1 00:00:00,080 --> 00:00:03,640 Speaker 1: Right now the Finance Minister Nicola willis good evening, Good evening, Ron, 2 00:00:03,800 --> 00:00:05,120 Speaker 1: good to have you on the show. A lot to 3 00:00:05,160 --> 00:00:09,440 Speaker 1: discuss tonight. We'll start with the supermarkets. What impact do 4 00:00:09,520 --> 00:00:13,200 Speaker 1: you expect because you've basically threatened to force the sale 5 00:00:13,360 --> 00:00:17,560 Speaker 1: or to break up the cooperative in food stuffs, some 6 00:00:17,720 --> 00:00:21,239 Speaker 1: of the brands around supermarkets, you've threatened to break them up. 7 00:00:22,000 --> 00:00:25,160 Speaker 1: What impact do you think that will have on those 8 00:00:25,200 --> 00:00:27,240 Speaker 1: supermarkets as we stand today? 9 00:00:28,160 --> 00:00:30,640 Speaker 2: Well, right now we have one of the least competitive 10 00:00:30,720 --> 00:00:34,160 Speaker 2: grocery markets in the world, and we are paying more 11 00:00:34,159 --> 00:00:37,480 Speaker 2: for our groceries as a result. So what I want 12 00:00:37,479 --> 00:00:40,519 Speaker 2: to achieve is a properly competitive market to put downward 13 00:00:40,560 --> 00:00:44,920 Speaker 2: pressure on prices, to motivate innovation, and to ensure that 14 00:00:44,960 --> 00:00:49,040 Speaker 2: shoppers get more choices. So the intention here is yep, 15 00:00:49,320 --> 00:00:51,839 Speaker 2: first protocoll, let's try and get a third operator in. 16 00:00:52,120 --> 00:00:55,800 Speaker 2: But if there are market structure issues preventing that happening, 17 00:00:56,200 --> 00:00:59,040 Speaker 2: then I feel duty bound to take a next step 18 00:00:59,320 --> 00:01:01,640 Speaker 2: and look at how we can fix that market structure. 19 00:01:01,760 --> 00:01:03,920 Speaker 1: All right, Well, we'll talk about that and whether that 20 00:01:04,080 --> 00:01:06,920 Speaker 1: is the issue that should be at the forefront of 21 00:01:06,959 --> 00:01:11,160 Speaker 1: any investigation. But what do you think the threat of 22 00:01:11,400 --> 00:01:13,800 Speaker 1: a being broken up as a business hanging over you. 23 00:01:13,920 --> 00:01:17,280 Speaker 1: What does that do to an individual family who might 24 00:01:17,319 --> 00:01:20,039 Speaker 1: own a supermarket that's part of their co op at 25 00:01:20,080 --> 00:01:22,840 Speaker 1: Food Stuck, for example, are they going to invest in 26 00:01:22,880 --> 00:01:26,240 Speaker 1: new technology? Are they going to invest in new machinery 27 00:01:26,280 --> 00:01:30,240 Speaker 1: efficiencies while there's that holding hanging over them? And does 28 00:01:30,280 --> 00:01:33,840 Speaker 1: that not in a way undermine the work that you're 29 00:01:33,880 --> 00:01:34,480 Speaker 1: trying to do? 30 00:01:36,160 --> 00:01:38,520 Speaker 2: Well, Ryan, As a Minister of the Crown, I am 31 00:01:38,600 --> 00:01:42,440 Speaker 2: responsible to the many, not the few. I'm responsible to 32 00:01:42,480 --> 00:01:45,160 Speaker 2: the millions of New Zealanders who do their grocery shop 33 00:01:45,240 --> 00:01:49,160 Speaker 2: each week, rather than a few hundred people who are 34 00:01:49,200 --> 00:01:53,160 Speaker 2: fortunate enough to own and operate a supermarket. I think 35 00:01:53,200 --> 00:01:56,320 Speaker 2: a lot of those supermarket owners do a really good job. 36 00:01:56,960 --> 00:02:00,360 Speaker 2: My issue is with the structure they are operating in. 37 00:02:00,400 --> 00:02:03,800 Speaker 2: And actually you'll find that some of those operators of 38 00:02:03,960 --> 00:02:09,359 Speaker 2: supermarkets