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OPINIONBusinessFebruary 27, 2025

We need to stop shadow-boxing on competition

Shadow of an empty shopping cart cast on a sunlit concrete surface, with the cart's metallic structure partially visible in the bottom right corner.
Photo: Getty Images

How many times do supermarkets and banks have to be put ‘on notice’ before something actually changes?

When, earlier this month, finance minister Nicola Willis warned our uncompetitive supermarket duopoly that they had been put “on notice”, Foodstuffs and Woolworths must have been trembling with fear. Indeed they can barely have recovered from the shock incurred the last time they were – according to RNZ – put “on notice”, in August last year, for routinely over-charging customers. This came on top of the mortal peril of – you guessed it – being put “on notice” in 2022, this time by Labour’s David Clark.

During his 2022 press conference, Clark insisted that the supermarkets’ uncompetitive behaviour “can’t be kicked down the road”, while in the same breath announcing “another review of competition in three years’ time”. Black comedy aside, the wrenching incompatibility of these two statements hints at the reason why our supermarket giants may not, in fact, have collapsed in terror. They have correctly deduced that all this half-hearted making of threats, all this putting “on notice”, amounts to nothing whatsoever.

In a similar boat are our cartel-like banks, who have somehow mysteriously survived being put “on notice” not only by the current government (the National Party in December last year: “The big banks are on notice”) but also by its predecessor (Kris Faafoi and Grant Robertson in November 2018: “Banks [are] on notice to lift their game”). The banks have also bravely endured the finance minister’s rapier-sharp wit, shrugging off her carefully crafted description of their industry as “a cosy pillow fight” where other firms might have crumpled under this near-mortal blow.

Image: Tina Tiller

Customers, meanwhile, await action. The Commerce Commission has calculated the supermarket duopoly extracts $1m in excess profits every day – profits, in other words, above and beyond those they would make in a competitive market. That $1m a day comes straight out of shoppers’ wallets. Kent Duston, the convener of the Banking Reform Coalition, estimates that another $10m a day in “unearned and unjustified profit” is extracted from us by the four big Australian-owned banks. A small handful of firms likewise dominate – and earn excess returns from – electricity generation, building supplies and other markets, many of which have also been put “on notice” to equally little effect.

Why is there so much shadow boxing, and so little action? One major culprit is the hands-off approach to regulation that has haunted the English-speaking world for decades. Anti-monopoly regulations should theoretically be popular even among small-government types: competition is, after all, the only thing that makes markets work. Monopolies, duopolies and oligopolies – the latter denoting market dominance by a handful of firms – are a menace to consumers, raising prices and squashing innovation. But even pro-competition regulations have long been deemed suspect.

The dominant view has instead stressed the economies of scale that – in theory – accumulate in larger firms. The mere possibility of competition, what’s more, is supposed to put a check on monopolistic behaviour. Obviously this latter idea is self-serving – or, rather, big-business-serving – nonsense, but it has nonetheless been hugely influential. Hence New Zealand has long tolerated two supermarket chains having over 80% market share, while further afield Facebook was – to take just one egregious instance – allowed to buy up both WhatsApp and Instagram.

Overseas, the grip of this laissez-faire view is weakening: witness the US Justice Department’s determined prosecution of Google’s monopolistic behaviour, and the tougher approach to anti-competitive activity crystallising within the European Union. Even in sleepy old New Zealand, everyone can feel the pressure build. It is not hard to guess why Willis has started talking a good game on competition: people don’t like the banks very much, and they really don’t like the supermarkets. Having a go at those firms – and their uncompetitive colleagues the electricity gentailers – is a free hit.

Our current politicians have, however, an immense fear of taking risks. No matter how angry the public gets over excess profits, there is far less peril in making big-sounding statements – and taking small, ineffectual steps – than in implementing the weighty structural reforms that would actually drive change. Decisively shaping markets feels like a step into the unknown; the possibility of a botched effort looms large. Hence, when it comes to the supermarkets, Willis has done nothing more than talk vaguely about removing “unnecessary regulatory hurdles that discourage new entrants”, whatever those may be, and taking further steps that “could” – note the hesitant conditional tense – include helping new entrants access suitable land.

