Labour’s plan to shake up the supermarket duopoly has been met with excitement over the prospect of lowering prices, but also caution.

The party has pledged the policy as part of their plan to drive down the price of groceries and provide competition for Woolworths and Foodstuffs.

Details are still in the early stages, but Labour has pledged to help competitors enter or expand into the New Zealand market, including financial help, getting land space, incubating innovation and accelerating competition.

It would be the latest step in changes Labour has made to the sector, since an inquiry showed the duopoly are making excess profits of $1 million per day.

From his Covid sickbed, Prime Minister Chris Hipkins told Mike Hosking a new competitor won’t enter the market without Government support.

“I don’t think it’ll be in the form of a grant, I think it’ll be much more like a loan for financing for establishment and so on.”

He said potentially getting a company like Aldi would bring competition to the supermarkets not seen in decades, and all options are on the table to make that happen.

“What I’m saying to those big companies like Aldi is if they want to come to New Zealand, and they want to come and talk to us about what it’s going to take to get to New Zealand, I’m happy to take their call.”

Supie founder Sarah Balle told Mike Hosking said she didn’t expect the Government to go down this route, having entered the sector to try to be that change.

She said from an economic perspective, you’d want to leave it up to the market to provide those changes, but in reality, it’s much more complex.

“We haven’t had meaningful competition, which is what the Commerce Commission found a couple of years ago, but now we know that regulation hasn’t solved it.”

On the likes of Aldi and Lidl potentially entering the market, Balle said they could do so, as seen with CostCo.

“But they’re not delivering lower prices at the checkouts for all Kiwis. They’re just going to go into the main centres but we need solutions for Kiwis who live in Gisborne, Whangarei, Palmerston North, Hawke’s Bay.”

Meanwhile, Labour’s Finance spokesperson Grant Robertson told Heather du Plessis-Allan the competition is there, but it’s not delivering yet.

“We’re only at the beginning of the process of competitors being able to come in. This is simply a recognition that we want to see lower prices in the supermarkets. We’ve got a number of different initiatives — no single one of them is going to be the answer. But I think we’ve got to be prepared to have a look and say if there is a way of supporting a competitor or competitors in, then we need to look at that.”

Balle told Mike Hosking there is a commercial case for government funding in supermarkets, as seen with Air New Zealand and electricity companies.

“This is really fixing the problem that we have upstreamed by providing meaningful competition so that we don’t have to have an ambulance at the bottom of the cliff, and Kiwis have the dignity to shop at a supermarket rather than a food bank.”

Across the ditch in Australia, a Sydney Morning Herald found its supermarket duopoly has similar problems, as it compared the price of saffron there to the United States, where there is no duopoly.

But New Zealand Initiative chief economist Eric Crampton told Kate Hawkesby while zoning changes for new supermarkets would be welcomed, subsidising entry for new chains should come with some caution.

“If you start them in here on subsidies, like subsidised access to finance, don’t be surprised if they come calling again a couple of years down the track wanting more subsidies to stay in the market.

“It'd be more difficult to say no [to more subsidies] at that point. It'd be a mistake to go down that route, but easing real regulatory barriers to entry — including zoning and consenting — would be a really big help.”

Labour’s changes to the supermarket sector since the inquiry has seen stiff fines for supermarkets if they don’t treat suppliers fairly, the naming of a Grocery Commissioner, land covenants that lock out new entrants at new locations banned, unit pricing mandated, and requiring major retailers to open wholesale offerings to other retailers to spread out the competition.