New Zealand’s two largest parties released rival plans to bring down grocery prices within 40 minutes of each other on Wednesday morning, putting the supermarket shelf at the centre of the campaign for the 7 November election.
National’s answer is structural. Finance spokesperson Nicola Willis released a policy that would sever Pak’nSave from New World, splitting the Foodstuffs co-operative into two nationwide chains that would compete against each other as well as against Australian-owned Woolworths. Labour’s answer is regulatory. Leader Chris Hipkins promised to make it illegal for large companies with entrenched market power to charge excessive prices for the basics.
Both were announced with little warning, and neither party appears to have known what the other was doing. The result is the clearest policy contrast of the campaign so far on the one cost that every household notices every week.
Under National’s plan, the break-up would not happen automatically. It would depend on a six-month Commerce Commission review into whether separating the brands would actually leave shoppers better off. If the regulator gave it the green light, National said it would legislate to force the split through. The end state would be three nationwide grocery chains rather than two, with Four Square staying alongside New World.
The numbers behind the pitch come from a government-commissioned cost-benefit analysis released at the same time. The modelling estimated grocery prices would sit about 3.5 percent lower in the first year after a separation, with the gains growing as the new chains found their feet, reaching roughly 5 percent below where they would otherwise be. By 2035, the estimated annual benefit to a household ranged from $200 to $1320 depending on income and family type.
“That’s real money back in the pockets of New Zealanders,” Willis said. “More competition means supermarkets have to work harder for every customer, on price, specials, range and service. That is how shoppers get a better deal.”
The report was not one-sided. The economists who wrote it warned their own analysis was “indicative rather than definitive” and flagged legal and implementation hurdles that could prove “insurmountable”. Willis acknowledged the caution, saying National would follow the Commission’s advice rather than play “supermarket executive from the Cabinet table”.
“There is a very high bar for this kind of intervention and National is not pursuing structural separation in any other sector,” she said. “However, after years of reviews and incremental reform, it’s clear the status quo isn’t working. It’s time for change.”
National was also quick to reassure the people who actually own the stores. No individual Pak’nSave, New World or Four Square operator would be forced to sell up or change brands. Foodstuffs is a co-operative owned by its franchisees, and the plan would sort those owners into two rival national groups rather than break up the stores themselves.
That structure is the reason the idea has proved so hard to land. The Commerce Commission’s most recent monitoring found Foodstuffs and Woolworths still hold about 82 percent of the grocery market, with very little movement in the core measures of competition over the past year, despite several rounds of reform aimed at opening the sector up.
Labour is attacking the same problem from the opposite end. Rather than redraw the market, it would police the prices that come out of it. Its policy would make it unlawful for a company with substantial market power to charge excessive prices for essential goods and services, or to pay unfairly low prices to the suppliers who make them.
Hipkins said a handful of large businesses were getting away with charging more than they needed to. “Right now, a company big enough to dodge competition can charge excessive prices for the basics, like food and fuel, and there’s no law against it,” he said. “Labour will change that, by making it illegal for big powerful companies to rip off New Zealanders on the essentials.”
The legal test would be whether a company held prices well above what they would otherwise be in a competitive market, sustained over time. Labour’s policy document said the law would bite where a firm had enough market power that customers could not realistically shop elsewhere, suppliers had nowhere else to go, or new competitors struggled to get in. Companies found to have gouged would face penalties and would have to hand back every dollar of excess profit. The Commerce Commission would get the power to investigate, and consumer groups and suppliers would be supported to bring their own cases.
Commerce and consumer affairs spokesperson Arena Williams said the policy was aimed squarely at the top of the market. She said 97 percent of New Zealand businesses were small and would not be affected. “It also only applies in markets for essentials, like food, power, fuel, transport, telecommunications banking, and insurance,” she said. Williams said comparable rules already operate in the United Kingdom, Europe, Canada and Australia.
Every party in Parliament now has a supermarket policy of some kind. The Green Party announced on 6 September that it would force Foodstuffs and Woolworths to sell 120 stores and two distribution centres into public ownership to create a state-owned chain, and in August it put forward a member’s bill banning excessive grocery pricing, with fines of up to $10 million. New Zealand First got there first, releasing a policy in April to split Foodstuffs into two co-operatives.
What has changed is that the two parties who will actually form the next government have now committed to doing something, and to doing quite different things. Voters comparing the two are effectively being asked whether they trust a regulator to referee prices, or a restructure to force the market to do it for them.
It is a curious moment to be fighting over food prices. Grocery inflation has actually cooled, with food prices up 1.9 percent in the year to July, the smallest annual rise since December 2024. But the level, not the rate, is what people feel at the checkout, and after several years of steep increases neither party is willing to concede the issue.
Newswire’s own view is that the fight over duplicated supply chains points to a different cut altogether. We set it out in the case for nationalising supermarket distribution and selling to every grocer at cost.
You can compare where the parties stand on this and other policies with our voting tool.
Would you rather see Pak’nSave and New World split apart, or a law against excessive pricing? Tell us what you think in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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