If you don’t learn from mistakes

14/08/2020

The government is making the same mistake it made during the first lockdown at higher levels:

Wood processors say plants will close for good if the government persists with its plan to shut non-food industries in the event the Auckland lockdown moves into level 4.

Industry executives were alarmed yesterday when told that officials expected to apply the same essential and non-essential split as in March in the event that deeper workplace restrictions are required. During that lockdown many manufacturers – particularly exporters – fought unsuccessfully to keep operating given the safe distance working inherent in many of their operations.

Jon Tanner, chief executive of the Wood Processors and Manufacturers Association, said the stakes are now much higher.

“If we get shut down this time there are plants that will close. There are plants that are that vulnerable,” he told BusinessDesk.

And he said all the sector’s efforts in April, getting safe working practices approved by the Ministry for Primary Industries and the Ministry of Business, Employment and Innovation, are at risk of being wasted.

“We’ve got all the protocols in place. We’ve had them approved by MPI and MBIE. There’s no reason for the wood processing industry to be shut down.” . . 

The insistence on the arbitrary essential rather than safe is also a problem for horticulture. Mike Chapman, CE of Horticulture NZ  has outlined his concerns in an open letter to the Prime Minister:

We are writing to you on behalf of the New Zealand horticulture industry to collectively address our growers’ concerns that independent fruit and vegetable retailers are not classified as essential services under Covid-19 Alert Level 3 and 4.

In New Zealand there are multiple ways fresh fruit and vegetables are available for sale to the general public. The majority of these sales are made through large supermarket chains and independent fresh fruit and vegetable retailers, at a market share of approximately 80 and 20 percent respectively. However, in Auckland independent retailers represent 60% of sales of fresh fruit and vegetables.

Growers will still be able to harvest fruit and vegetables but if 60% of Auckland sales aren’t available there will be a lot of wastage.

Unlike supermarkets, fresh fruit and vegetables sold through independent retailers are different grades than sold in supermarkets and in some outlets at more affordable prices and in high end outlets at higher prices. Independent retailers also sell culturally significant fresh fruit and vegetables in their communities (that aren’t readily available in supermarkets) that form the staple diets of different ethnic groups in New Zealand.

Supermarkets usually cater for mass buying, smaller greengrocers cater for niche markets.

When New Zealand was in Alert Level 4 and 3 earlier this year, households were significantly impacted by not having access to purchase fresh fruit and vegetables from independent retailers, especially lower income households. In addition, rural communities often rely on independent retailers for supplies of fresh fruit and vegetables that are produced locally, where large supermarket chains are not readily present. This is in alignment with the government’s messaging to support local businesses.

In Auckland a large number of households in the poorer outer suburbs have lost the ability to purchase fresh fruit and vegetables from their local independent retailers at affordable prices. Supermarkets tend to operate a structure whereby the consumer drives to the store. In lower socioeconomic areas this is not always practical and a portion of the population needs walking access to retailers selling fruit and vegetables.

Some elderly will usually shop close to home and might need only fresh produce. If they can’t get that locally they will be forced to go to supermarkets where they will be exposed to more people.

This issue is exacerbated by many households facing financial hardship since lockdown due to loss of employment and other pressures. The result of this situation is a significant increase in demand at foodbanks across New Zealand to provide food parcels to families in need. The horticulture sector has programmes in place supporting foodbanks, but this only addresses a small portion of the lack of supply.

While the government did confirm that independent retailers are able to operate in a contactless manner at Alert Level 3 and 4, this method of business operation is not suitable for many lower income households who don’t have the ability to order or pay for food purchases online.

The closure of independent retailers does not only impact consumers, it also impacts the horticulture industry who work tirelessly to provide all retailers, large or small, with seasonal fresh fruit and vegetables. The closure of independent retailers during lockdown resulted in an excess of fruit and vegetables that could not enter the supply chain. This loss of access resulted in direct financial loss to growers from failure to sell their products, causing some to exit the industry and delay or reduce replanting. Ultimately, this impacts on consumers due to lower supply levels and increased pricing. These impacts will be further exacerbated by the current Alert Level 3 restrictions in place in Auckland.

When New Zealand was in lockdown earlier this year the horticulture industry, together with independent retailers, developed a protocol for the safe operation of retailers. This protocol used the principles of essential service operation, the same as other primary industry businesses and dairies had been using to operate. We know that the New Zealand government recognised protocols for independent retailers during Alert Level 3, as the Ministry of Business, Innovation and Employment approved the operation of some retailers. Independent stores are much smaller than supermarkets and have indicated their ability and commitment to operating safely.

Producing fresh fruit and vegetables is regarded as essential, selling them should be too and the criteria for who sells them should be safety.

To maintain adequate supply of affordable fresh fruit and vegetables to all New Zealanders, it is critical that both supermarkets and independent retailers are able to operate if they are able to demonstrate they can do so using Covid-19 safe practices. The horticulture industry sincerely requests that the government re-considers their decision not to recognise independent retailers as essential services. We ask that a decision is made to consistently apply to all independent retailers to ensure New Zealanders have access to affordable fresh fruit and vegetables across the country.

We are available to discuss this request with you and your officials to find a solution that is in the safety and wellbeing interests of our team of five million.

