Hard working Kiwi families have been struggling to keep up with the increasing cost of living under the National Government, and as the cold of winter bites, power bills aren’t the only things up with food prices increasing.
According to Statistics New Zealand, food prices rose up 1.4 per cent in June over May, and annually, food prices are up 7.5 per cent on a year earlier.
Fruit and vegetables have been hardest hit in June, rising 12.2 per cent. Tomatoes were up a staggering 56.9 per cent over their price in May, with lettuce and capsicum also up over 40 per cent on the previous month.
Labour promised to take GST off fruit and vegetables. If this policy were introduced the price of fresh fruit and vegetables would fall dramatically. Not only would Kiwi families have a cheaper grocery bill, but they would also have a healthier lifestyle.
It seems that hard-working kiwi families are being hit everywhere. GST rises, working for families’ cuts, kiwi saver cuts and arbitrary employment laws (90 day fire-at-will) mean that Kiwis are on tenterhooks as the costs mount during winter, a time when doctor visits are essential and power bills naturally increase.
When will the National Government give hard-working Kiwi’s a break?
That why Kiwis moving to Australia is at a 30 year high, some very close freinds have just left taking there two young kids, both into good paying jobs straight away; and 9% super.
How are we catching up with Australia Johnkey? oh move there.
“Tomatoes were up a staggering 56.9 per cent over their price in May, with lettuce and capsicum also up over 40 per cent on the previous month”
Maybe because these items are out of season? crikey man. Give it a few months and then see if you report on this blog that the price of Tomatoes has DROPPED a staggering 56.9%.
“Labour promised to take GST off fruit and vegetables. If this policy were introduced the price of fresh fruit and vegetables would fall dramatically”
fall dramatically – really?
Any consumer knows about seasonal variation in fruit and vegetables. Only rich and/or stupid people buy summer produce in the middle of winter.
Prior to November 2008, this news would have been on the front page of the Herald. Now it doesn’t rate a mention. I wonder why?
“If this policy were introduced the price of fresh fruit and vegetables would fall dramatically.”
Even if your assumptions that taking GST off would result in a 15% discount, 15% is hardly “dramastic” is it? Besides: where is the evidence that if GST was taken off food the discount would be passed on: there is already a 100%-500% markup on fruit and veg, and it certainly is cheaper down at the local farmers market anyway than the supermarket.
Plus, even if 15% off fruit and veg was taken off, it wouldn’t make “Kiwi families have a cheaper grocery bill.” If you spend $25 on fruit and veg in a grocery shop (which seems high) you’d save $3.75.
Taking GST off fruit and veg is actually a regressive measure, because higher income families eat more fruit and veg, and even if it was taken off this is still the case according to a study out of the University of Auckland. The discount would go mainly to the rich, not the poor: just like JK’s tax cuts.
Hell, according to that same study Maori families actually ate less fruit & veg after it was discounted by the cost of GST, and Pacifika familes overcompensated by buying more unhealthy food, so your policy could just make some of the worst off families even more unhealthy.
That $250 million that would be lost through tax on fruit and veg would be much better spent on actions that reduce the causes of poverty and unhealthiness, like inequality, rather than election bribes that don’t work.
@ Andrew Scobie – With Labour’s policy for no GST on Fruit and Vegetables the prices will be down for the WHOLE year not just when they are in season!
“The Queensland floods are being blamed for a massive increase in the cost of tomatoes, capsicums and cucumber during June.
The latest Statistics New Zealand Food Price Index shows food prices were up 1.4 per cent, led by a 12.2 per cent increase in the fruit and vegetables subgroup.
In contrast meat, poultry, and fish prices fell 3.2 per cent from their peak in May – the exception being lamb, which rose 1.2 per cent and is now at its highest-recorded level.”
Helps to look beyond the headline Raymond.
FYI price gouging by supermarket chains has nothing to do with GST.
It has everything to do with NZs worst behaving duopoly, Foodstuffs and Progressive. If the NZLP wanted to really shake up the status quo then go after them for price fixing, slap then with massive fines, deny then RMA consents to build new outlets and as a last resort, actively regulate….oh, but wait, thats all a bit too hard and you can’t blame it on the Nats.
Because of course, John Key and his cronies directly control the price of broccoli to keep the masses oppressed. Or something.
If you are going to pull the trigger, at least point the gun at the right target.
What would be a better comparison and tell a much more interesting story (and not let Foodstuffs and Progressive of the hook) would be;
1. Comparing for say, tomatoes, the price jack of year on year vs CPI.
2. Over the same period comparing the price paid to suppliers on average for said produce.
@raymond, given some supermarkets put several 100% markup on fresh fruit and vege, what makes you think taking out GST (which will increase their compliance costs) won’t be eaten up by the supermarkets themselves?
The global indirect tax partner at Price Waterhouse Coopers named New Zealand’s GST system the best in the world because it’s so clean and easy to deal with. Don’t muck it up with policy that you have no way of knowing whether they help people or not.
