works. The rules have to be fair and they have to be proportionate. Clearly they haven’t been, and what this bill is seeking to do is to correct that. It’s a brave and a bold move, and something to be commended. I’m really excited to see what is going to happen over time to make grocery prices fairer for everyday New Zealanders as a result of this. I commend it to the House.

This is a split call. Five minutes—the Hon David Bennett.

Thank you, Mr Speaker. The National Party is supporting this bill but personally I just struggle to see how it’s actually going to achieve its purpose. You know, everybody has a choice where they want to buy their fruit and vegetables. Nobody forces you to go to one of the two supermarket chains to get your fruit and vegetables, and you can actually get them cheaper if you go to the local greengrocer down the road. When you go to the supermarkets, you’ve got a choice. You can go to the very little ones where you’re paying more for convenience, or you can go for the bigger ones, and you can go for your shopping and decide to get that when it’s on special and that when it’s not. So nobody forces anybody to go to a supermarket; you’ve got that choice.

The reality is that a Labour Government getting involved in any business is bad news. I just can’t see it work when the Labour Government gets involved in any business; it’s just how they operate. There are two things that I think people should be aware of in regard to our fruit and vegetables at the moment. Fruit and veggies are probably the bit that we all expect New Zealand to be able to produce. The reality is that our fruit and veggie growers do not get a return on their investment. You look at kūmaras at the moment—completely destroyed because of the weather this year. Very expensive; going to be very expensive next year as well. Those growers don’t get the return to satisfy a business that’s got to continue long term. Let’s actually be real about it. If we want to do that kind of thing, we need to give the growers the return they need.

Secondly, if you look at what’s actually happening in the sector, especially in the fruit and veggie market, the supermarkets are becoming very dependent on one or two suppliers on purpose, because they can regulate control of price and of quality, and this bill actually accelerates that. It gives them the power to be the wholesaler to other players that come into the market. The very thing that they’ve done in the last decade in their market is actually what this bill actually accelerates. It helps them in their market plan.

So we are supporting it because we need to see something done in this area; there’s no doubt about it. I know that the Labour Party have got it wrong. They have got it wrong as normal. All they’re doing is actually helping the supermarkets make more money. They are actually accelerating the economic gain that they have undertaken in the last decade, and nobody is forced to go to a supermarket and buy their fruit and veggies. You have a choice. Exercise your choices, consumers. Be smart about your money, and you will actually be able to save. You do not need a Labour Government to make your savings on your daily spend.

On this side of the House, we are focused on the bread and butter issues that New Zealanders care about. Quite literally, this bill is aimed at reducing the cost of bread and butter for New Zealanders at the supermarket. That is why I am supporting this bill.

In all seriousness, as someone who grew up in a household who at times watched my parents have to decide whether it was pay for food for us kids or pay for petrol for dad to get to work—so as we had an income the next week—I am very proud that this Government is tackling another big issue head-on to try and reduce the cost of living pressures that Kiwis are facing. We’re doing that for groceries. We’re doing that for the fuel industry as well. So I have absolutely no hesitation in commending this bill to the House.

Thank you, Mr Speaker. This is a good day. I want to track back right to the beginning of this legislation and think about the market study that kicked us off: the market study that was supported by the Labour Government in order to really get to the bottom of competition issues in this country. I want to acknowledge the Commerce Commission for their work, Anna Rawlings, and our current Chair of the Commerce Commission, John Small, for the analysis that led to the actions that this Government is taking. They have made a real difference through their work under quite a lot of time pressure and through some robust conversations with the sector and some extraordinarily good analysis.

I want to also acknowledge the effect of the market studies on the actual behaviour of the sector. We saw, before this legislation went through, the acceptance of unit pricing, the acceptance of a Grocery Commissioner, and the acceptance of a grocery code. We saw price freezes in the sector, and we’ve seen what scrutiny in the sector can provide. I anticipate that that appointment of a Grocery Commissioner at the appropriate time will see future developments in the sector as the sector understands what it means to be watched, to be scrutinised, and to see real competition in the marketplace.

I want to congratulate the Hon Dr Duncan Webb and his team, and all of the excellent officials who have worked on this bill because they have done some superb work. Those officials—they were excellent. When I had the privilege of leading this bill to the House, they were superb, they were robust, and they were thoughtful. We disagreed on some things, but we worked hard to find solutions that would be in the interests of New Zealanders and we got there.

As a Government, we decided that we would accept the majority of the Commerce Commission’s findings. We disagreed with them on a couple. We think that a regulatory backstop is actually what’s needed to make the difference in the market, and we had acknowledgments from the sector subsequently that that actually is the thing that will make a difference. We also wanted to see more regular reporting through from the Grocery Commission, because we think New Zealanders deserve to know what’s going on in that sector and deserve to understand how competition is improving.

I want to then also just briefly acknowledge some of the people who worked very directly on this bill in its preparatory phases. I want to acknowledge Jonathan Gee, Sam Farrell and Melissa Turner in my office, who worked very long hours to make this the best bill it could be. I want to acknowledge Katherine Rich, Jon Duffy, and Tex Edwards. I actually want to acknowledge also the duopoly leaders, Chris Quin and Spencer Sonn, for the conversations—the grown-up conversations that we had to have along the way. The likes of Matt Lane as well, The Warehouse, Supie, Circle K—actually, everybody who contributed through the select committee process to make sure this is the best bill that it can be.

