National promises ‘laser sharp’ focus addressing competition problems

Monday, 25 September 2023

National and Labour share the same goal of having goods and services delivered “in the right way, at the right price”, but National would be “more laser sharp” in its competition policies, its commerce and consumer affairs spokesperson Andrew Bayly says.

A National-led government could expand the current market study into the banking industry but would also look beyond additional regulation to other means of bringing about more competition between businesses, he said.

Bayly gave as an example the party’s proposal to make it easier to import building products that had already been approved for use in the United States, UK, EU or Australia, subject to their specifications being published and vetting by a panel of industry experts.

Competition policy has gained a higher profile over the past two government terms, in the wake of concerns that a lack of competition in key industries has been holding back growth in the country’s productivity and, more recently, exacerbating rises in the cost of living.

The Organisation for Economic Cooperation and Development has blamed New Zealand’s slow productivity growth in part on a lack of competition, saying in 2017 that weak competition had resulted in a substantial number of firms with “mediocre management”.

“There are certainly some issues in certain industries,” Bayly said.

“New Zealand has got low productivity and, on the face of it, we seem to pay a lot of money for goods compared to Australia. There are some reasons for that but maybe not all explained by the fact that we're a small market.”

New Zealand was now characterised by having two very significant players in a number of industries, he said.

“Supermarkets is one example, the waste sector is another. The more competition you have, the more pressure you have not only on price, but on better quality of service.”

The current government’s response has included giving the Commerce Commission new powers to conduct market studies into problem industries and, more recently, amending the Commerce Act to lower the bar on what counts as illegal, anticompetitive conduct.

It has also substantially increased funding for the Commerce Commission.

Bayly said it was crucial the commission had the funding it needed to pursue court actions, but the watchdog’s studies into the fuel, supermarket and building materials industries had not achieved much.

National broadly supported the interventions the Government was making to try to improve competition in the supermarket industry, but would reserve the right to widen the banking study currently being undertaken by the Commerce Commission to include business banking, he said.

Bayly said the commission should examine the relative proportion of lending banks directed to housing and to “productive” business activities, and consider whether capital adequacy rules might be influencing that split.

It should also look closely at the margin between the interest rates at which banks lent and borrowed money, he said.

“We would have been much more laser-focused. Rather than just do a whopping great study of the banking sector, let's be more commercially-focussed, because we do want to get better outcomes.”

Bayly said the Productivity Commission should also be providing more specific advice and less general commentary.

“Instead of trying to bite off the elephant, do two or three things every year and do them well, and then move on to the next two or three things.”

National itself didn’t have a list of major structural reforms it would intend to kick off on “on day one”, he said.

“We've got enough reforms to do anyway; we've got to work out what we're going do with the health system, the education system and we’ve got to put in a new economic framework around Three Waters.

“National, if we win the election, will have enough on its plate just trying to get us back on track.”