National’s latest idea to somehow carve Foodstuffs into separate supermarket businesses is worse than stupid.
For me, it finally kills one of the great myths of New Zealand politics — that somehow the National Party is naturally better at managing the economy than Labour.
Because this policy doesn’t look like the product of a Government confidently executing a competition strategy.
It looks like a Government that has spent almost an entire term searching for an answer, arrived at election time, looked at the supermarket sector and suddenly decided the answer might be to start pulling apart privately owned businesses.
And this from the party of free enterprise.
You couldn’t make it up.
I HAVE BEEN TALKING ABOUT THIS FOR YEARS
I have been involved in calling for greater competition in the supermarket sector for years.
This is not a new problem.
The Commerce Commission told us back in 2022 that competition in the grocery sector was not working well for New Zealand consumers.
It identified some of the real problems: access to suitable land, restrictive covenants, land banking, difficulties getting competitively priced wholesale groceries, the treatment of suppliers and the enormous power of the dominant supermarket groups.
Four years later, here we are.
National has had almost a full term in Government and suddenly, weeks out from an election, it has discovered structural separation.
Where have you been?
REMEMBER THE GREAT NEW SUPERMARKET COMPETITION?
Remember Nicola Willis talking up the possibility of new competitors?
There was supposed to be an express lane for new supermarkets. New entrants. New investment. More competition.
Last year the Government said its request-for-information process had identified five prospective domestic competitors and growth ambitions among existing retailers. It talked about Costco expansion and even noted that Aldi and Lidl had chosen not to participate in the initial process.
So where is this great new wave of supermarket competition?
Where are the new nationwide chains?
Where is the competitor opening 50 stores?
Where is the international supermarket giant coming to rescue the New Zealand grocery shopper?
Silence.
And perhaps the reason for that silence is fairly straightforward.
Creating another nationwide supermarket network in a small, geographically stretched country at the bottom of the South Pacific is enormously expensive.
You need land.
You need stores.
You need distribution centres.
You need warehouses.
You need trucks.
You need technology.
You need suppliers.
You need enormous purchasing power.
You need billions in capital.
Competition is not created by issuing a press release saying you would quite like some.
SO NOW WE BREAK UP FOODSTUFFS?
Having apparently failed to conjure a major new competitor into existence, National has arrived at Plan B.
Separate PAK’nSAVE from New World and Four Square.
National says that could create three nationwide competitors — PAK’nSAVE, New World/Four Square and Woolworths — although the Commerce Commission would first be given six months to determine whether the separation would actually leave consumers better off.
Think about the absurdity of where we have arrived.
We are going to intervene in the structure of Foodstuffs while leaving Woolworths intact and then hope this magically creates cheaper groceries.
And these are not simply government-owned shops where ministers can redraw an organisational chart.
PAK’nSAVE, New World and Four Square stores operate through cooperative structures involving locally owned businesses.
National itself acknowledges that existing owner-operators would keep their businesses and brands.
So what exactly are we separating?
Procurement?
Distribution?
Technology?
Marketing?
Warehousing?
Supply agreements?
Private-label production?
Back-office systems?
And how much will duplicating some of that infrastructure cost?
Because somebody will eventually pay.
My bet is it won’t be the politician announcing the policy.
It will be you at the checkout.
BusinessNZ has raised precisely this concern, warning that supermarket economics rely heavily on scale across purchasing, distribution, logistics and technology, and that duplicated costs from structural separation could ultimately be passed on to consumers.
National itself admits supply-chain costs are one of the risks its proposal would need the Commerce Commission to assess.
That is quite an admission.
We have a policy designed to make groceries cheaper that could increase the cost of getting groceries onto supermarket shelves.
Brilliant.
WHAT HAPPENED TO LANDBANKING?
Here is what annoys me most.
We already know many of the problems.
What happened to dealing aggressively with land banking?
What happened to ensuring suitable sites are actually available for new competitors?
The Commerce Commission identified access to land as one of the biggest barriers to supermarket competition years ago and specifically recommended monitoring land banking and eliminating restrictive covenants and lease arrangements that prevent grocery development.
The Commission says work removing restrictive land and lease covenants is now helping create a more enabling environment for competitors — but the major supermarkets still control more than 80 percent of the national retail market.
So finish that job.
Open the land.
Remove the barriers.
Make it easier for competitors to build.
Don’t pretend rearranging the existing supermarket deckchairs automatically creates competition.
