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Labour's Grocery Store Subsidies Will Not Reduce New Zealand’s Food Prices

Responding to the Labour Party’s announcement that they intend to subsidise grocery stores to try and enable competition in New Zealand’s grocery sector, Taxpayers’ Union Policy Adviser, James Ross, said:

“There is a lack of competition in New Zealand’s grocery sector, and that does lead to extortionate food prices. But Labour seem to have missed that the reason for this is that the Government keeps propping up the big two supermarket chains.

“There is a massive contradiction in Labour’s story here. Given the enormous profits generated by the big two grocery chains, if there was an opportunity for foreign competition to establish themselves here than they would jump at the chance regardless of whether they received taxpayer-funded handouts. The fact that they haven’t just goes to show that, thanks to the Government interfering in the market, competing with Foodstuffs and Woolworths is not currently possible.

“Overly restrictive resource management under the RMA and restrictions on foreign investment make it nigh-on impossible for competitors to establish themselves in New Zealand. Coupled with Labour’s bizarre ruling that new grocery chains will have to supply their competition at wholesale prices should they be successful, this sends investors running. Just chucking more taxpayer dollars away in corporate welfare isn’t going make these problems go away, and so food prices will stay sky-high.

“Labour must at least be commended for their new-found transparency. Rather than just subsiding grocery store owners by stealth with their GST fiasco, at least with this new policy they’re being open with the public about their plans to line the pockets of grocery chain fat cats.”

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