> ## Content Index > Fetch the complete content index at: https://goodoil.news/llms.txt > Use this file to discover other available public pages before exploring further. # So, Mamdani Marts for NZ? - URL: https://goodoil.news/so-mamdani-marts-for-nz/ - Published: 2026-09-20T22:00:11.000Z - Updated: 2026-09-20T22:00:10.000Z - Description: Change the Commerce Commission’s 6.2 per cent weighted cost of capital and the alleged excess profit claim disappears, taking with it the Green Party rationale for state intervention and their plan for ‘Mamdani Marts’ across New Zealand. - Author: Guest Post - Tags: NZ Politics, Greens, Business **JD** The Green Party repeatedly tells New Zealanders that our supermarkets make around $1 million every day in ‘excess profits’, supposedly proven by a Commerce Commission report on the supermarket industry in 2024. But that is a highly misleading way to present what the commission actually found. The Commerce Commission did not discover $1 million a day sitting in supermarket accounts labelled ‘excess profit’. It constructed, some might say ‘invented’, a theoretical estimate of what it believed supermarkets ought to earn on their capital. For 2019–2023 the major grocery businesses earned returns of 10–12 per cent on their cost of capital. To compare this, the Commission then calculated what it thought the returns should be on weighted average cost of capital – WACC – and decided it should be somewhere between 5.3 per cent and 6.2 per cent at the upper end. It then said that the difference, comparing the returns on their WACC figures versus the actual supermarket’s returns, must represent excess profits, arriving at a figure of approximately $372 million a year, or just over $1 million a day, which is the figure Swarbrick repeats *ad nauseum*. But everything about this claim hinges on the accuracy of that 6.2 per cent WACC assumption. Most importantly it should be noted that this is not the average return made by supermarkets internationally. It is not an observed market fact. The 6.2 per cent WACC is simply the output of a Commerce Commission model containing assumptions about interest rates, equity risk, debt costs, business risk and capital structure, any or all of which could be wrong (and in the current 2026 interest rate environment, demonstrably are.) Plus there is an obvious reality check. Major international supermarket businesses routinely report capital returns above the New Zealand figures. Walmart has reported returns on investment in the 12–15 per cent range. Tesco’s retail return on capital has been in the low teens. Woolworths Group in Australia has reported normalised returns on funds employed of around 15 per cent. These measures are not precisely identical, but they demonstrate an important point: returns on capital investment of 10–12 per cent are hardly extraordinary in international grocery retailing. If efficient supermarket businesses around the world commonly produce returns at or above the level achieved in New Zealand, then describing everything above an invented 6.2 per cent return as ‘excess profit’ seems to show a bias and deserves considerably more scrutiny. There is also another major problem with blaming supermarket profits for today’s food prices. Food prices do not exist in isolation. Supermarkets have faced the same economy-wide increases in wages, electricity, fuel, freight, rent, insurance, construction, packaging, finance and distribution costs that have affected every other part of the economy. New Zealand experienced extraordinarily reckless fiscal and monetary stimulus during the Covid years with exceptionally low interest rates and very large government expenditure at precisely the time supply was constrained. At the same time, the size of the core Public Service expanded rapidly. From 2017 to 2022 its workforce grew by about five per cent a year on average, reaching more than 63,000 full-time-equivalent employees by June 2023. Whatever view one takes of the value, or lack of it, this represents, a larger state bureaucracy has to be financed by the productive economy and taxpayers. Financed, in NZ’s case, by borrowing and loose monetary policy that further contributes to inflation. As a result, the general consumer price level has risen by about 29 per cent cumulatively since the fiscal profligacy of Labour’s Covid years. That 29 per cent increase applies at every step of the delivery chain, from farm and factory to the supermarket floor, and that matters enormously in terms of your grocery bill. Of course, none of this establishes that New Zealand's supermarket sector is absolutely competitive, and greater competition, if it could be achieved, may well benefit consumers. But high food prices and ‘excess supermarket profits’ are not the same thing. It is far too convenient to blame supermarkets for the full increase in grocery bills and the Green Party’s $1 million-a-day slogan ultimately rests on a modelled assumption that 6.2 per cent represents a ‘fair’ supermarket return on capital invested, whereas international comparisons show that actual returns are much higher. Higher even than the New Zealand norm. Change the Commerce Commission’s 6.2 per cent weighted cost of capital and the alleged excess profit claim vanishes, taking with it the Green Party rationale for state intervention and their plan for ‘Mamdani Marts’ across New Zealand.