Heather du Plessis-Allan: Is the Govt so desperate they announce any half-baked idea?
On the face of it, it's great retail politics. Everyone hates being stung 2% for using the credit card at the sushi shop. But there will be consequences.
The surcharge is there because it costs to use your credit card. Someone has to pay for it. Either you or the retailer.
Currently, it's you in the form of the surcharge. After the ban, it'll be the retailer.
And we're talking a lot of money. Interchange fees alone – the fees Visa and Mastercard charge – suck nearly $1 billion out of NZ businesses a year. Add what retail banks charge on top of that and we're talking several billion apparently.
One retailer reckons they were paying $2500 a month just in merchant fees. That's $30,000 a year. They realised they were basically subsidising everyone's credit card loyalty schemes. So, they introduced the surcharge.
No savvy small or medium-sized retailer will suck up a cost like that. If they can't get that back through a surcharge, they'll get it back by upping the price on products.
So, while the Government can sell the story that they're saving consumers money through the ban, they're not.
Pity the poor travel agents especially. Let's say they book flights to London for a family of four at the cost of $15,000. If the family put it on the credit card, which most of us would do, there is a $225 merchant fee. Once the ban kicks in, the travel agent will essentially be helping the family pay for their holiday.
So, you can see why retailers are up in arms. They're so angry they've managed to mobilise the country's chambers of commerce into banding together in a statement criticising the ban. Their point is a fair one: the Government should really be dealing with the source of the problem, which is banks and credit card companies charging too much for a basic service.
Ministers choosing to beat up on Kiwi retailers instead of sorting out big foreign bankers is bizarre. Even more so because SME owners are traditionally National Party and right-leaning voters. The Government is burning its own support base here.
Which brings us to the weirdness of this. It should have been entirely predictable that this would blow back badly. So, why did they do it?
Are they so desperate to get good coverage that they take any half-baked idea pitched at them by a minister at the weekend to announce the following Monday? Did they run out of time to interrogate the idea before announcing it? Or did they anticipate all the problems but ignore them in their desperation to get a cost-of-living announcement out?
It also begs the question, why are they so panicked?
The answer is probably that it's not just the Government's vibe that has shifted. It's the country's vibe too.
It's the middle of this Government's term and the middle of winter and the tail end of a very long and hard recession. The goodwill towards the coalition Government is suddenly depleting.
It's possibly recoverable. Summer and an economic recovery should improve things again. But even when we're warm and flush, it won't stop the Government stuffing things up itself if it keeps making weird announcements like this.
Watch now for how they get out of this. And they'll have to. They can't be doing this to their own voter base just months out from next year's election.
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