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Insights 19: 30 May 2025
Webinar: Smart support for Councillors: AI tools for local leaders, 3:00pm, 12 June
 
Fast-track supermarket entry and expansion omnibus bill, Dr Benno Blaschke
 
NZ Herald: Dr Bryce Wilkinson on how soaring debt threatens MAGA vision
Clearing the fog on grocery competition
Dr Benno Blaschke | Research Fellow | benno.blaschke@nzinitiative.org.nz
New Zealanders’ frustration with grocery costs is understandable. When household budgets stretch thin, the instinctive response is to assertively tackle the issue. But if we act hastily, policy may shoot from the hip while ignoring that it is near impossible for new entrants to open supermarkets at scale in New Zealand. 

Instead, we propose hitting the mark by opening the market. We can create a mechanism giving new entrants a single, timely decision with reliable outcomes, allowing them to develop supermarkets on multiple sites across the country. 

It sounds simple, but we have been confidently following obscure signposts in grocery policy. Consider driving through dense fog while following clear road signs. Each marker reassures you are headed correctly - they look authoritative, match your direction, and your conviction grows with each mile. But then the fog lifts and you discover you have been following outdated signs, circling for hours. 

Similarly, New Zealanders observe our grocery sector has two major supermarket chains. Conventional understanding tells us this must be exploitative; their profits are substantial, so we are told. The signs point toward one straightforward solution: forcefully change market structure to increase competitors. 

But recent industry data suggests we may have been navigating through fog. Recall that GST applies to food in New Zealand. Once tax differences are removed, PAK'nSAVE prices may well beat major international competitors. Woolworths reports after-tax losses and margins in the bottom quartile globally. Those signposts pointing to ‘excessive profits driving high prices’ now look suspect. 

Recognising we are navigating through fog demands solutions that work without perfect diagnosis. This connects to insights from 1880s American economists who understood competition not as a particular market structure, but as ‘a process of open rivalry.’ As economist George Gunton argued, “if the gates of admission are always open, then the economic effect is the same as if the new competitor were already present.” 

Consumers need frameworks that discipline incumbent behaviour regardless of market structure. Even expanding to three competitors risks three rather than two complacent players, knowing they will not be challenged. Conversely, if the market is competitive, adding another by force will not change prices but could pass costs to consumers. 

Our ‘Fast-track supermarket entry and expansion omnibus bill’ promotes market openness with credible threat of entry. Rather than mandating specific structures, it removes barriers preventing serious challengers from testing whether they can succeed. Market openness acts like clearing fog, revealing the actual competitive landscape rather than relying on assumptions. 

The clearest path forward emerges not from engineering market structures, but from ensuring markets can discover optimal arrangements themselves. 

Dr Benno Blaschke's research note, Fast-track supermarket entry and expansion omnibus bill, published 29 May. 
Smart spending for a smarter future
Dr Michael Johnston | Senior Fellow | michael.johnston@nzinitiative.org.nz
It is no secret that the government is struggling to balance the country’s books. Yet, in last week’s budget, nearly $2.5 billion was found for new educational initiatives.  

This was new spending but not new money. Education Minister Erica Stanford cut ineffective and inefficient educational programmes and reallocated the money. 

There is more than $570 million of capital expenditure for school property. It will fund the construction of high-quality but traditional classrooms, not discredited “modern” learning environments. Standardised designs will cut the cost of each classroom by more than a quarter. 

At the heart of Stanford’s ‘learning support budget,’ are several initiatives that aim to get young students off to a better start in education.  

By 2028, there will be two million additional teacher aide hours available. Teacher aides support teachers in classrooms. Often, this involves giving individualised attention to children with high learning needs. That enables teachers to concentrate on whole-class teaching. 

Funding for additional educational psychologists, speech language therapists and occupational therapists will support students facing learning challenges. It will also help take the pressure off their teachers. 

There will be a new ‘maths check’ at Year 2 to identify students who need additional support to keep them on track with their maths learning. That support will be provided by 143 new full-time-equivalent specialist maths teachers for Year 0-6 students. 

A new assessment tool aligned with the new, ‘knowledge-rich’ curriculum will be rolled out. This will enable schools to track students’ learning progress and simplify reporting to parents. If schools were also required to report data from this tool to the Ministry of Education, the Ministry would have an easier time allocating resources to support struggling schools.  

The new spending focusses squarely on primary-level education. At the launch event, secondary teachers’ union president Chris Abercrombie challenged Minister Stanford on that.  

Stanford responded by promising that the 2026 budget would have more of a secondary focus. She also pointed out that ensuring far more students leave primary school at expected levels of literacy and numeracy would make secondary teachers’ jobs easier. 

There will be challenges in successfully implementing many of these initiatives. But by smart spending, Minister Stanford is setting the stage for a smarter New Zealand. 
Auckland Council’s precautionary urbanism
Roger Partridge | Chair and Senior Fellow | roger.partridge@nzinitiative.org.nz
Auckland Council has confirmed what many suspected: in most of the city centre, 20 storeys is quite tall enough. We wouldn’t want to frighten ourselves into looking like a real city. 

Not everywhere, of course. A few favoured blocks in the CBD will be permitted to reach for the sky – provided they don’t offend a protected viewshaft, cast an unauthorised shadow, or challenge our collective sense of scale. But outside that core, the Council has drawn a firm line: 72.5 metres. Generous, but not excessive. 

It’s being hailed as a step forward. Floor area ratios have been abolished. Modelling shows development capacity will more than quadruple. But the ambition remains strikingly limited. While cities across the Tasman are building 30- and 40-storey towers above suburban train stations, Auckland has opted for mid-rise restraint. 

This, in a country where housing remains among the least affordable in the world and home ownership has been falling for a generation. The planning system restricts supply and then blames the market for the consequences – as though scarcity were a market flaw, not a planning feature. 

But this isn’t just about planning. It’s a national disposition – a preference for small, polite improvements over structural change. We’re drawn to gestures that look bold on a press release and feel safe in committee.  

And so, in the same breath that the Council celebrates the City Rail Link – a $5 billion investment in underground mobility – it imposes above-ground controls that prevent that investment from being fully realised. One can have a world-class train station. One just shouldn’t build too much above it. 

There is, of course, a cultural logic to all this. New Zealand was the perfect filming location for The Lord of the Rings – not just for the scenery, but for the sensibility. We took Hobbiton to heart. A tidy hillside, a front door rounder than it is tall, and nothing so vulgar as a skyline. 

Some part of the national psyche remains deeply committed to being “mainly harmless.” Big is risky. Presence is showy. And we know what happens to tall poppies. 

And so, we get a planning regime that permits growth – but only at speeds that won’t alarm the neighbours. Unlimited height in a small zone. Thirty metres in another. Seventy-two and a half if you ask nicely. 

It’s not a system designed to fail. It’s a system designed to gently underdeliver – consistently. 

In other words, it’s Auckland Council at its best. 
 
On The Record
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