The Sin Of Cheapness.


IS THE EDITOR of The Daily Blog correct? Would New Zealanders benefit from the creation a state-owned supermarket chain? Unburdened by the obligation to return a healthy dividend to private shareholders, would “KiwiShop” really be free to supply the highest quality food and groceries to the public at the lowest possible prices?

Let’s see.

The rationale for this level of state intervention is, presumably, to break up the cosy duopoly of Woolworths and Foodstuffs. No less an authority than the Commerce Commission has determined that New Zealanders are paying too much for their food and groceries. An apparent aversion to aggressive competition has led the dominant players to match one another’s’ prices rather than better them. This is not the way a “healthy” market is supposed to work. Ergo, the whole industry needs a shake-up.

The first question, naturally, is whether or not the present government possesses the will to involve the state directly in the distribution of such crucial commodities. Given that the Minister in charge of the process is David Clark, the chances seem slim. This former Treasury boffin remains firmly wedded to the Neoliberal economic model. It is, therefore, difficult to see him pushing such a democratic-socialist project through Cabinet. Nor, if we’re being truthful, is it very likely that the Minister of Finance, Grant Robertson, would give such a project his blessing. Both Labour politicians still subscribe to David Lange’s famous taunt: “You can’t run a country like a Polish shipyard!” (Or, they would probably add, a Soviet supermarket.)

It would be easy to stop at this point, and simply close the argument with a terse: “It’s not going to happen.” But, let’s not do that. Let’s assume, instead, that the entire Cabinet, after a special screening of “Reds”, decides to embrace the “cheap food for the people” proposition with both arms. Let’s follow the idea through to some sort of conclusion.

The first point to make is that under this scenario Woolworths and Foodstuffs will continue to trade. KiwiShop is there to compete with all the New Worlds, Pak n Saves and Countdowns – not replace them.

Hmmmmm. Tricky.

Part of KiwiShop’s remit is to give the growers and suppliers of food products a fair price for their offerings. Presumably, this would be a higher price that the price offered by either Foodstuffs or Woolworths? But, if they’re paying their suppliers more, wouldn’t they be required to charge their customers more? That would not be a very good way to start: with the private supermarkets offering their customers cheaper fruit and vegetables than the state-owned store. People would laugh. Right-wingers would crow. Jacinda would not be impressed.

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The situation would not be improved if the private supermarkets embarked on a policy of driving up the wholesale prices of everything the state supermarket needed to purchase in order to remain competitive. If successful, this strategy would also lead to KiwiShop’s prices displaying no appreciable advantage over those of the private distributors.

The pressure would be on KiwiShop’s management to undercut their competitors’ prices – even at a loss to its public owners. It’s easy to imagine the Opposition parties demanding to know the cost to the taxpayer of this expensive counter-strategy. The luckless Minister would soon be inundated with Official Information Act requests. Jacinda would be even less impressed.

One way out of this rapidly deteriorating situation would be to announce that staple items – bread, cereals, milk, cheese, meat, fruit and vegetables – would be significantly subsidised in KiwiShop supermarkets. Subsidies not available in privately-owned supermarkets.

Problem solved? Well, no, not really. The private supermarket owners would immediately file a complaint with the Commerce Commission, quite rightly asserting that the Government was screwing the scrum.

Moreover, Woolworths and Foodstuffs would not be the only complainants. New Zealand has puts its signature to a host of international agreements outlawing the state subsidisation of commodities – especially subsidies intended to disadvantage private sector suppliers. The Commerce Commission wouldn’t be the only body telling the Government to cease and desist. By now, one suspects, Jacinda would be getting really pissed-off.

At this point the NZCTU might well suggest that an even better way to run Foodstuffs and Woolworths out of the market would be to start paying KiwiShop workers much higher wages. Failure to match the state’s wage-rates would spark a major worker push-back. On the other hand, conceding wage parity with KiwiShop employees would slash the supermarket owners’ profits.

You know, that strategy just might work.

Or, it might not. It is difficult to see the Opposition parties – let alone the employers’ representative bodies – sitting back and doing nothing in the face of such a blatant attack on the capitalist system. If the Labour Government was allowed to get away with rendering the privately-owned distribution sector unprofitable, then what was to stop it from doing the same to any other sector it fancied taking over? Faced with what they would undoubtedly interpret as an existential threat, the capitalist ruling-class would start gearing-up for a God Almighty fight.