themselves raise concerns about the way that their cooperative 39 00:02:09,760 --> 00:02:13,280 Speaker 2: or their company operates, and so the request for information 40 00:02:13,400 --> 00:02:16,239 Speaker 2: process that I'm running will give them the opportunity to 41 00:02:16,320 --> 00:02:18,480 Speaker 2: raise concerns about that model as well. 42 00:02:18,840 --> 00:02:22,200 Speaker 1: The Commerce Commission initially recommended breaking them up, but by 43 00:02:22,200 --> 00:02:25,600 Speaker 1: the final report had pulled back because it was too risky. 44 00:02:25,680 --> 00:02:26,639 Speaker 1: Why raise it again? 45 00:02:28,200 --> 00:02:30,880 Speaker 2: Because what the Commus Commission said was, let's see if 46 00:02:30,919 --> 00:02:35,040 Speaker 2: these new regulations that we're introducing will introduce some more 47 00:02:35,080 --> 00:02:38,600 Speaker 2: competitive pressure to the market. Since then, there has been 48 00:02:38,840 --> 00:02:41,960 Speaker 2: no more competitive pressure. In fact, the market has become 49 00:02:42,000 --> 00:02:46,000 Speaker 2: more concentrated. There's evidence that margins are increasing, that profitability 50 00:02:46,040 --> 00:02:50,079 Speaker 2: is increasing average key. We certainly haven't seen better prices 51 00:02:50,120 --> 00:02:53,560 Speaker 2: at the checkout, and in the meantime we've had misleading specials, 52 00:02:53,639 --> 00:02:59,320 Speaker 2: pricing and accuracies, ongoing investigations, consumer complaints, issues with the 53 00:02:59,320 --> 00:03:02,800 Speaker 2: supply code, issue with the wholesale code. None of that 54 00:03:02,960 --> 00:03:07,400 Speaker 2: tells me that the supermarkets are taking this seriously. They 55 00:03:07,480 --> 00:03:11,120 Speaker 2: haven't pulled their socks up. They aren't actually delivering anything 56 00:03:11,160 --> 00:03:15,280 Speaker 2: materially better to New Zealanders. A year on from when 57 00:03:15,280 --> 00:03:18,320 Speaker 2: these regulations were first brought in, and the first grocery 58 00:03:18,440 --> 00:03:22,800 Speaker 2: Port review is pretty sobering reading. It points out that 59 00:03:22,919 --> 00:03:27,120 Speaker 2: despite all of the good intentions, things actually haven't gotten better. 60 00:03:27,280 --> 00:03:29,640 Speaker 2: So I can sit back and say, oh, well, I'm 61 00:03:29,680 --> 00:03:32,160 Speaker 2: going to cross my fingers and hope that aldi turns up, 62 00:03:32,600 --> 00:03:35,200 Speaker 2: or I can take action, and I'm choosing to take action. 63 00:03:35,360 --> 00:03:39,280 Speaker 2: I'm actively pursuing a third entrant, and I'm preparing for 64 00:03:39,320 --> 00:03:41,080 Speaker 2: a scenario in which that doesn't happen. 65 00:03:41,800 --> 00:03:44,280 Speaker 1: Can we just be clear for people who listen to 66 00:03:44,320 --> 00:03:46,520 Speaker 1: this type of retrick and we've had it from previous 67 00:03:46,560 --> 00:03:49,839 Speaker 1: Ministers of Finance and prime ministers saying we will rain 68 00:03:49,920 --> 00:03:52,160 Speaker 1: them in, will make it better. Can we just be 69 00:03:52,240 --> 00:03:54,560 Speaker 1: clear about how much we're being ripped off by? So 70 00:03:54,560 --> 00:03:57,680 Speaker 1: it's a million dollars a day, so you know, three 71 00:03:57,720 --> 00:03:59,960 Speaker 1: hundred and sixty five million a year. If you divide 72 00:04:00,200 --> 00:04:02,400 Speaker 1: by the population of New Zealand, we're talking about a 73 00:04:02,400 --> 00:04:04,360 Speaker 1: dollar forty a week I think per person. 