Labour finance spokesman Grant Robertson says any concerns he had about taking GST off fruit and vegetables have been addressed.
It comes as Labour announced the vast majority of its “cost of living” policy today, which included removing the 15% tax off fruit and vegetables.
It’s expected to cost $2 billion over four years, saving the average household about $5 a week, and applies to fresh and frozen produce, but not “processed” products such as dried or canned goods.
Robertson who had previously called the concept of removing GST from particular food products a “boondoggle”.
The word, which dates to the 1930s, means a pointless or unnecessary exercise.
Facing questions from media after today’s announcement, Robertson said his main concerns were whether supermarkets would absorb the saving, and “making sure that the tax system… was one that was stable and sound and efficient”.
The first concern was addressed by having a Grocery Commissioner, he said.
Pierre van Heerden was appointed to the role – which was created by the Grocery Industry Competition Act – in July.
Labour’s policy statement said the commissioner could oversee supermarkets’ pricing behaviour to ensure savings were passed on to the consumer.
“I’ve been convinced that looking around the world, other countries can do this and actually, doing something directly about the price of food matters sufficiently to me, that we can make this change.”
Robertson said he “completely” supported the policy now.
“I’ve had my concerns in the past – those concerns have been met.”
He said the policy met Labour's values with which he was aligned.
“I’m very happy to be here. I’m very happy to be campaigning on this versus unfunded tax cuts from the National Party.”
In a speech earlier in the day, which was held in a church in Lower Hutt, Robertson said he didn’t want to present himself as a saint, but he had “been on my own road to Damascus when it comes to the announcements we’re making today”.
In a statement, it said the policy would be funded by removing depreciation for non-residential buildings, a practice reintroduced in March 2020 to support commercial property owners through the pandemic. It had previously been removed by the John Key-led National Government.
Robertson also earlier clarified there would be no new taxes in Labour’s election platform.
'Frustrating' policy - economist
Infometrics principal economist Brad Olsen was less convinced than Robertson.
He said the policy was not targeted, expensive, difficult to implement and did not guarantee savings would reach the consumer.
“It gives more support to upper income households than it does lower income households.
“It’s expensive, and difficult and complex to administer. Someone’s got to decide what’s in and what’s out.”
He said Labour giving money directly to people would have “more efficient” and “more effective” than removing GST from fruit and vegetables.
“It’s difficult to understand exactly how the Grocery Commissioner will be able to – at a product-by-product level – determine if any increases to prices, for example, are because of supermarkets putting GST effectively back on, or if there’s an underlying [other] driver.”
He said variables such as inflation, fertiliser, fuel prices and weather could increase prices legitimately.
Olsen said while the policy may be politically popular, it might not deliver the outcome people wanted.
It was a frustrating day to be an economist as the evidence did not support the policy, he said.
“Despite the prime minister saying that this will be easy and simple, it’s simply not.”
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