
No Quick Growth For Retail In Budget 2025
'There is little in the Budget to suggest that we will see any quick improvements in consumer and business confidence,' Retail NZ Advocacy Manager Ann-Marie Johnson says.
'There will be no economic growth without retail growth. Until consumers feel confidence about their future, they will continue to be careful about spending their discretionary dollars.'
Retail NZ welcomes the Government's continued focus on combating crime, with the increased spending on policing, serious youth offenders and cutting the backlog in our courts.
The new Investment Boost, allowing a business to immediately deduct 20% of the cost of a new asset, on top of depreciation, will no doubt be of value to retailers who are looking to invest in their businesses, Ms Johnson says.
'However, only yesterday Smith + Caughey's confirmed it will close, with the loss of almost 100 jobs. This is just the latest retail business closure that we are aware of. Many more retailers will struggle to make it through the winter.
'Our members will need to continue tightening their belts in anticipation of slow sales until confidence returns to the marketplace. The light at the end of the tunnel is still a long way off.'

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2 hours ago
- NZ Herald
KiwiSaver hardship reveals hidden cost of this economic downturn
We had news last week that KiwiSaver members withdrew more than $470 million for hardship reasons in the past 12 months amid continuing economic stress. Inland Revenue figures showed $470.7m was taken out of KiwiSaver in the June financial year, up 56.6% from $300.5m over the prior period. Looking back through the figures, there has certainly been a big spike in withdrawals in the past two years, but they have been on the rise for several years. Since Covid, both the number of people withdrawing funds and the amount withdrawn have risen steadily. As a barometer of the general economic situation, that isn't great. But the bigger problem with these hardship withdrawals is that the ultimate cost is (quite literally) compounded through the years. More than $1.3 billion of KiwiSaver funds has been withdrawn for hardship reasons in the past five years. 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Our annual superannuation bill already comes in at more than $20b, and Treasury has projected that to rise to about $45b by 2037. According to Budget 2025 data, New Zealand Superannuation costs $4352 per person per year, making it the third-largest area of government spending after welfare ($6181 per person) and health ($5804 per person). From the Treasury's long-term fiscal projections, spending on NZ Super is projected to grow from 4.3% of GDP in 2010 to 7.9% in 2060, an increase of 3.6 percentage points. It is also rising as a percentage of the Government's total tax revenue – from about 17% now, it is projected to rise above 21% by 2037. So we know we have a problem. It seems almost certain that the age of superannuation will have to be raised to 67 in the coming years – despite the current opposition of NZ First and Labour. Future governments will almost certainly come under more pressure to means-test. KiwiSaver, which currently has total funds of $122b, is one of our great hopes. But the total figure is flattering. There are more than three million KiwiSaver members so the average fund size is just $37,000. Hopefully, that will be skewed by a lot of young people who will see their savings grow dramatically in the next decades. That brings us back to the downside of withdrawing funds early for hardship, though. We need to be saving more, not less. Moves by the Government to lift the default contribution rate for both employees and employers to 4% from April 2028 were a step in the right direction. However, they pale in comparison to Australia's compulsory scheme, which requires 12% employer contributions. The scheme has the equivalent of $4.5 trillion invested, making Australia the fifth-largest holder of pension fund assets in the world, not per capita but in nominal terms. Australia, for the record, also allows people to withdraw funds for hardship, but one suspects fewer people there need to. If we want to make the most of the KiwiSaver scheme we have, we need to look more closely at who is withdrawing their money and why. Meanwhile, young Kiwis are voting with their feet and joining the Australian Superannuation scheme ... by virtue of moving to work there. Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.