It always ends up here. Deploy the full resources of the state against one profitable capitalist player, and very soon you’ll be faced with the necessity of deploying its resources against them all. The capitalist class has no objection to the state taking over businesses which cannot provide a return on their owners’ investment. (It’s called “socialising the losses”.) But the state attempting to muscle in on money-making enterprises, well, that’s a whole different ball-game. A ball-game called Socialism. A ball-game which capitalism cannot afford to let the state, or anybody else, play – let alone win!

Which means that even a project as benign and necessary as providing affordable food and groceries to the poorest New Zealanders will, in the end, require a full-scale revolution. Now, I’m confident that Comrade-Editor Martyn “Bomber” Bradbury is more than willing to mount the barricades for social and economic justice. But can anyone see Jacinda, Grant Robertson, the Cabinet, or the rest of the Labour caucus, joining him in the violent overthrow of New Zealand’s capitalist system? Why not? Because the bosses cannot be defeated with kindness.

The basic necessities of life are sold as expensively as possible, because the capitalists owe it to their shareholders not to commit the sin of selling them cheap.



  1. You are right, this government is NOT going to intervene on behalf of its citizens, ever. It’s track record boldly states that. If it cared or even half arsed did its job, housing for one, would not be the festering infected wound on our nation that it is. Furthermore, I don’t think there is an MP in this government who would have a clue how to intervene.

    But a third player is badly needed because the situation is exactly like the high profit halcyon days of the Telco industry where Vodafone and Telecom charged us 20 cents per text message, because they could. Vodafone NZ was allegedly the Crown jewel in its empire as its consumers were ripped off , borderline criminally.

    The trouble is Labour are simply incapable of doing anything about this. Recall the much talked about energy sector reforms that the PM no less spoke out on price gouging, on behalf of her people? Well, that was just talk. Headed by the serially incapable Kris Faafoi, that crusade died a death without a whimper.

    And guess what, fuel retailer margins are as healthy as they have ever been.

  2. The simple, and obvious, question is: what is the net profit margin of our supermarkets? In other words if they where to reduce their prices to the customer to the point of not making any money at all (after costs), how much would it save the customer? Is it 20 % or maybe 10%? Turns out earnings, before tax and interest payments for NZ supermarkets is about 4.5%. Doesn’t seem unduly exploitive to me, after all, the government clips the ticket at 15% (GST)
    Here’s a link to the commerce commission’s investigation of our grocery market:

    • Exactly David. Absent some other fact(s) explaining why their profit is actually much higher, as a Govt why get commercially involved?
      A simple solution is to allow/help a couple of other companies to start up and compete, IF they see a ‘market’. e.g. Aldi etc.

    • Chris
      There is another solution. Cheese is 17bucks a block? OK New Zealand, don’t buy cheese for a month.
      Aaaaah but who wants to go without cheese?

      • Cheese is salt and fat. That and sugar is why I don’t bother too much with cheap takeaways as an adult.

  3. So they say electricity and telecommunications are too expensive and now food. But the real kicker is housing- I cant wait for that report.
    Control alt delete the comm comm.

  4. I agree we need to step out of the current market system if we want to solve the problem. There is hope.
    Why not think about this as an opportunity for a different business model?
    Is it time for a cooperative supermarket?
    please check this out:

  5. Maybe better to repeal GST, one of the many evils wrought by the Lange-Douglas LINO government – and exacerbated by Key’s increase to 15 %. A tax that hurts those on low incomes, who inevitably spend the largest fraction of their income on the basics (rent, power, food). Would have to be compensated with higher income tax on the big earners, and/or some kind of wealth tax.

    But Ardern and her LINO colleagues seem more interested in critical race theory and radical gender ideology. I would love to see a journalist ask Ardern what she understands by Keynesian economics. Or Friedmanite economics, for that matter. Do you think she could provide a coherent answer?

    Go on Tova, ask the question.

    • I am sure Grant Robertson could answer your questions; why make this problem about trying to embarrass the Prime Minister?
      I agree about the inequities of the GST system, and for that matter the whole tax system – until the ‘rich’ pay their fare share that will continue.

      • “why make this problem about trying to embarrass the Prime Minister?”