It is world-leading. It will ensure that New Zealanders pay a fair price at the supermarket, and I wish all of those who are involved now in implementing it the very best. This is a Government that is concerned about the bread and butter issues for New Zealanders, and I’m very proud to have played a part in developing this legislation.

I must say, listening to that last contribution, I actually thought that we might have heard a retraction of a retirement speech come out there for the Hon David Clark, who I do respect because there’s a few spare seats on the bus opening up on that side of the House.

But let’s get into the Grocery Industry Competition Bill, third reading—a bill that National will be supporting this evening. As the Minister who was involved in the initial aspects of this bill has articulated, there are a number of components of this bill which will derive value in regards to the overall sector. National have outlined and continue to outline, through the passing of this bill, those aspects and comments.

I do want to, though, comment on a couple of elements that have been raised by other speakers this evening, in regards to the grocery sector, and a line that has often been used, particularly by that side of the House, in regards to the super profits, or the $1 million per day. I’d like to remind those that make those comments that the period in which those profits were derived were during the pandemic and during the period in which Auckland in particular was locked down for over 100 days. For those that don’t remember or who were outside of Wellington, or particularly living in the South Island, they might not appreciate what it was like living in Auckland. The only place you could buy your groceries in Auckland during that period was from the two major supermarket chains. You couldn’t buy it from your local butcher. You couldn’t go to the local greengrocer. Many of the small operators were closed and you were not able to shop.

So it doesn’t take a mathematician to work out that if you close down all the other competitive environment and the competitors, then the only place that you have to spend it is within the supermarket. So using this sort of super profits in a period of a pandemic where Auckland is locked down is a little bit rich, to say the least, and potentially not quite a reasonable basis in order to make those assumptions.

The other fact, just to remind people, is that actually, while we do have two significant players within the grocery sector, one of those players in particular is 100-percent Kiwi-owned. Foodstuffs South Island has 200 stores and employs over 14,000 Kiwis across their entities. Foodstuffs North Island—over 100 years old is that entity—100-percent Kiwi-owned, 330 stores across the country, employing over 24,000 New Zealanders. So when that side of the House attacks the grocery sector, when they attack those two entities in particular, they are by doing that attacking all of those hard-working Kiwis within our Four Squares, our New Worlds, our Pak ’N Save, our Countdowns, our FreshChoices, our Gilmours; those that at this hour of the night, no doubt, for those supermarkets that are starting to close, will be doing the night fill shift in terms of stocking those shelves, many of which aren’t on significant high salaries. That side of the House is attacking them and saying that they are all villains.

And that is the divisive nature of this Government’s policies. It is a great shame that they need to get into that space, particularly on a bill such as this, which, in essence, at a fundamental level, does have some positive comments. But when it starts to get into this conversation around attacking the profitability of entities, then they need to balance up that aspect.

The other aspect to raise is that food prices are and continue to increase in this country. But the food price element, running at around 12.1 percent annual inflation, is driven by a number of factors, and to take it that it is solely the supermarkets profiteering that is driving up that food price is simply not the reality. The cost of the inputs into those products is a significant driver, and, again, this Government’s regulation and legislation has in part led to significant increases in costs on businesses in this country. That is a factor of why consumers are paying higher prices when they go to the supermarket checkout and look to get their goods.

Lastly, I also want to acknowledge those working in our grocery sector across our country, and I think particularly of those in our urban centres when we see the impact of law and order and crime on our grocery sector and our grocery industry. I don’t see that there are any components of this grocery industry bill that actually deal with one of the most fundamental issues that are facing our grocery sector at the moment, and that is the out-of-control issues around law and order that are happening in the thing.

In my home electorate of the North Shore, at the local Countdown, about three times a week someone walks out of that store with a trolley full of groceries without paying. In my New World store in Shore City in Takapuna, a person, only in the last four months, walked out with a supermarket trolley full of food and actually physically assaulted and pushed over two members of the staff, one of which was hospitalised because of the injuries sustained from that assault from someone stealing a trolley full of groceries. And it is very common and people are seeing it weekly, and if not daily, in this country. Because of the lack of consequences, people are doing that within our grocery sector, and those staff members, as I have articulated before, are the ones that are at the front line dealing with that. This is a lost opportunity in terms of an opportunity, at least, that the Government could have used to implement some changes to strengthen up the issues that we have in that space.

But that’s all I want to cover on this bill in its third reading. National will be supporting this bill, and thank you very much.

Thank you, Madam Speaker. It’s a real pleasure to speak on the third and final reading of this bill, the Grocery Industry Competition Bill. And congratulations to Minister Duncan Webb and also former Minister David Clark for getting the bill to this point.

I didn’t sit on the select committee that heard the submissions on the bill, but in the context of the high cost of living—needing to make sure that nobody has to pay any more than they need to at the supermarket. And as we’ve heard tonight and previously when the Commerce Commission released its report last year, what it found was that that competition in the sector wasn’t working well for consumers. So thinking through with many families, particularly those on low incomes, they’re paying a huge proportion of their disposable income on the supermarket. I remember when my own sons were teenagers and just the huge amount of groceries we got through. So making sure that families don’t have to pay any more than they have to is really important.

So this is a really important bill that will help families and households with the high cost of living, and I’m happy to commend it to the House.

Motion agreed to.

Bill read a third time.