@ Oliver, I’m sure the ebola virus is pristine and efficient under the microscope in the laboratory, but not so good for folks when on the loose in the real world.
Jennifer, actually ebola is not so good as a virus in that it kills its host too quickly before the virus has a chance to mutate, therefore outbreaks of ebola even though thay have a high kill percentage burn themselves out before it has a chance to spread too far.
We were told quite a while ago that the floods in Australia had destroyed tomato crops and they would therefore be very expensive this year. So whinging and whining achieve nothing. Taking GST off should reduce prices by 15%, but this saving will soon disappear as prices revert to previous levels.
Good comment Jennifer, what on earth has ebola virus got to do with anything?
Food prices are up 7.5% on a year earlier.
Sweetd, tell that to the corpses after the 2008 outbreak which lasted about a year and was found to be a whole new strain. Like I said, pristine and efficent, but massively damaging to real people.
That’s actually unlikely. The produce will sell for whatever the retailer can get for them. Removing GST on fruit and veg is most likely to increase the retailers profit.
Basically, if an item sold for $1.15 with GST on it then it will sell for a $1.15 without it.
Agree with Gregor W. The solution to the supermarket duopoly is actually to nationalise the supermarkets and run them as a government service with all the money from sales going to the suppliers. As the suppliers would be paying taxes the costs would be covered.
In some cases, competition doesn’t add any benefit but it will always cost more. Supermarkets are a case of no added benefit but costing more.
This.
It has nothing to do with taxes but with the profiteers putting prices up to maximise profits.
Hold up there, Draco. I didn’t suggest nationalisation.
There is sensible balance achievable with carrot and stick policies under existing legislation.
Crack the duoploy to give growers a fair deal? For sure.
Active regulation to prevent price fixing? Definitely.
Having an anonymous grey bureaucrat determining the only thing in stock at the Peoples Market is Karl Marx brand toothpaste (beetroot flavour)? Not my cup of tea.
The assumption that people will buy more healthy food if the price of veggies is kept low, is a big fallacy. As long as the choice what to buy is not changed, nothing will change in the buying paterns of the “under-privileged”, notwithstanding all the efforts of politicians to get some milage out of this issue.
“Labour promised to take GST off fruit and vegetables. If this policy were introduced the price of fresh fruit and vegetables would fall dramatically.”
In what way would the decrease be dramatic, exactly?
No nationilisation wouldn’t be so hard with out affecting choice, SOE model, still largely market driven, but with absolute tranparency through the supply and cost chain.
Super markets are simply a matter of logistics, what people want where they want it.
At the moment the Progressive Foods and Foodstuffs are the big fat middleman in the room; harvesting/price gouging profit from growers and consumers.
Raymond, you’re either being very naiive, or you’re lying. A GST exemption on F&V will offer savings on a household F&V spend of 13% at best, or nothing at all.
Given that seasonal pricing variation on F&V far exceeds 13% this ‘policy’ is little more than a stunt. Nothing dramatic about it.
Jennifer
“Sweetd, tell that to the corpses after the 2008 outbreak which lasted about a year and was found to be a whole new strain. Like I said, pristine and efficent, but massively damaging to real people.”
That would be the Dec 2007-Jan 2008 (2 month) Uganda outbreak that killed 37. The worst outbreak was in Zaire in 1976 killing 280. A much higher mortality virus would be the infulenza types, with the 1918 outbreak killing an estimated 100 million. So, ebola, not a really good virus at all is it?
I think there’s enough competition that this policy would result in slightly cheaper veges. Yes, there is compliance costs for supermarkets to deal with which needs to be factored in.
Personally I stinge out on veges because they are unreasonably expensive (I live in Wanaka, veges cost twice what they do in Auckland). Even in-season produce is hard to justify.
If this policy brings veges down by 10% then I think it’s worth doing.
@Gregor W
No, you didn’t and I didn’t mean to imply that you did.
Regulation of private businesses actually costs more. We need to consider if the added costs bring about any benefit and, IMO, I don’t think it would.
This is what we already have. The selection process ATM is about what produces more profit for the supermarket. This would have to be changed of course but I think you could actually end up with a better selection as small businesses find themselves getting supermarket shelf space for the first time ever.
Or you could either a, head to the local market where there is no middle man. b, dig up your lawn and grow your own just like older generations did.
YOu don’t need a whole lotta room to grow enough spuds to last the best part of the year…
Bleeping milk and cheese prices
Spud growing? 
!
Or as an idea, We build large ‘community gardens’ and have people on community service or even as a job seeker type training doing the growing. It’s productive, they will learn a skill and if sent home a portion of produce for themselves, reward for hard work. The rest could be sold at nominal cost (which would cover the next batch of seed) to people in severe need.
