Foodstuffs has challenged National to show the receipts on how much shoppers would save under its proposed supermarket break-up after finance spokesperson Nicola Willis insisted reforms would lead to lower prices at the checkout.
Foodstuffs North Island chief executive Chris Quin said New Zealanders deserved clearer answers about the costs, risks and benefits of restructuring.
National this week announced plans to pursue a separation of Foodstuffs' supermarket chains, potentially splitting Pak'nSave from New World and Four Square, subject to Commerce Commission approval.
Quin questioned whether the promised savings would justify the disruption involved.
"Customers will rightly want to know what savings they can expect, when those savings would be delivered, what the restructuring would cost, and whether the promised benefits justify the disruption involved," he said.
National's finance spokesperson dismissed the co-op's concerns as "extraordinary" as consumer advocates welcomed the proposed split. (Source: 1News)
An MBIE-commissioned report – completed in June this year and released by the ministry on Wednesday – found a split of Foodstuffs could generate net benefits of around $2.9 billion over 20 years, largely through lower grocery prices driven by stronger competition. Households would generally benefit from lower grocery prices, with annual gains ranging from about $200 to $1320 by 2035, depending on household size and income, the report found.
National has publicised the policy on social media as having the potential to "save households up to $1320 a year" without noting the 2035 timeline or that it would be for households with three or more children in the highest 20% income.
The Sense Partners report also cautioned findings were highly sensitive to assumptions around restructuring costs, saying benefits could shrink significantly under higher-cost scenarios and warning further work was needed on the practical feasibility of such a major intervention. "Very high, or even insurmountable" legal and implementation hurdles were also mentioned.
Quin said Foodstuffs was often discussed as a single company when it was actually a co-operative comprised of hundreds of independent owner-operators competing with each other as well as Woolworths.
He also cited the MBIE report, noting many of the projected benefits appeared to come from allowing Foodstuffs to operate nationally rather than forcing its brands apart.
"If the benefits are primarily generated by creating a national Foodstuffs business, it's worth considering whether the additional restructuring and risk is necessary to achieve those outcomes."
He also said the proposal would disproportionately affect Foodstuffs while leaving its largest competitor, Australian-owned Woolworths, largely untouched.
'Resilience matters as much as structure' – Foodstuffs South Island
Foodstuffs South Island chief executive Mary Devine said owner-operators across the co-operative were seeking answers about what the proposal would mean for their businesses, staff and communities.
"The strongest message I've heard is uncertainty," she said.
"These are local business owners who employ local people, invest in their communities, compete hard with other stores, and help people across the South Island access the groceries they need every day."
She said the debate was about more than supermarket ownership, pointing to the distribution networks and infrastructure that supply regional communities.
"For many South Islanders, this debate is ultimately about ensuring communities continue to have reliable access to food, particularly during natural disasters, severe weather events or disruptions to global supply chains.
"The resilience of the food system matters just as much as its structure."
'Vested interests' – Willis
Speaking to reporters at Parliament yesterday, Willis dismissed suggestions the policy would increase grocery prices.
"Decide New Zealand who you want to believe: the people with the vested interest in some of the highest profits in the supermarket sector internationally, or independent economic expert after independent expert who say, actually, with more competition, prices will fall," Willis told reporters.
"Of course, they're going to tell you that this won't work. They have a vested interest in the status quo."
Willis said she had reviewed independent economic analysis that showed "in black and white" the proposal would deliver lower prices for consumers.
If returned to govern, the party says it will divvy up grocery giant Foodstuffs – with Pak'nSave a separate entity. (Source: 1News)
She also sought to reassure Foodstuffs owner-operators they would retain ownership of their businesses.
"No one's taking their store away from them – they'll continue to own it. No one's taking their brand away from them – they'll continue to have it," she said.
"This isn't a crazy policy in which we're expropriating your business ... this is about making sure that the Kiwi shopper gets a better deal."
Willis acknowledged the modelling behind the proposal was sensitive to underlying assumptions, saying that was why it was appropriate for the Commerce Commission to assess the plan.
Quin said Foodstuffs supported reforms that could demonstrably improve outcomes for shoppers, but warned structural changes of this scale should be based on evidence.
"We support competition. We support change that delivers better outcomes for customers. And we support reforms that can be shown to make a meaningful difference to grocery prices.
"But structural reform on this scale should be guided by evidence, not assumptions."
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