National’s push to drive competition in the supermarket sector by breaking up one of the key players has drawn stinging criticism from the country’s leading business groups.
BusinessNZ has likened the proposal to Labour’s offshore ban on oil and gas exploration, which critics claimed had a chilling effect on investment.
BusinessNZ Director of Advocacy Catherine Beard described the move as alarming.
“This is a very concerning move by the National Party and sends a chilling signal to businesses across New Zealand that the Government can break up businesses. It also sends the wrong signal to foreign investors looking to invest in New Zealand. We consider this to be in the same league as Labour’s ban on oil and gas exploration and New Zealand First’s promise to split up the gentailers.”
Beard said New Zealand had a strong reputation for predictable policy settings and National’s move flew in the face of that.
“New Zealand has long benefited from a reputation for regulatory stability, respect for property rights and predictable policy settings. Measures of this nature risk undermining that reputation at a time when New Zealand needs investment, productivity growth and economic confidence.”
“Breaking businesses apart does not automatically create more competition, and it certainly does not guarantee cheaper groceries. Supermarkets rely heavily on scale across purchasing, distribution, logistics, technology and other infrastructure. If structural separation reduces those efficiencies or duplicates costs, there is a risk that some of those costs ultimately find their way to consumers.”
Meanwhile, the Employers and Manufacturers Association was also critical. Head of advocacy Alan McDonald said the policy undermined the foundations of business and private property rights.
“Seeing a right-of-centre, business-focused political party like National suggest this type of policy will sit uneasily with businesses in New Zealand. It might be a populist policy for a grumpy electorate, but that doesn’t make it a good policy.”
McDonald agreed it sent a bad signal to investors.
“It’s not quite nationalising a private business but it’s too close for comfort. And that’s a terrible signal to send when we’re currently trying to attract much-needed international investment through the government’s open-for-business mantra.”