Pee Kay
No Minister
Right now, National is playing a masterful game of economic misdirection. While Chris Luxon and Nicola Willis demand accountability from supermarket executives, National actively side-steps the massive economic drivers they actually control. It’s a convenient distraction: if the public is busy blaming the price of cheese, nobody asks why the government’s own strategy is completely failing.
New Zealand’s grocery sector, well the locally owned ones, have been in the cross hairs of a number of our political parties over the last few weeks.
It seems our politicians have found a perfect scapegoat to camouflage their own cock-ups, and it is a camouflage with a barcode on it. In a massive display of buck-passing, Labour, the Greens, National, and NZ First are all taking a sledge hammer to our local supermarkets.
But this isn’t about fixing the economy – it’s about obfuscation and diversion. All in the name political expediency and political survival.
Because their internal focus groups are squealing about the cost of living, the politicians are panicked. Instead of being honest about the massive hikes in our power bills, line charges, insurance premiums, local body rates and petrol prices – all problems they either messed up or have zero control over – what do they do? They reach for the political wand and, hey presto, they’ve manufactured an easy villain, located at the checkout counter.
The pollies are hoping you will be duped, as this is cheap, dishonest political theatre designed to make you think they’re fighting for your wallet, while they completely ignore the real, everyday costs that are the main culprits killing the household budget.
Any experienced political strategist knows that when a focus group starts screaming about the grocery bill, you don’t hand them an economics textbook, you hand them a villain. Right now, across Labour, the Greens, National and NZ First, there is a multi-party race to the bottom, undoubtedly driven entirely by focus-group data detailing household anxiety over the cost of living, and politicians of all stripes are swinging a massive, poorly aimed hammer at the supermarket sector.
The collective obsession with breaking up the grocery duopoly or threatening “price gouging” penalties is an exercise in absolute inanity. What makes this sudden crusade uniquely baffling is its hypocritical trajectory. The regulatory crosshairs are disproportionately fixed on our homegrown cooperative, the locally owned Foodstuffs group, while giving a softer ride to Australia’s Woolworths.
National’s plan splits Pak’nSave from New World and Four Square to theoretically manufacture a ‘third player’ out of our domestic market. Yet, Woolworths, which controls roughly 42 per cent of the New Zealand grocery market and faces its own severe allegations of anti-competitive behaviour and price-gouging across the Tasman, skates away into the sunset.
If National truly believed that a consolidated duopoly was the core enemy of the Kiwi consumer, they would apply the hammer equally. By targeting only the New Zealand owned half of the equation, they reveal that this isn’t a principled stand for free-market competition – it is a highly calculated intergovernmental pivot.
Enforcing a structural breakup on an Australian corporate giant sets an alarming precedent for foreign investment. Business groups have quickly, and correctly, pointed out that if New Zealand starts aggressively legislating the forced asset sales of successful overseas corporations, international capital will dry up. For a National party that brands itself as pro-business, pro-investment, and global-facing, being labelled ‘anti-foreign investment’ by our closest trading partner is an absolute nightmare scenario.
The trans-Tasman economic relationship is a delicate environment. If New Zealand unilaterally targets an Australian economic crown jewel like Woolworths, Canberra has countless levers to pull in retaliation – ranging from subtle trade friction to changes in expatriate rights. Luxon and Willis are very aware that the diplomatic capital required to fight a trade war with Australia over grocery prices simply isn’t worth the risk.
National is essentially admitting that they are brave enough to bully local businesses to win an election, but far too cowardly to risk an uncomfortable phone call from Canberra. It turns out that ‘standing up for New Zealand families’ stops abruptly the moment it threatens trans-Tasman relations.
By treating the local checkout counter as the main contributor for inflation, our pollies are committing a calculated act of political dishonesty. They are taking a massive, complicated economic mess and turning it into a cheap story with an easy villain to blame.
This isn’t just politicians being dumb: it’s a calculated, multi-party cover-up designed to point the finger anywhere else but at themselves. They are throwing up a massive smoke screen to make sure you look at the grocery shelf instead of looking at the real culprits behind your empty wallet.