74 00:04:05,280 --> 00:04:07,840 Speaker 2: It's the number I'm focused on is the fact that 75 00:04:07,920 --> 00:04:11,200 Speaker 2: when you compare us with other advanced countries and the OECD, 76 00:04:11,840 --> 00:04:15,480 Speaker 2: we're paying about nine percent more on average for our groceries. 77 00:04:15,880 --> 00:04:20,880 Speaker 2: That's a worry. That is hundreds of dollars every year potentially. 78 00:04:21,480 --> 00:04:23,600 Speaker 2: And what I'm also worried about is that with a 79 00:04:23,720 --> 00:04:26,680 Speaker 2: lack of competition, you don't get the choice that you 80 00:04:26,720 --> 00:04:29,360 Speaker 2: see in other markets. If you're in Australia and many 81 00:04:29,360 --> 00:04:31,839 Speaker 2: communities you actually have the choice to go to an ALDE. 82 00:04:32,120 --> 00:04:35,520 Speaker 2: Now it has more limited stock, but it's cheaper, and 83 00:04:35,560 --> 00:04:38,040 Speaker 2: I know a lot of New Zealanders just want that choice. 84 00:04:38,360 --> 00:04:41,479 Speaker 2: Is there a cheaper option, a different option, and right 85 00:04:41,520 --> 00:04:45,240 Speaker 2: now our market and most parts of the country doesn't 86 00:04:45,279 --> 00:04:48,760 Speaker 2: have that. So competition is about price. It's also about 87 00:04:48,839 --> 00:04:52,480 Speaker 2: variety and choice. It's about innovation because there's evidence that 88 00:04:52,880 --> 00:04:55,680 Speaker 2: our supermarkets aren't innovating in the same way that you're 89 00:04:55,720 --> 00:04:58,840 Speaker 2: seeing overseas because they don't have to. There's not huge 90 00:04:58,839 --> 00:05:01,520 Speaker 2: amounts of competitive pres share on them. I believe in 91 00:05:01,600 --> 00:05:05,520 Speaker 2: markets ryan competitive markets. I'm a backer of business and 92 00:05:05,560 --> 00:05:08,719 Speaker 2: private enterprise, but for that to deliver the dividends, it 93 00:05:08,839 --> 00:05:12,680 Speaker 2: has to be truly competitive. And the evidence is pretty 94 00:05:12,720 --> 00:05:16,240 Speaker 2: clear that here in New Zealand we have a functional duopoly. 95 00:05:16,640 --> 00:05:19,240 Speaker 2: We have the effects of market power, which is that 96 00:05:19,320 --> 00:05:23,160 Speaker 2: the big providers don't need to provide the price pressure 97 00:05:23,279 --> 00:05:25,320 Speaker 2: or have the relationships with supplies they would in a 98 00:05:25,360 --> 00:05:26,119 Speaker 2: competitive market. 99 00:05:26,200 --> 00:05:30,760 Speaker 1: We asked the former managing director at Costco, Patricknon this afternoon, 100 00:05:30,800 --> 00:05:33,920 Speaker 1: what are the main barriers to getting into New Zealand 101 00:05:34,080 --> 00:05:35,000 Speaker 1: government regulation. 102 00:05:35,200 --> 00:05:40,279 Speaker 3: I suppose real estate prices was a massive barrier and 103 00:05:40,440 --> 00:05:44,000 Speaker 3: is a massive barriers just not a lot of retail 104 00:05:44,480 --> 00:05:48,080 Speaker 3: space available to be purchased or a rent, so I 105 00:05:48,080 --> 00:05:50,559 Speaker 3: think that's a huge barrier, and then logistics as well, 106 00:05:50,920 --> 00:05:55,240 Speaker 3: getting stuff into the country at a nice timely manner. 107 00:05:55,520 --> 00:05:59,000 Speaker 1: By far and away, the biggest issue was lands owning. 