New supermarkets that could boost competition will be eligible for fast-tracked approval, under changes announced by the government.
Economic Growth Minister Nicola Willis on Wednesday revealed a suite of legislative and policy changes, following a feedback process from entities looking to enter the New Zealand market.
And she continues to not completely rule out restructuring the existing duopoly.
Earlier this year, Cabinet issued a formal request for information (RFI) from interested parties on what regulatory changes they wanted to see.
Willis said the responses had revealed "widespread frustration" with zoning, slow consenting and regulations that had made it extremely difficult for new competitors to gain a foothold.
New policy changes were directly in response to that feedback.
"Ultimately, businesses will make their own decisions. But we are putting on our best dress and saying we are ready for the dance."
She said the government would introduce legislation in November to clarify grocery developers' eligibility for the fast-track approvals process.
The existing act would be amended so the overall effects on grocery competition were made a factor for consideration by decision-makers.
While any developer can apply if they meet the criteria, a government fact sheet said it would "seem difficult" for one of the current major supermarkets to meet the test.
The legislation would be passed by the end of the year, and supported by a new government policy statement on grocery competition.
"We're creating an express lane for new supermarkets to boost competition and deliver better deals for Kiwi shoppers," Willis said.
A single building consenting authority will be selected to standardise and streamline consent processes for grocery developments that improve competition, and the Building Act will be amended so chains and other developments can more easily apply for pre-approved MultiProof standardised designs.
Willis said Woolworths reported costs of $3 million over four years to get resource consent for a single new supermarket. The changes, she said, would mean that process would now take under a year.
The responses revealed there were five prospective new domestic competitors, and "credible growth aspirations" among several existing retailers.
However, European giants Aldi and Lidl did not take part in the RFI. Willis said that was "disappointing", but was hopeful the changes would encourage them to take a more serious look.
"Now we have a really strong welcome mat to present to them," she said.
"This exercise has made it clear New Zealand has a reputation for being a really hard place to set up a new supermarket. We have to change that reputation."
Labour said the announcement was tinkering on the edges, and did not provide a timeline for when a new player could come into the market.
"A fast-track regime for supermarkets makes sense, but it won't make any immediate difference for New Zealanders who will keep paying high prices at the checkout today," said Labour's finance spokesperson Barbara Edmonds.
She said changes to resource consents were recommended in the Commerce Commission's market study in 2022, which the previous Labour government had started the groundwork on.
"The government has basically waited two years to come up with their announcement today, which, we still don't have a bill or piece of legislation until possibly November," she said.
"I'm not sure why the Minister of Finance is dithering, but Kiwis can't wait."
The Ministry of Business, Innovation and Employment received 24 responses to the RFI, containing a mix of existing companies, prospective competitors, advocacy groups and other interested parties.
Costco, which operates one store in Auckland, indicated the express lane consenting approach would assist with its future expansion, Willis said.
"Costco has confirmed the government's express lane consenting approach will assist with their future expansion plans. They have also confirmed they can see opportunities for new stores to be built in New Zealand in the next few years.
"At the moment it can be a matter of years between someone deciding to make an investment and getting the permission. These changes I'm announcing today reduce that to a matter of months," she said.
She rebuffed any concerns communities might have about the fast-track process, including whether it would exclude them from having their say on whether they wanted a new development in their neighbourhood.
"Yes, a new supermarket might mean new cars on the road. Yes, it might mean a big, bright, garish sign. Yes, it might mean that there's a few more people on the streets disrupting the view of the trees. But you know what's more important? That Kiwis can afford their local food shop."
Cabinet will also shortly consider changes to strengthen enforcement and penalties under the Fair Trading Act, while the Commerce Commission was pursuing stronger protections for suppliers under the Grocery Supply Code.
Despite some respondents saying the only way to truly improve competition was breaking up the existing duopoly, Willis said that would not be a decision taken lightly.
"It would be a significant intervention that would carry costs and risks that would need to be rigorously weighted against the potential benefits to shoppers.
"A cost-benefit analysis is underway on specific options for restructuring the duopoly and will inform future advice I intend to take to Cabinet on whether further legislative changes are required to improve competition."
She would not put a timeframe on that, only saying it would be taken to Cabinet "in due course."
In June, the IPSOS Issues Monitor survey had Labour overtaking National as the party New Zealanders believe is most capable of handling the cost of living.
Food prices were about 3 percent higher in New Zealand compared to the OECD average, and higher than in the UK or Australia, Willis said.
Last month, following a meeting with Fonterra's chief executive where the soaring price of butter was discussed, Willis said the best thing the government could do was increasing supermarket and retail competition in New Zealand, in order to put downward pressure on prices.
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