        You think a journalist asking the PM a fundamental question about economic theory would be “making” a problem? If Ardern were embarrassed by such a question, the problem would be Ardern’s economic illiteracy (hypothetical at this stage), not the question or the questioner. She doesn’t need to be an expert in economics, but she needs to have some idea of what her finance minister is doing.

        I have no time for “gotcha” questions about details or trivial matters, but it’s a journalists job to help the public decide if our elected leaders are fit to govern. For example, by exposing economic illiteracy.

        • But wouldn’t it just be waste of ‘air time’; I want to know what government is doing about things like the current immigration crisis, not if the PM is a source of wisdom about economic theories that even economists can’t agree on.

          • You think helping the public decide if our elected leaders are fit to govern would be a waste of air time? Interesting.

            Try reading my comment again – I don’t expect Ardern to be a “source of wisdom” on economic theories either. My point was she needs to have some idea of what her finance minister is doing.

      • Grant Robertson has a BA in political studies. He doesn’t know shit about economics, but then again neither do most mainstream economists.

    • You keep harping on about dropping GST. OK, let’s assume without GST Cheese will drop down to, say under 10 bucks per kilo. Good. But then, magically, it will creep back up to 15 bucks a kilo. Just like everything will creep back up. What are you going scream then? Before you answer, remember we have dropped GST! OK you can answer now…

  6. Oh dear, another seemingly intractable problem that the great thinkers on the left can’t agree on.
    And still no mention of the solution to this and pretty much every economic, social and health problem that keeps the chattering classes preoccupied.
    Want healthy nutritious food?
    Grow the damn stuff.
    Want a healthy home for your kids to raise their kids in?
    Plant some damn trees for them to cut down in the future.
    Want to lose weight and reverse diabetes, etc,etc?
    Get some fucking fresh air and exercise.
    There are a number of ways to get people on to land without debt.
    Some are bloody. Some are kind.
    I was given mine. After how many generations of people on earth, that’s how you all should have access to it.
    If you’re going to revolt about anything, I would suggest you make it that.
    Pitty you all left it 40 years to late ” comrades”.

  7. You’re not wrong Chris. On all counts. A state-owned supermarket chain simply won’t happen. Just rhetoric dreamed up by journalists. A third private player? Far better to remove gst on essential items (and you omitted ‘rice’ I may add). Is that doable? Ideologically feasible? Certainly a vote catcher.

    • “A state-owned supermarket chain simply won’t happen. ” And niether should it; it would solve nothing. Past governments and private owners have sold out to overseas finance – once profits that stayed in NZ now flow offshore and are lost to the our economy. NZ has been in a race to the bottom for years. Supermarkets screw their suppliers and workers, use council planning to limit competition, and extract excessive profits – there’s nothing unique about that type of corporate behaviour.

  8. Boris Yeltsin,

    “When I saw those shelves crammed with hundreds, thousands of cans, cartons and goods of every possible sort, for the first time I felt quite frankly sick with despair for the Soviet people,” Yeltsin wrote. “That such a potentially super-rich country as ours has been brought to a state of such poverty! It is terrible to think of it.”

  9. How about giving greater encouragement to local markets. I find that the reasonableness of price, the variety, and more significantly the quality of produce at the Cannons Creek market (Porirua) are superior to the supermarkets. Unfortunately Porirua Council drove the traders away from a great position in central Porirua. Surely councils and government could do something to make market sites more available, and trading hours/days more extensive.

    • I used to drive out early morning to that central Porirua market and it was good and good value, with original initiatives and various home /cottage industry enterprises – sort of a bit like pre- Industrial Revolution Britain – and decent sized sacks of potatoes, and delicious jams and pickles, so no wonder the council scuppered it.

  10. Ok. So it’s better for families to live on noodles and weight-challenging crappy food, and get diabetes, and burden the health service, and amputate the odd limb, than piss off Jacinda and yet another Treasury alumnus.

  11. The part you miss, Chris, is that industrially produced food is incredibly cheap and abundant because industrial humans have been ‘converting oil into food’ for decades, and have become almost totally reliant on industrially-produced and industrially-distributed food. It starts with ploughing and application of industrially-produced fertilisers, and progresses through harvesting and processing and distribution -all of it totally dependent on imported oil. Even NZ’s so-called natural systems are totally dependent on oil inputs.