It would need capital to set up but money well spent I’d say…
So why buy capsicums,cucumbers and fresh tomatoes and why not buy fantastic NZ tinned tomatoes at a dollar or so each etc etc etc
Community gardens okay, slave wages not okay!
There are some real plonkers on here who post on fruit and vege, my advice is that if you dont garden and or dont bye fresh fruit and vege then dont post on this topic.
Remove GST from fresh fruit and veges will help middle and bottom NZ families.
Oh and i wouldnt recommend buying tomatoes form the super market, grow your own, they taste alot better.
@waterboy – so true, my Ma nearly fainted when she saw how high tomato prices are today.
Who buys tomatoes in July?? That’s just crazy talk! The middle income class are all into gardening now as veges are so expensive. When this starts to be the norm for low income people then we can grow our way to health and prosperity as was achieved in Chile and as our forefathers has too to survive previous Depressions. GST is a non-issue, getting people to live within their means is what is needed!
That’s as it appears. Unfortunately, it’s not true as prices will initially go down (GST taken off) and then back up as “the market” boosts them back to the maximum of what people are willing to pay. This is the same amount that is charged now it just won’t have GST in it.
“Who buys tomatoes in July?? That’s just crazy talk!” My Ma was looking at the produce and noted the price!
I didn’t say she bought any! 
If this policy were introduced the price of fresh fruit and vegetables would fall dramatically- Raymond what guarantees are theere that the full reduction will be passed onto consumers? Ther aren’t any. Over time I woul dnot be surprised if the “savings” would be clawed back by growers, distributors, wholesalers and retailers, & what is the avg family suppose to do with the $2.64 week savings from the GST removal? From the table below a family spends $20.30/week of F&V
http://wdmzpub01.stats.govt.nz/wds/TableViewer/tableView.aspx?ReportName=HES/Household expenditure for group, subgroup and class
Please Raymond do not fall into the trap of over promising and failing to deliver!!!
I also notice no comments regarding the savings many of us are benfiting from with reduced mortage rates. From memory they were 10.4% floating at the last election. Remember all the posturing regarding the cost of being released from fixed mortages. They are now below 6%, and isn’t petrol, cheese, milk below the Oct 08 levels?
@ Draco
Good point about small business. That is why I choose to shop at a grocer and/or market for fresh goods. I have the luxury of being able to pay more to support small traders and actively do so.
@ Draco
Good point about small business. That is why I choose to shop at a grocer and/or market for fresh goods. I have the luxury of being able to pay more to support small traders and actively do so.
My god. How do people like you get into parliament.
It is blindingly obvious produce like tomatoes and lettuce which are out of season are going to cost more.
Secondly removing gst will just increase the profit for the supermarkets as this will not be passed on to consumers anyway.
This article, although US based, probably has more information about the trouble of getting people to eat healthy food than so far expressed by any political party in NZ.
Ive change my mind on this one, it not a good policy. Would like to see GST go altogether, the financial transaction tax a much more progressive system.
If you want to make fruit / vege / dairy affordable for low income families in our market system; then the best way to do is probably a food stamp/voucher/community service card type system as a supplement.
Nooo, foodstamps are demeaning as they are like forcing a person to wear a sign around their neck saying “look – I’m too poor to afford food!”
Growing veges isn’t a cost saving measure. It’s not. By the time you buy the spades and hardware, then some potting mix and slug pellets etc, then the seeds or seedlings, it’s starting to get expensive already. Then there’s the fact you need to take the time to plant and weed the garden, and the 10 mins out of every day to water the thing, so there’s opportunity cost to be factored in as well.
I grow a few herbs and veges, but I do it because I like the taste and it’s satisfying to watch stuff grow. It doesn’t save any money unless you have ample time on your hands.
If Labour takes GST off the cost of say a kg of tomatoes ($10 now) the price, according to this report will fall dramatically all the way to…$8.50. Taking GST of the price of food is tinkering with the problem. There needs to be a complete paradigm shift amongst politicians and amongst us. The Americans have a saying that starts with..”we the people”. If politicians, bankers, big business, etc don;’t grasp what is at hand may I gently lead them to the centre of hard line repression, the Middle East.
Revolution has occurred there. Eventually when our collective backs are against the wall the only way out is to push back. If governments keep stripping the money from our pockets, the banks keep punishing us and then failing and having to be bailed out by us and big business ignores the masses, then they will be the authors of their own fate. It’s not if but when!
Hi,
From what I see around I feel NM and Gregor W are correct.
The solution that some other countries developed is competition. In the USA, for example, prices for food items (after you do currency and lb/kg convertion) turn out to be 100-400% lower than in NZ. Forget about things like 15% GST, – it is negligible. As well as costs due to diseconomies of scale and distance from the rest of the world. Think big: prices in NZ are 2 to 5 times higher. Qui bono that they are SO MUCH higher than around the world?
On the other hand we should not worry as this is not sustainable – in just 20 years there will be no one to pay them as everyone, including nationals and labours, etc. will move to Australia and live there peacefully