When Woolworths wanted to build a new supermarket in Christchurch, it took them four years and $3 million just to get permission. Did you know it takes an average of 18 months and costs $1 million to get permission to build a supermarket? To be clear, just to get permission – the building still comes later. Oh, and in some cases, permission took as long as four years. 
 
Well, unfortunately, this planning nightmare is New Zealand’s reality, and many councils use the rules to delay and stop new supermarkets from being built. But what this means is that they shield existing supermarkets from competition. No wonder international retailers look at New Zealand and put it in the ‘too hard’ basket. 

Now picture this: within two years, Costco announces three new stores, Aldi finally decides New Zealand is worth the hassle, and you have more choice where to shop and what to buy.  

The government just laid the groundwork for that scenario.  

Last week, Minister Willis outlined a sensible approach: tear down barriers to entry. Government will introduce fast-track processes for supermarkets that increase competition. A single building consent authority will replace the current lottery of dealing with dozens of councils. Approvals for standardised designs will be streamlined, allowing companies to build multiple stores without repeated approval processes. 

This approach will let the market determine what works. Rather than having Wellington decide supermarket numbers, investors with money at stake will figure out viability. It creates a clear opportunity for new competitors to emerge and deliver competition benefits, but only if the government’s market-opening moves are well designed.  

The New Zealand Initiative’s original proposal included overriding planning rules that ban new supermarkets from competing with existing ones. We suggested going further and including rezoning, which would provide certainty and let new entrants add value to sites. We also recommended including independent economists on panels to weigh competition benefits properly. 

Government has adopted our core logic but not the complete toolkit that would maximise success. Without economic expertise and override powers, existing Fast Track panels may struggle to weigh costs and benefits properly or to cut through all relevant barriers. 

These details could matter. Remaining barriers could kill potential entry. If entry fails because processes stay cumbersome, people will conclude that market opening does not work, potentially paving the way for heavy-handed interventions. 

We cannot afford to stick with a system that unproductively frustrates and thwarts new entrants. The minister rightly prefers market discovery to structural intervention, at least at this stage. Government must now implement its reforms carefully to preserve the logic of its approach, monitor outcomes closely, and remain ready to address emerging gaps.