It doesn’t help that there is no clear consensus on the exact remedies for anti-competitive behaviour – which may vary from sector to sector – nor much detailed academic work on how to implement them. Several influential figures have called for the gentailers to be broken up, so that they can no longer exploit the commercial advantages of being able to both generate and retail electricity, but it is unclear just how much good this would do.

When it comes to the supermarket duopoly, a third competitor might be encouraged – but how? Some credible thinkers – among them the Australian competition expert Lisa Asher – argue New Zealand is badly under-served with supermarkets. Others, such as 2 Degrees founder Tex Edwards, believe that on the contrary New Zealand is “oversupplied”, and that the only solution is to force Countdown and Woolworths to divest 140 of their existing stores to a new entrant. Other thinkers on the progressive left are arguing, at least in private, that tougher regulation of the current supermarkets – rather than a new competitor – is the way to go.

Questions abound, too, about whether our entire legal framework on competition is fit for purpose. Clarity on all these points will be needed before the next election. Because right now, when it comes to tackling anti-competitive behaviour, New Zealand politicians are locked in a pointless cycle of empty words and signals of virtue. For the sake of the consumer, they may need to stop handing out “notices” that are about as threatening as a wet wipe, and start taking action.

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New Zealand visa application form with a hand holding a pen, overlaid with floating, colourful $100 notes.
Image: Getty Images, additional design The Spinoff

BusinessFebruary 11, 2025

The visa changes to lure rich investors to Aotearoa, explained

New Zealand visa application form with a hand holding a pen, overlaid with floating, colourful $100 notes.
Image: Getty Images, additional design The Spinoff

Migrants with money are the focus of new visa settings that the government hopes will boost the economy. Alice Neville explains.

What’s all this then? 

On Sunday, as part of the government’s big plan to kickstart economic growth, changes were announced to the Active Investor Plus visa category, with the goal of making it easier for cashed-up foreigners to bring their lovely piles of money to Aotearoa.

Sounds good, I guess? What’s the Active Investor Plus visa?

We have a bunch of different visa categories that allow people from other countries to live, work, start a business or invest here, and the Active Investor Plus (AIP) visa is the one that lays out the welcome mat to potential migrants with plenty of pūtea, hence its nickname: the “golden visa”.

How much pūtea are we talking?

Since 2022, when the previous government brought in some strict new criteria (which sent applications plummeting), to be eligible for this visa you have to invest “NZ$15 million or the weighted equivalent in acceptable investments in New Zealand”. The “weighted equivalent” bit refers to a system that gives certain more “active” investments greater weight – direct investments (ie a capital injection in a plucky little Kiwi startup, in one scenario) get triple weight, meaning $1 = $3 (meaning you could put just $5 million in and it would count as $15m). Investing in managed funds gets double weight ($1 = $2), while a dollar equals a dollar when it comes to investments in philanthropy and listed equities, ie shares in a company listed on a stock exchange (which can make up only half the total investment). Those mentioned above are the only investments deemed acceptable.

I’m confused. 

Don’t worry, that’s all changing anyway. From April 1, the AIP will be divided into two categories: “Growth” and “Balanced”. Growth is the higher-risk option, requiring a minimum investment of $5m over three years in direct investments or managed funds. Balance is lower-risk and for bonds, listed equities and philanthropy, with a $10m minimum over a five-year period (five-year direct investments or investments in managed funds also come under this category, with a $10m minimum). 

I’m still confused.

Don’t worry, basically all you need to know is that the requirements for this visa are being loosened. Property investment, which doesn’t count towards an AIP visa currently (though a managed fund can hold 20% or less in the property sector), is now allowed, as are bonds (those are when you essentially lend money to the government, a council or a company and are paid regular interest on your investment).