    Now here’s the crux of the matter: not only are industrial humans no longer able to access water for irrigation in a plethora of locations but the crops are failing because of Planetary Meltdown, and the oil supply is in terminal decline.

    Add to that the fact that the seas and oceans have been largely stripped on large fish, and we are moving down the food chain (or consuming factory-farmed fish, dependent on oil-based energy inputs) and we see that the entire system is on the brink of collapse.

    So people can debate prices and subsidies and market controls as much as they like, none of it is connected to the REAL WORLD.

    And the general refusal to discuss ANYTHING within the framework of the real world is what is in the process of demolishing all the artificial systems that industrial humans have constructed.

    My guess is that we have got less than a year before the Ponzi globalised financial system unravels, and less than a decade before accelerating Planetary Meltdown demolishes practically everything industrial and severely disrupts most of the natural world.

    There is a mountain of evidence that humans just keep repeating self-destructive activities until they can’t.

    • Yes, but, we are in quite a unique situation isolated down here at the bottom of the world. It served us well during the pandemic, and it should be able to do so again. As a simple ex-Green, I like to think that we could become even more self-sufficient than our industrious pioneers were. If the Greens were a bona fide environmental party instead of a bunch of sex and gender and race weirdos, they would be working along these lines right now.

      • “If the Greens were a bona fide environmental party instead of a bunch of sex and gender and race weirdos, …” Hehehe!

      • In principle you may be right.

        But do not forget that Permaculture -the ONLY strategy that can possibly make a difference both to environmental degradation and feeding people long term -has been universally shunned by governments, local councils and the bulk of the populace despite being invented in the late 1970s by Bill Mollison, and despite being heavily promoted by those who do care about the future.

        So bad is the situation that councils like New Plymouth District Council not only ensured that Permaculture was taken off the agenda every time it was raised, but the sociopaths that formed the bulk of the council and its staff were quite happy ( pleased?) to see community gardens bulldozed and community orchards rot away from neglect.

        The cynic in me says the official ‘plan’ [of the LINO government -in keeping with every government before] it is to keep the masses dependent on corporations for food, and energy, and practically everything else. And to keep the masses as dumbed-down as possible. Hence the assaults on community education and the constant broadcasting of the propaganda and garbage generated by TVNZ etc.

      • I second your sentiment and agree with afewknowthetruth above – why don’t we do less finger pointing and start serious R and D in to farming practices using less fossil fuels and chemicals, and incentivize planting natives, there are a lot of people keen to get in to regenerative agriculture
        jeez would someone give me an option for baleage that doesn’t involve kilometers of non biodegradable plastic!

        We should have government backing farmers and putting our considerable agricultural know how and natural environmental advantages to good use so we can one day truthfully market our produce as actually clean and green.

  12. > An apparent aversion to aggressive competition has led the dominant players to match one another’s’ prices rather than better them

    Have you been in any supermarkets recently? Because this is simply not true..

  13. Forget the supermarket scenario and look at the Z petrol station takeover by the Govt ( well the super fund more specifically, govt owned) from Shell. Cheaper fuel prices?…Nope
    Expected to make a healthy profit back into the fund?…Yup
    So would the ‘Kiwifood’ supermarket be expected to break even, no profits per se but no losses either?…no way! Govt would want its slice of the outlay it gave to establish the business, no different to shareholders.
    The whole Idea is a socialist wet dream and Labour will have nothing to do with it, a political minefield.