WHAT HAPPENED TO PRICE GOUGING?
Then there is pricing itself.
What happened to seriously confronting pricing practices?
Consumers don’t care about the corporate diagram hanging on the wall at Foodstuffs headquarters.
They care about the number printed at the bottom of the receipt.
If a $300 grocery bill remains $300 after structural separation, congratulations — you have successfully rearranged the supermarket sector while achieving precisely nothing for the family trying to feed three kids.
The test isn’t whether Wellington can manufacture another corporate entity.
The test is whether kai becomes more affordable.
WHAT HAPPENED TO OUR PRODUCERS?
Then there are the people producing the food.
This might be the most extraordinary omission of all.
New Zealand produces enormous amounts of food, yet our own families continually ask why food produced here can feel so expensive here.
Look upstream.
The Commerce Commission says it has identified more than 50 different types of rebates, discounts and payments involving around $6 billion paid by suppliers to the major supermarkets annually.
These can include charges associated with promotions, shelf restocking and other services.
The regulator says those arrangements can reinforce the market power of the major supermarkets and make it harder for smaller retailers to compete.
Six billion dollars.
That deserves enormous scrutiny.
The Commission’s original market study also found many grocery suppliers feared having products removed from shelves if they did not accept costs, risks and contractual uncertainty.
Where is the national political debate about that?
Where is the conversation about ensuring growers, farmers, manufacturers and small Māori food businesses receive a fair deal while consumers also get a fair price?
Because squeezing producers until they squeal is not a sustainable food system either.
AND THEN THERE IS LOGISTICS
New Zealand is a long, narrow country with a small population.
Moving food costs money.
Fuel costs money.
Trucks cost money.
Drivers cost money.
Warehouses cost money.
Refrigeration costs money.
Inter-island freight costs money.
Getting kai from a producer in one part of the country onto a supermarket shelf hundreds of kilometres away has a cost.
If your supermarket competition policy ignores logistics, distribution and supply-chain economics, you are solving only part of the problem.
Worse, if your proposed solution duplicates parts of those systems, you risk creating additional costs.
That is why this policy feels upside down.
WOOLWORTHS GETS TO WATCH FROM THE SIDELINE
And then we arrive at perhaps the strangest part.
Foodstuffs gets structurally separated.
Woolworths doesn’t.
How does forcing structural change on one major supermarket group while leaving the other intact constitute a coherent competition policy?
National argues the end result could be three major nationwide grocery chains instead of the present structure.
Perhaps.
But another logo on an organisational chart is not necessarily another genuine competitor.
Competition means businesses independently fighting for customers, suppliers, sites, prices and market share.
If the economics underneath the supermarket sector remain unchanged, simply creating another corporate structure does not guarantee the weekly shop becomes cheaper.
THIS IS THE ECONOMIC MANAGEMENT PARTY?
National has traditionally sold itself as the party of business, markets and economic competence.
Yet here we are contemplating a level of intervention into privately owned businesses that would have had previous generations of National MPs reaching for the smelling salts.
And apparently this is what passes for free-market economics in 2026.
Spend years telling us competition is coming.
Wait for the magical new entrants.
Discover they aren’t arriving at the scale required.
Get to election year.
Then threaten to restructure one of the country’s biggest privately owned grocery networks.
This isn’t an economic strategy.
It is an admission that the strategy hasn’t worked.
FIX THE WHOLE SYSTEM
Yes, New Zealand desperately needs greater supermarket competition.
Yes, Foodstuffs should face greater competitive pressure.
Yes, Woolworths should face greater competitive pressure.
Yes, regulators should have strong powers where anti-competitive conduct occurs.
But if we are serious about bringing food prices down, then stop searching for one giant political lever.
Deal with the whole system.
Deal with land banking.
Deal with restrictive property arrangements.
Deal with wholesale access.
Deal with supplier power imbalances.
Deal with pricing practices.
Deal with the enormous web of supplier payments and rebates.
Deal with logistics and transport costs.
Make entry easier.
Make expansion easier.
Give the Commerce Commission the resources and teeth to enforce competition law.
And create the conditions where genuinely independent competitors can grow.
Because breaking Foodstuffs into pieces while leaving the economics that created supermarket concentration largely intact isn’t revolutionary.
It’s political theatre.
After nearly a full term of Government, New Zealanders deserve something better than another supermarket announcement.
They deserve cheaper food.
And the only economic test that ultimately matters is the one happening every week at the checkout.
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