Why do we want foreign investors anyway?

“Foreign investment has the potential to provide jobs for Kiwis, lift incomes by delivering new businesses and investing in existing ones,” said economic growth minister Nicola Willis in the press release announcing the changes. The revamped visa will incentivise investors “to choose New Zealand as a destination not just for their capital, skills and international connections, but to build a life for themselves and their family here”, added immigration minister Erica Stanford. 

map of christchurch covered in houses
Image: Tina Tiller

Won’t they just buy all the property, send house prices sky high and further munt our already munted property market?

Well there’s the foreign buyer ban, remember.

Oh yeah. Remind me, what’s the deal with that?

In a controversial move intended to alleviate our overheated housing market, the Labour government in 2018 banned most non-ordinarily-resident visa holders from buying existing houses (more on that below). During the 2023 election campaign, National pledged to repeal the ban on foreign buyers for homes of $2m or more and chuck a 15% tax on such sales, with the resulting revenue to be used in part to pay for tax cuts. A spanner in the works by the name of Winston Peters (OK, the coalition agreement with NZ First) scuppered that plan, so the ban remains.

Won’t not being able to buy a house dissuade rich foreigners from bringing their money here to “build a life for themselves and their family”?

That’s widely considered to be a sticking point, yep, as joining the renting contingent doesn’t generally appeal to the very wealthy. A resident visa holder can buy a house in New Zealand only if “ordinarily resident” in New Zealand, meaning they have to lived here for at least 12 months and have been physically present in the country for at least half of that, which might not fit with the lifestyle of your average cashed-up jet-setting foreigner. There could be change afoot, however… 

Please, tell me more.

With pleasure. Peters has indicated he could be open to a softening of the foreign buyer ban for the right (read: rich enough and committed enough) potential migrant. Stanford told RNZ that discussions on that topic were continuing, which the prime minister reiterated at yesterday’s post-cabinet press conference. “When we’re ready to tell you, we’ll tell you,” said Christopher Luxon.

Righto. Are any other changes being made to the AIP visa?

Yep, a “reasonable level” of English is no longer needed, and the time-spent-in-New-Zealand has been reduced: just 21 days in three years is required for the Growth category (so an average of a week per year), and 105 days over five years for Balanced (which can be reduced to as little as 13 days a year if more money is invested).

Interesting. Have any other issues been raised? 

There are some doubts about whether the changes will really “turbocharge our economic growth, bringing brighter days ahead for all Kiwis”, as Stanford put it. Unsurprisingly, Labour was unimpressed, with immigration spokesperson Phil Twyford saying, “Allowing people to buy residence by parking their money in a passive investment like property that won’t generate jobs or sustainable economic development for New Zealand doesn’t sit well.” 

Business journalist Bernard Hickey of The Kākā (paywalled) was also sceptical, saying most of the money brought in by migrants on this visa would “simply go to the government as purchases of government and local government bonds, rather than investment in actual businesses”.

Writing on the golden visa phenomenon for BusinessDesk, Dileepa Fonseka said that many countries including Spain, the Netherlands and Portugal were in the process of winding back their own schemes. He pointed to research by London School of Economics assistant professor of sociology Kristin Surak that found the effects of golden visas on overall growth in most countries was modest, and there could be negative after-effects, such as in Greece, where golden visas contributed to destabilising the property market.

What else is the government up to in the foreign investment realm?

It’s a key focus, that’s for sure. An investment summit is being held next month to “showcase upcoming infrastructure opportunities for partnership and investment” to about 100 “leaders from global investment and construction companies”, it was announced yesterday. Last month, a new agency called “Invest New Zealand” was unveiled, a “one-stop shop for foreign direct investment” with a focus on increasing capital for “banking and fintech, critical infrastructure like transport and energy, manufacturing, and innovation”.

February 12: An earlier version of this post has been updated to clarify the rules around the foreign buyer ban

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