108 00:05:59,480 --> 00:06:00,040 Speaker 1: That's got. 109 00:06:01,680 --> 00:06:04,920 Speaker 2: Absolutely and we are tackling that by replacing the RAMA 110 00:06:05,040 --> 00:06:08,120 Speaker 2: at the same time. Ryan Right now, according to the 111 00:06:08,160 --> 00:06:12,960 Speaker 2: Grocery Commissioner, the supermarkets are holding at least forty six 112 00:06:13,000 --> 00:06:17,320 Speaker 2: properties which they haven't used for retail for more than 113 00:06:17,360 --> 00:06:21,200 Speaker 2: twenty years. So that to me suggests that the current 114 00:06:21,240 --> 00:06:25,600 Speaker 2: incumbents are land banking. They are bastily holding sites so 115 00:06:25,640 --> 00:06:29,240 Speaker 2: that others well they are, but and the Grocery Commissioner 116 00:06:29,279 --> 00:06:31,520 Speaker 2: is looking into progress on that. But there are still 117 00:06:31,560 --> 00:06:34,719 Speaker 2: sites that they hold and traditionally, of course they used 118 00:06:34,760 --> 00:06:37,880 Speaker 2: covenants and other tools, but we sought to block out 119 00:06:37,960 --> 00:06:38,560 Speaker 2: new entrance. 120 00:06:38,640 --> 00:06:40,520 Speaker 1: We sorted that out, didn't we. I mean, that's part 121 00:06:40,560 --> 00:06:40,800 Speaker 1: of what. 122 00:06:40,760 --> 00:06:41,320 Speaker 3: They are now. 123 00:06:42,520 --> 00:06:44,880 Speaker 2: We've now banned the use of covenance. But my point 124 00:06:44,960 --> 00:06:48,480 Speaker 2: is there are still land holdings which the Grocery commission 125 00:06:48,560 --> 00:06:50,720 Speaker 2: is looking into because they want to know do they 126 00:06:50,720 --> 00:06:52,760 Speaker 2: own them for a real reason or are they owning 127 00:06:52,800 --> 00:06:54,960 Speaker 2: them to block out the competition. So that's one of 128 00:06:55,000 --> 00:06:57,120 Speaker 2: the issues that we need to look at. But I'm 129 00:06:57,440 --> 00:06:59,600 Speaker 2: a big believer too. We need to get rid of 130 00:06:59,680 --> 00:07:03,400 Speaker 2: the zon owning laws and requirements in the RMA that 131 00:07:03,440 --> 00:07:06,360 Speaker 2: have made it too hard for all kinds of industries 132 00:07:06,440 --> 00:07:09,800 Speaker 2: to develop and expand I'm absolutely on that agenda. Let's 133 00:07:09,800 --> 00:07:11,160 Speaker 2: get that red tape out of the way. 134 00:07:11,280 --> 00:07:15,200 Speaker 1: Okay, fairies. Winston Peters was on the show earlier, So 135 00:07:15,320 --> 00:07:19,280 Speaker 1: basically you had an option which was following the advice 136 00:07:19,280 --> 00:07:22,520 Speaker 1: of the Working Group, which didn't include rail. Can you 137 00:07:22,760 --> 00:07:26,240 Speaker 1: let us in on what the price difference was between 138 00:07:26,640 --> 00:07:30,240 Speaker 1: the no rail option that you didn't go that Cabinet 139 00:07:30,240 --> 00:07:33,000 Speaker 1: hasn't gone with and Winston's option with rail. 140 00:07:34,000 --> 00:07:37,680 Speaker 2: All I can tell you is that this deal that 141 00:07:37,720 --> 00:07:41,720 Speaker 2: we've done is going to deliver a far far more 142 00:07:41,760 --> 00:07:44,760 Speaker 2: affordable option than was being proposed by the past government. 143 00:07:44,800 --> 00:07:48,560 Speaker 2: And you'll understand that revealing our budget to third parties 144 00:07:49,400 --> 00:07:51,960 Speaker 2: that would usually be a pretty poor strategy for give 145 00:07:52,120 --> 00:07:53,160 Speaker 2: value for bablock money. 146 00:07:53,240 --> 00:07:55,560 Speaker 1: So we're not going to be remarked Minster. That's not 147 00:07:55,560 --> 00:07:57,320 Speaker 1: what I'm asking you to do. What I'm asking you 148 00:07:57,400 --> 00:08:00,400 Speaker 1: is to tell us the difference in price between what 149 00:08:00,520 --> 00:08:02,920 Speaker 1: you had proposed and what you've gone. 150 00:08:02,760 --> 00:08:06,400 Speaker 2: With, Well, that's yet to be determined because it rests 151 00:08:06,400 --> 00:08:09,679 Speaker 2: on the negotiations which are now going to occur, both 152 00:08:09,680 --> 00:08:13,800 Speaker 2: for the purchase of ships and for infrastructure development proposal. 