NZ Herald
2 hours ago
- NZ Herald
Heather du Plessis-Allan: We are being irrational about the price of butter
Unless you're into commercial scale baking, butter is not the thing putting the most pressure on household budgets. Try power. This winter power is costing the average household almost a block of butter every day. Or rates. That's costing the average Wellingtonian more than a block of butter every day. Those expenses have no alternatives. You have to pay them. With butter we at least have alternatives. If we don't like the price we can do a swap. I don't want to be Marie Antoinette but at least we have the option to switch to margarine. Not only have we abandoned logic, but also facts. Even the Finance Minister briefly took to complaining that butter is cheaper in Australia than in the very country that produces it. Except that's not true. At the time of writing, if you take Woolworths' salted butter, which is available both sides of the Tasman, adjust for currency and the fact the Australian Government does not charge their equivalent of GST on butter, we actually pay 30c less. Discounting butter domestically is impractical, as it would require subsidies, impacting farmers and shareholders. Actually, the price of butter is a good news story for New Zealand. Because if we're paying our farmers more, the world is paying our farmers more. And they're buying a lot more blocks of butter than we are. So that means they're paying a good chunk towards our tax take, our health, our roads, our schools. It's become slightly fashionable to suggest the solution is to discount butter domestically. That's a nutty idea. A discount is a subsidy. A subsidy has to be paid by someone. Who? Fonterra? The shareholders will probably object to that. Maybe, if this drama runs on long enough and there is enough reputational damage to Fonterra, it might be in the business' interest to cut the price to make the pain stop. That would not be a good day for farmers and shareholders. Miles Hurrell attributes the 46.5% rise in butter prices to global demand and supply issues. Photo / Alyse Wright The Government? Again, bonkers. If New Zealand is too broke to afford the full Dunedin hospital build, we're too broke to help commercial bakers afford their butter. The truth is there is no fix to the price of butter that isn't stupid or temporary. We simply have to pay the price that we pay. And the Finance Minister knows this. She knows this because she is a very clever woman. And because she worked for Fonterra for six years. Finance Minister Nicola Willis has turned butter into the cost-of-living symbol. Photo / Mark Mitchell So, she should never have turned butter into the cost-of-living symbol she has. This really started with her in April when she visited Costco and was taken by the fact it could sell butter for about half the price mainstream supermarkets were selling it for. It became her evidence that supermarkets were ripping us off. But then somehow, Fonterra got dragged into it and one of their regular ministerial briefings became a please-explain. And then the TV news was chasing the CEO Miles Hurrell around the forecourt of Parliament and going live to air while the meeting was under way. And there were expectations. And then nothing happened. And it has become yet another example of the Finance Minister, disappointingly, talking big but doing nothing. Just like with the retail banks. And just like with the supermarkets, so far. Spare a thought for Hurrell. The man is one of the most impressive Kiwi CEOs of his generation but had to spend his week cast as the villain of the butter story. There is no story. It's not even the biggest pressure on our weekly bills.


NZ Herald
a day ago
- NZ Herald
Government should cut GST on food if it's worried about butter price – Fran O'Sullivan
The Finance Minister did not need to call Hurrell in to reaffirm that global dairy prices are at a high and that this would inevitably spill over to higher farmer returns and, in turn, boost regional and finally national economies. (That's the plus side you didn't hear about before the meeting). Or that any notion of Fonterra slashing its own margins was not going to happen. They are thin when compared with the margins applied by supermarkets to dairy products, and she knows it. The upshot is that Willis did seek explanations from Hurrell over the co-operative's pricing, which she of course accepted. Within days, she was talking up Fonterra and the surging global prices on the Mike Hosking show as a plus – as indeed they are when it comes to the impact on the New Zealand economy. Hurrell subsequently made it clear his company is not moving to a two-tiered pricing system: an export price geared to global prices and a subsidised price for domestic consumers. There was more besides. It was sensible for Fonterra to shut the issue down quickly. It currently has its consumer brands business on the market. Any suggestion of a move to a two-tiered system would be a complication to that sales process or indeed an IPO of that business if that ultimately turns out to be the Fonterra board's preferred option. But while there was an element of the performative to the Beehive shenanigans, it does underline how much 'cost of living' issues are a lightning rod when it comes to sparking domestic dissatisfaction with the Government. Willis later described her meeting with Hurrell as 'constructive and engaging', underlining the fact that Fonterra does not control retail prices and that the final price is set by supermarkets, whose contracts and pricing strategies vary. This was more grist to Willis' campaign against what she claims are supermarkets profiteering at the expense of consumers. Already, she has been working to reduce the barriers to entry for other competitors. Willis has been encouraged that the Commerce Commission has taken a case against grocery giant Foodstuffs North Island and Gilmours Wholesale to court over what it believes is cartel conduct. The regulator said civil proceedings would be filed against the big grocery suppliers under the Commerce Act and Grocery Industry Competition Act (GICA). Foodstuffs 'strongly denies' any unlawful conduct. The Commerce Commission has also levelled criminal charges against retailer Noel Leeming over what it claims is a misleading price-matching promotion. The company 'firmly' maintains it had not committed an offence and would vigorously defend itself against multiple charges of misleading customers under the Fair Trading Act. Put that to one side. Prices have escalated on multiple fronts: dairy products, meat and some fruits; electricity and gas, rates, insurances. But they have decreased on others: mortgage and loan interest rates, and some fuels. There is little point in trying to jawbone prices down. In many respects, the answer lies with Willis. If she is overly concerned, she could wipe the 15% GST from particular food items. This is the case in Australia, where its 10% GST does not apply to meat, fish, produce, cheese and eggs, plain milk and cream, bread, butter and other spreads, bottled water, tea and coffee, cooking ingredients and oils, or infant formula. In Britain, most foods are zero-rated. Many European countries have reduced value-added tax rates for food, typically running at 5%-7%. Basic foods are exempted in Singapore, there is an 8% rate in Japan, and in the United States some states exempt various food items from sales tax. The upshot is that New Zealand verges on being an outlier in this area. Any changes to the GST regime would, however, have an impact on how New Zealand's tax regime is perceived as being neutral. Farmers are not the enemy. There is much to celebrate from our rural sector, which will deliver nearly $60 billion in export earnings this year. The fixation on rising prices has also overly consumed the Prime Minister, who frequently talks about 'cost of living issues'. But this is not going to be solved in the medium term. The upshot is that, short of any intervention by the Government, consumers will just have to suck it up.