Yours sincerely

Mike Chapman

On behalf of the New Zealand horticulture industry

Butchers will also be on the wrong side of the essential vs safe debate as they were last time. That nearly caused an animal welfare issue with pigs until the government bought 2,000 pigs a week and gave the meat to food banks.

Auckland Business Chamber CEO says the lockdown cost is too high:

Government says they learned things from the last lockdown so if they did can we do things differently and let all businesses that can comply with Covid-19 safety measures stay open, says Auckland Business Chamber CEO Michael Barnett.

“The cost to businesses locked down and out of their livelihoods is too high,” he said. “Why can a dairy open and a supermarket sell fresh fruit and vegetables, but your local greengrocer cannot? It would be much better for the economy and wellbeing of the community to allow shops to operate if they follow the strict compliance and safety requirements that can be enforced for each alert level.”

Many small businesses, particularly in hospitality and retail, are teetering with reserves run down, jobs at risk and confidence shaken, forced to shut their doors because they are not on government’s list of essential retail and services, Mr Barnett said. . .

If you don’t learn from your mistakes you are doomed to repeat them.

The government obviously hasn’t learned from its mistaken insistence on what was essential rather than what could operate safely earlier this year and is repeating it.

Businesses, consumers and the economy will pay the price for this with no health benefit.


Who’s fleecing us?

10/10/2018

Jacinda Ardern reckons fuel companies are fleecing us.

The Motor Trade Association says that isn’t so:

. . . MTA Chief Executive Craig Pomare says the biggest influences on prices at the pump are the landed refined price of petrol and diesel, taxes and the value of the NZ dollar against the USA dollar.

“Competition also has a big effect in New Zealand. It is well recognised that the deregulation of the market and the emergence of Gull, and other smaller independents such as Challenge and G.A.S. have affected prices in the areas where they operate. So too has the widespread use of discounting.”

Mr Pomare says the independent fuel retailers have minimal control over their daily pump prices.

“Most of these small businesses have contracts with the oil companies which give them very little wriggle room when it comes to setting their pump price.

“We take issue with the Prime Minister for suggesting that service stations, or oil companies are ‘fleecing’ motorists. Last year’s review of pricing by MBIE found no evidence of this. Like others in the sector, and the public, we support a further detailed market study to give us all more information on pricing structures.”

He says if the Government is seriously concerned, there is plenty of precedent for reviewing fuel taxes and either lowering them, or holding off on further increases.

Michael Barnett, chair of the Auckland Business Chamber has no doubt where the blame lies:

The tipping point for fuel consumers has been the blunt and ineffective fuel taxes imposed by local and central government. The margins identified by media today are less than most retailers would seek and have not changed.

It is worth noting:

• The major fuel companies welcome the proposed investigation from the Commerce Commission

• Of the 1,500 service stations in New Zealand, over 1200 are mum and dad running their small businesses, employing people and trying to make a profit. They deserve a return on the risk

• There are 20% more fuel providers than 5 years ago – does this signal a lack of competition?

The currency and additional Government taxes have created a price point consumers find unacceptable.

Consumers don’t only find the price unacceptable, Many also find it unaffordable.

The National Party has called for the tax increases to be dropped.

The Government should axe its fuel tax increases to provide immediate relief to motorists, Opposition Leader Simon Bridges says.

“Instead, the Prime Minister’s response to record high fuel prices is to announce yet another inquiry.

“She’s saying consumers are being ‘fleeced’ while her Government is driving up fuel prices and taking hundreds of dollars from Kiwi households through higher taxes on fuel.

“The inquiry will take months and any resulting changes could be years away. Meanwhile New Zealanders are paying record prices for petrol and the Government is collecting hundreds of millions of extra tax from them.

“Unlike petrol, talk is cheap. And the Government is a big part of the reason why petrol prices are so high.

“The importer margin, the profit petrol companies make on every litre of fuel sold and which the Prime Minister wants more information on, is 31 cents per litre and around the same as it was last year. The amount the Government makes is $1.25 – and that keeps increasing.

“The average New Zealand household is now paying $200 a year more in petrol taxes than this time last year, with Auckland families paying $324 extra as a result of higher petrol prices and this Government’s decision to hike fuel taxes. It’s pricing Kiwis out of their cars.

“There are a number of other reasons behind record petrol prices and National supports another look at the practices of fuel companies, something we also looked at in Government, but the Government should also be looking in the mirror.

“While the Government passes new legislation and waits for yet another report it should provide immediate relief to motorists by putting a stop to its relentless imposition of new taxes.”

The Taxpayers’ Union agrees:

Taxpayers’ Union Economicts Joe Ascroft says “When the Government was legislating for fuel tax hikes, we argued that these taxes punish hard-working families – especially those that live in the city-fringe and are forced to commute for work. The Government should back the call from the Opposition and provide much-needed relief to family motorists who are struggling.”

“Now that National has called for fuel tax repeal, it must meet that commitment if it goes back into Government in 2020, 2023, or later. It’s easy to argue for tax cuts in opposition, but walking-the-talk in Government is much harder. The Taxpayers’ Union will be watching closely
.”

Who is fleecing us?

The government that is taking nearly half the price of fuel in tax and worsening the pain by spending the increases not on roads but public transport and cycle ways most of us will never use.


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