153 00:08:13,960 --> 00:08:14,760 Speaker 2: Let me we've been. 154 00:08:14,600 --> 00:08:17,080 Speaker 1: Out to stay. Let me be more specific. Can you 155 00:08:17,160 --> 00:08:20,320 Speaker 1: tell me the price difference an estimate between the two? 156 00:08:21,440 --> 00:08:21,520 Speaker 3: No? 157 00:08:21,760 --> 00:08:25,200 Speaker 2: I can't. What I can tell you infrastructure side? No 158 00:08:25,440 --> 00:08:27,760 Speaker 2: I can't, because actually we want to do a good 159 00:08:27,760 --> 00:08:29,960 Speaker 2: commercial deal. We're not going to have the will pulled 160 00:08:30,000 --> 00:08:32,680 Speaker 2: over our eyes like the last guys who allowed you 161 00:08:32,920 --> 00:08:35,160 Speaker 2: the price to be read without because they knew the 162 00:08:35,200 --> 00:08:36,280 Speaker 2: taxpayer was on the hoop. 163 00:08:36,360 --> 00:08:37,840 Speaker 1: Yea, But this number is different. 164 00:08:38,000 --> 00:08:39,360 Speaker 2: I'm not going to put them in jepidy. 165 00:08:39,480 --> 00:08:41,600 Speaker 1: But you're not telling us the number that you've got 166 00:08:41,640 --> 00:08:44,680 Speaker 1: available to spend, just the difference between what you're not 167 00:08:44,800 --> 00:08:47,080 Speaker 1: spending and what you are spending, which is not telling 168 00:08:47,080 --> 00:08:47,600 Speaker 1: them anything. 169 00:08:48,320 --> 00:08:50,640 Speaker 2: But that number is yet to be determined because it 170 00:08:50,720 --> 00:08:52,760 Speaker 2: depends on the results of the negotiations. 171 00:08:52,800 --> 00:08:55,920 Speaker 1: The place I'm moving on because getting boring for people? 172 00:08:57,840 --> 00:09:00,120 Speaker 1: Do you think are you let me ask you this. 173 00:09:00,160 --> 00:09:02,800 Speaker 2: A boring ryme? May you sometimes ask boring questions? 174 00:09:05,840 --> 00:09:09,520 Speaker 1: With having Winston around the cabinet table. Do you do 175 00:09:09,559 --> 00:09:12,280 Speaker 1: you appreciate having someone like that? I mean he didn't 176 00:09:12,360 --> 00:09:15,160 Speaker 1: quite say that he was, you know, the old smart 177 00:09:15,160 --> 00:09:18,120 Speaker 1: man in the room, but he's sort of implied it 178 00:09:18,160 --> 00:09:20,319 Speaker 1: is it nice to have someone around the table like that. 179 00:09:21,240 --> 00:09:23,800 Speaker 2: Look, I get along well with Winston. He's obviously got 180 00:09:23,840 --> 00:09:26,559 Speaker 2: a different perspective online. I'm a forty four year old 181 00:09:26,559 --> 00:09:29,080 Speaker 2: woman with four kids. He's a man who's almost eighty. 182 00:09:29,440 --> 00:09:32,760 Speaker 2: We've got different perspectives and different experiences to bring to 183 00:09:32,800 --> 00:09:35,120 Speaker 2: the table, and I think that's a good mix. I 184 00:09:35,160 --> 00:09:38,400 Speaker 2: think what we've demonstrated over the past few months is teamwork. 185 00:09:39,760 --> 00:09:43,559 Speaker 1: Very nicely pot Minister, never boring, Appreciate your time, Nichola Willius, 186 00:09:43,600 --> 00:09:47,600 Speaker 1: who's the finance Minister. For more from Heather Duplessy Allen Drive, 187 00:09:47,760 --> 00:09:51,120 Speaker 1: listen live to news talks. It'd be from four pm weekdays, 188 00:09:51,280 --> 00:09:53,479 Speaker 1: or follow the podcast on iHeartRadio.