National seeks election mandate to separate Pak'nSave and New World

National will ask voters for a mandate to separate Pak'nSave from New World in a bid to cut grocery prices.

The proposal is conditional. National said a six-month review by the Commerce Commission, the competition watchdog, would test whether shoppers would be better off. It would pass a law to force the separation only if the Commission agreed, according to RNZ.

Foodstuffs is made up of two co-operatives, or groups owned by their store owners. It runs all New World, Pak'nSave and Four Square stores. Under National's plan, New Zealand would have three nationwide supermarket chains: Pak'nSave, New World/Four Square, and Woolworths. The party published the announcement as "National to pursue separation of Foodstuffs" on national.org.nz.

National will not take a proposal back to Cabinet, the group of senior ministers that makes Government decisions, this term. It will instead seek voter approval at the election.

Finance spokesperson Nicola Willis said the proposal followed a cost-benefit analysis, a study weighing expected gains against costs, by Sense Partners and two peer reviews, or independent checks, she ordered as finance minister.

The numbers come from that modelling. National claimed the change could save households up to $1320 a year by making prices about 5 percent lower than otherwise. Sense Partners estimated prices would be about 3.5 percent lower in the first year of separation, according to RNZ. The modelling puts the yearly household saving by 2035 at $200 to $1320, depending on income and family type. National cited $12.6 billion in consumer benefits over 20 years. The analysis put the net gain to the economy at $2.9 billion after lost supermarket profits were counted. The Sense Partners economists warned the work was indicative rather than definitive.

Labour leader Chris Hipkins dismissed the policy as another review. "New Zealanders can't eat a review," he said. New Zealand First announced its own plan to break up Foodstuffs in April. National has now set out its position ahead of the election.

The broader context here is that the mandate strategy changes the question. It removes the need for a Cabinet decision now. It asks voters to approve the use of compulsion in principle, with the detail and the economic test left to the Commerce Commission process after the election.

In my view, much will rest on that review. A six-month inquiry with a yes-or-no law change at the end leaves little room. It will need clear terms of reference, a clear measure of what prices would have been without the split, and a plan for separation costs and supply deals. The gap between the $12.6 billion figure for shoppers and the $2.9 billion net figure will be central. Opponents will point to the second. Supporters will point to the first.