  14. The claim made for capitalism is that it is efficient, not that it is necessarily equitable, and far less that it is egalitarian. Capitalism is premised on the notion of competitive advantage, which is a phrase denoting inequality between individuals, companies and nations, and therefore it is futile to try to use capitalism to deliver social equality. That is something that it cannot do and is not designed to do, and Chris has just given us a case study to show why capitalism cannot provide all people with equal access to resources.
    However the state in its abstract form can deliver equality, even though it cannot do so through the mechanism of capitalism. I say “in its abstract form” because contrary to the assumption of many social democrats, it is not in the character of every state to deliver social equality.
    The New Zealand state is a case in point. At times, in the late nineteenth and mid twentieth centuries, it has given the impression of being on an egalitarian track, yet that impression is misleading. Throughout its history the colonial state has had to reluctantly take account of the realities of New Zealand society, both Maori and Pakeha, the state of the market in labour and land and other factors which have worked strongly in favour of egalitarianism and the idea that “Bob’s as good as his master”.
    At the same time the state has contrived to undermine the spirit of egalitarianism when and as it could, as in the Labour government’s privatization program, its expanded immigration policy and the end of universal access to home ownership.
    The true character of the colonial state is perfectly represented at its Head. An exceedingly wealthy woman, permanently resident in a foreign capital, whose wealth and power derives from imperial conquest, whose position will be inherited by her own offspring without regard to merit, and who is not politically or morally accountable to the people of Aotearoa.
    As a consequence the hierarchy of the colonial state is entirely infected with a sense of privilege and entitlement.
    A KiwiMarket would end up like KiwiPost, with senior staff, mostly citizens of other states, paid extravagant salaries, while the workers get by on something like the minimum wage and customers pay exorbitant amounts for service. Except that KiwiMarket would have serious market competition, and thus will not get off the ground in the first place.

    • An impressive review Geoff; I totally agree. A state owned supermarket would not deliver cheaper food, there are plenty of examples why this would not happen.

  15. To help both farmers and consumers they need to make it easier for farmers to sell their food directly to consumers. One of the issues with supermarkets is that it costs time and money to go to different supermarkets so it is not as easy as having a ‘new supermarket’. You need new supermarkets everywhere so that the most needly can access them! That can take years and cost a fortune.

    The should have an online supermarket that connects consumers to farmers and cut out the supermarkets. It would also be very cost effective to run compared to supermarket real estate everywhere.

    In addition with regards to these NZ employers constantly saying they can’t get people. Sees to me like NZ employers treat their employees like crap, dispose of them at a whim, while also have poor service and overpriced products.

    NZ firms seem to love to sack anybody for anything which seems to be unusual when the same industries who can’t even do basic employment correctly and have redundancy at a whim, are back at the government teat asking for more cheap worker visas to exploit!

    Truckie sacked for sharing Stuff story with workmates

    ‘Soul crushing’: inside Rocket Lab’s ‘toxic’ workplace culture

    Smiths City advertises for new staff days after making 115 redundant

    Comvita makes 90 staff redundant, posts $9.7m loss

    Warehouse job cuts: 33 Northland staff made redundant; union may challenge decision

    Dozens of jobs lost in Mid-Canterbury as Silver Fern Farms closes pelt house

    Million dollar investment at Pareora plant as Silver Fern Farms prepares to close Fairton

    Big read: Why being made redundant in NZ is so tough

    Employer held to task again, after exploiting workers via sham business

    ‘They’re not hiring Kiwis’: Locals keen to pick fruit ignored, rejected’re-not-hiring-kiwis-locals-keen-pick-fruit-ignored-rejected

    Oil rig workers claim unfair treatment in a system ‘rotten to the core’

    ‘Absolutely horrible’ telling staff they’ve lost jobs, says owner of Te Kuiti sawmill cutting 35 positions

    Worker told to ‘f*** off’ wins unfair dismissal employment case

    Employee wins unfair dismissal case after being fired three days into new job

    Seems to me that NZ employers have a lot to be desired in their forward planning and way they interact with workers! They will never change while the government props them up!

  16. I’ve always been in favor of a chain of supermarkets which is owned and operated by the State, selling basic everyday household items to the Kiwi consumer at cost. The reasons for this are numerous.

    Firstly, if you take a look at many fruits and vegetables, the producers aren’t making a great deal of profit because the costs such as staff, land, water, rent or lease, equipment and machinery, mean that the overhead costs are quite large and the price which they sell their products for is quite low. Commodity based products such as corn and coffee aren’t typically produced in New Zealand, so agricultural producers are locked out of the OTC market. A SOE chain of supermarkets could solve this issue, paying producers more and charging consumers less. The alternative would be to reduce GST which is impractical because it’s a huge revenue earner for the State.

    The downside would be the necessary reduction in the price paid for other good such as meat. This would unfairly target farmers. It would also affect freezing works staff and result in a big change in spending. I personally would prefer for these workers to retain their $22 to $26 an hour jobs, keep spending up large in the pubs and on international travel and in our shopping malls, and keep the low skilled agricultural workers on or about the minimum wage.