It is far more convenient for politicians to weaponise public outrage against local grocers than to confess a deeply uncomfortable reality: the government itself, along with global factors entirely outside parliament’s control, is driving this crisis. The real demolishers of the household budget are not found in the vegetable or bakery aisle – they are buried deep within our government-owned power generators and transmission lines, a volatile global oil market, and local councils that have spent years blowing cash on pointless vanity projects.
When parliamentarians across the board point their fingers at supermarket profit margins, they are deceiving the public. They want you to ignore the fact that the government-regulated Commerce Commission actively signs off on skyrocketing network line charges. They want you to forget that electricity generators have hammered consumers with double-digit increases to fix a fragile national grid, or that local councils are hiking rates to eye-watering highs.
Most of all, they want to disguise their absolute impotence against global fuel shocks. By manufacturing a fake war with New Zealand-owned supermarkets, our politicians get to play the role of the consumer’s champion, while actively hiding the structural failures of their own economic management and the painful truth that no government can control a globally interconnected spike in the cost of living.
Consider what is actually happening beneath the surface of the New Zealand household budget. While politicians scream about the price of block cheese, the Commerce Commission quietly sanctioned massive increases in electricity transmission and distribution charges to fund grid infrastructure upgrades. Transmission infrastructure changes have driven electricity line charges up significantly. In fact, MBIE reported that average household electricity costs surged 11.7 per cent in the March quarter compared to the prior year, directly driven by these skyrocketing network charges.
While Chris and Nicola obsess over grocery prices, this is what they are camouflaging. The electricity network is quietly booking massive profits. Transpower, the 100 per cent government-owned transmission giant, saw its net profit skyrocket by 64 per cent to $176 million. The local lines networks are also raking it in. Auckland’s Vector booked a massive 55 per cent profit surge, taking home $240 million in net profit. Powerco locked in $111.9 million, while Christchurch’s Orion banked $35.4 million and handed a $30 million dividend right back to council shareholders.
That is hundreds of millions of dollars drained out of New Zealanders’ wallets under a government-sanctioned grid infrastructure upgrade. Normal business practice is that large infrastructure upgrades, capital expenditure, and everyday maintenance are funded straight out of debt or shareholder equity, not passed directly onto consumers as a straight cash grab.
Then there is the electricity price blowout. Home electricity bills climbed nine per cent annually by August. Major winter cold snaps and grid constraints in August saw spot market spikes hit eye-watering peaks, surging by a vicious 2,500 per cent in a single morning to top $2300 per megawatt-hour as freezing temperatures pushed the national grid to its absolute limit.
A cost of living crisis, yet the government-backed electricity sector is hammering the average household by hundreds of dollars a year?
The last but certainly not least is the fuel crisis. The true cut-throat of the wallet is the fuel pump. Due to international volatility, global energy shocks, and the ongoing international conflicts impacting crude oil supply, fuel prices have rocketed. Stats NZ data (at time of writing) shows that petrol prices have skyrocketed by 17.9 per cent over the last 12 months, while diesel surged by a staggering 45.8 per cent. Diesel powers the distribution of our groceries!
When you combine a 12 per cent jump in electricity bills with an 18 per cent spike in petrol, you create a compounding inflationary monster. These are systemic, fixed, and largely non by-passable costs. If a family has to pay an extra $40 a week just to keep the lights on and drive to work, that is money pulled directly from their household income.
The raw data I found exposes the cynicism and hollowness of the election cycle. While grocery prices have actually begun to plateau, with fruit and vegetable prices dropping 1.6 per cent annually by late winter, our politicians are still acting as if breaking up Foodstuffs will magically cure inflation.
It won’t. It can’t!
As independent economic analysis points out, attacking legitimate supply chains risks adding massive restructuring costs, weakening local buying power against multinational suppliers, and scaring away future investment.
Any government, regardless of its ideological leaning, is virtually powerless to control cost of living increases when global oil markets spike or when the domestic energy infrastructure requires billions in structural investment.
But talking about that requires political honesty and that is something in short supply, especially when an election cycle looms and focus groups are angry. It is far easier for politicians to pretend that the enemy is the local supermarket owner, hoping you don’t notice that the real culprits are the power lines overhead and the petrol pump in your hand.
Political populism won’t fix New Zealand’s real cost of living crisis.
This article was originally published by No Minister.
