New supermarkets that could boost competition will be eligible for fast-tracked approval, under changes announced by the government.
Economic Growth Minister Nicola Willis on Wednesday revealed a suite of legislative and policy changes, following a feedback process from entities looking to enter the New Zealand market.
And she continues to not completely rule out restructuring the existing duopoly.
Earlier this year, Cabinet issued a formal request for information (RFI) from interested parties on what regulatory changes they wanted to see.
Willis said the responses had revealed “widespread frustration” with zoning, slow consenting and regulations that had made it extremely difficult for new competitors to gain a foothold.
She said the government would introduce legislation in November to clarify grocery developers’ eligibility for the fast-track approvals process.
The existing act would be amended so the overall effects on grocery competition were made a factor for consideration by decision-makers.
While any developer can apply if they meet the criteria, a government fact sheet said it would “seem difficult” for one of the current major supermarkets to meet the test.
The legislation would be passed by the end of the year, and supported by a new government policy statement on grocery competition.
“We’re creating an express lane for new supermarkets to boost competition and deliver better deals for Kiwi shoppers,” Willis said.
A single building consenting authority will be selected to standardise and streamline consent processes for grocery developments that improve competition, and the Building Act will be amended so chains and other developments can more easily apply for pre-approved MultiProof standardised designs.
Willis said Woolworths reported costs of $3 million over four years to get resource consent for a single new supermarket. The changes, she said, would mean that process would now take under a year.
The responses revealed there were five prospective new domestic competitors, and “credible growth aspirations” among several existing retailers.
However, European giants Aldi and Lidl did not take part in the RFI. Willis said that was “disappointing”, but was hopeful the changes would encourage them to take a more serious look.
The Ministry of Business, Innovation and Employment received 24 responses to the RFI, containing a mix of existing companies, prospective competitors, advocacy groups and other interested parties.
Costco, which operates one store in Auckland, indicated the express lane consenting approach would assist with its future expansion, Willis said.
“Costco has confirmed the Government’s express lane consenting approach will assist with their future expansion plans. They have also confirmed they can see opportunities for new stores to be built in New Zealand in the next few years.”
Cabinet will also shortly consider changes to strengthen enforcement and penalties under the Fair Trading Act, while the Commerce Commission was pursuing stronger protections for suppliers under the Grocery Supply Code.
Despite some respondents saying the only way to truly improve competition was breaking up the existing duopoly, Willis said that would not be a decision taken lightly.
“It would be a significant intervention that would carry costs and risks that would need to be rigorously weighted against the potential benefits to shoppers.
“A cost-benefit analysis is underway on specific options for restructuring the duopoly and will inform future advice I intend to take to Cabinet on whether further legislative changes are required to improve competition.”
In June, the IPSOS Issues Monitor survey had Labour overtaking National as the party New Zealanders believe is most capable of handling the cost of living.
Food prices were about 3 percent higher in New Zealand compared to the OECD average, and higher than in the UK or Australia, Willis said.
Last month, following a meeting with Fonterra’s chief executive where the soaring price of butter was discussed, Willis said the best thing the government could do was increasing supermarket and retail competition in New Zealand, in order to put downward pressure on prices.
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