    To me, before the government rushes in to slap a forty foot dressing on a bandaid wound, they should reduce the GST rate back to 12.5 percent and monitor the cost of supermarket goods for a while.

  17. While we all complain about supermarkets I wonder why we as consumers don’t do anything about it. It’s just lazy shopping at supermarkets – I try to avoid them, even though I have got two (Countdown and Pak’n Save) just a short walk from home. We get our fruit and vegetables, our milk and a lot of our dry goods from the local fruit and bulk shop: we have gotten to know the owners and it’s better and normally cheaper than going to the supermarket. Together with friends and family we buy some common household items in bulk directly from producers or wholesalers (including frozen food). Yes, we have got a bit of storage space in our kitchen, so it means our normal weekly shopping is not huge (so we don’t need a car to do it). We bake our own bread and make our own muesli. We’ve got a garden and exchange some fruit and vegetables with friends and family. We get our meat from the butcher. And if we really want some junk food, there are Asian shops round the corner. I found it surprisingly easy not to shop much at supermarkets. In addition to their price gouging, supermarkets give people vouchers for discounted fossil fuel. How crazy is that!
    Yes people complain about supermarkets, but maybe taking some responsibility would go a long way. There are many other options out there and I think people should use those, rather than asking for the state to get involved.

    • I highly recommend Bidfood, the food delivery people that deliver for resteraunts can also deliver to homes, minimum order $200, 10 buck delivery to our rural address. No fruit and veges available and not everything is cheaper but bulk stuff and frozen fish, meat and some cheese are way cheaper.
      Stuff the supermarkets.

    • Agree to this point , supermarkets don’t do specials on the basics usually , we use local fruit places and bulk stores where ever possible and it saves a fair bit , I think putting booze into supermarkets was a bad thing as they special beer and wine to get people in the door

  18. If I want a chicken, a loaf of bread or a jar of marmite I can pretty well be 100% certain that when I enter the supermarket those good will be available. If I need a hip replacement and turn up at the local hospital I can pretty much be 100% certain I will have to wait months or years for said surgery. That’s why a state run market – and, trust me, it won’t be a “super”market – will not work. The supermarket chains may be expensive but I will guarantee that you get better value for the money you spend there that any value the government gives you for the taxes you pay.

  19. Breaking them up sounds completely good to me. But perhaps the most good would go to primary produce areas like my province. The Planters could pay their (brown) peons more.

  20. I find groceries quite cheap myself, as it is. Though a head of broccoli is near $ 4 here, when I pass them regularly in the fields. Vegies are expensive. Galbraith maintained primary produce was the only area where the free market worked.

  21. I request another expose’ of the peasants revolt of 1381 from you, ….if you will Chris, ….I recall you did an article a few years back and that there were some disturbing parallels you drew regards modern politics. Could you do this for us again, please?

    I am grappling with the political relevance, long forgotten yet powerfully relevant to todays social democratic struggle against neo liberalism/capitalism and the similarity’s it had regards medieval authorism at the time,… so missed the full vitality of your message at that time.

    I would be very, very grateful for that,… until then, here is the brilliant Tony Robinson:

    The Story Of The Peasant’s Revolt | Peasant’s Revolt Of 1381 | Timeline

    The Legacy Of The Peasant’s Revolt | Peasant’s Revolt Of 1381 | Timeline


    Is Wat Tyler an ‘evil agent’ or a social revolutionary? And what of John Baker? Where these bold men wrong or standing up against what I would call horrific abuses? Personally, … I regard them as hero’s. And yet several century’s later, I cannot but help to support the Irish…as it is a similar story when I ,in my simplistic manner, survey the same cold blooded ruthlessness of their oppressors.

    Young Ned Of The Hill – The Pogues – YouTube

    I would appreciate your clarity, on historical issues, and their modern relevance regards todays lessons please, if you will.

    Thank you.

  22. Macbeth,…I have always thought Shakespeare a Tudor propagandist,…and a liar,…seems this is borne out in this documentary by Timeline. I am sure we can learn from and draw parallels to this series of events,…

    Who Was The Real King MacBeth? | The Real MacBeth | Timeline

    It may seem complex, but the kernel of truth is magnified by these historical examples whereby peoples have gone before us and experienced the exact same things….that there is no differences and that truth remains the same throughout the century’s. We would be fools to ignore it.

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