Labour’s plastic bag policy set to enrich shareholders of supermarket duopoly

Labour wants to ban plastic bags in a lurch back towards the nanny-statism that the country rejected in 2008.

As Michael Reddell points out in his post, this will hurt the poor: Quote:

As I’ve already noted, there is no cost-benefit analysis in the document.  Specifically, there is no overall summary estimate.  But there is also no attempt to put a dollar value on any one of the various potential costs and benefits (some identified, others ignored completely).  How do we value the potential reduction in the poisoning etc from marine life? I have no idea of the appropriate number, and the documents suggests (by silence) that MfE and the government have no idea either.  Since that is, purportedly, the main benefit of the policy, it seems like quite a gap.

And if there is no cost-benefit analysis, there is also no decent distributional analysis. But there is this stark statement

Some consumers on low incomes may nonetheless find the up-front cost of multiple-use bags unaffordable. One possibility is to provide support, such as offering discounted bags to holders of Community Services Cards and Gold Cards.

So yet another policy proposal –  from the party the campaigned that it was on the side of the poor and the marginalised – that will hit the poorest hardest (as the net-zero climate proposal will).  And that on the government’s own reckoning.    But it does rather highlight the point about why supermarket shopping bags with handles exist: because they are cheap and efficient.

Strangely, there is also no real analysis of where the savings to retailers (from not providing bags) are likely to go.   Again, from a left-wing government, the first option listed in a “windfall profit” to retailers –  transferring value from poor people to supermarket shareholders?  My starting point would be that, over time, any savings to retailers would be competed away, but I know that serious people have concerns about the degree of competition in the New Zealand supermarket sector.  On which note, it would be interesting to know –  and tempting to OIA –  whether the supermarket chains have lobbied for this ban, including in its very particular form.    Quoting again from the Associate Minister,

Government working alongside industry can be very powerful

No doubt, but there should be no presumption –  perhaps especially from left-wing parties, if they seriously care about consumers and the poor –  that such working together will generally be in the public interest. End quote.

And how much does it help retailers with windfall profits? We know what it will be because Australia has been through this: Quote:

Moves by major supermarkets to stop providing free plastic bags could save these businesses more than $170 million a year in direct costs, while potentially creating a $70 million revenue stream, but may only have a small impact on the environment.

Australia’s two supermarket giants, Woolworths and Coles, announced their stores would stop offering regular plastic bags within 12 months. Instead, customers would be able to buy a more durable plastic bag at 15 cents apiece, or simply bring their own.

These bags are factored into the cost of doing business for these supermarkets.

There are costs beyond just the bags themselves, such as the costs associated with sourcing and negotiating with packaging suppliers, procuring them, shipping and warehousing them, and distributing them to stores only to then give them away.

Supermarket margins are already feeling the strain of price deflation. These businesses are generally making less than six cents in the dollar, so the opportunity to phase out this cost certainly makes good business sense.

[…]

It’s estimated Australian retailers give away 6 billion plastic bags each year. Woolworths alone said they provided 3.2 billion each year. Coles did not provide an estimate of bag use, but claimed to process 21 million transactions each week.

With fewer stores than Woolworths, I estimate Coles may give away up to 2.7 billion bags annually.

With each bag costing almost 3c, retailers stand to save more than $170 million a year in direct costs.

Selling the new bags at 15c each would effectively create another revenue stream potentially adding up to $71 million in gross profit (6c x 1.18 billion units). End quote.

Awesome, Labour is hurting the poor while enriching the shareholders of a duopoly in the market. Worse it does nothing for the environment: Quote:

Unfortunately, introducing a charge for bags doesn’t help the environment in isolation.

While plastic bags represent only about 2 per cent of landfill, there is certainly sufficient scientific evidence that plastic bags do present risks to marine life and clog waterways.

However, simply charging for a plastic bag, without directing these funds into environmental programs, does not necessarily resolve the problem.

Some shoppers simply forget to bring reusable bags with them. The UK Department for Environment, Food and Rural Affairs found the average UK household had 40 plastic bags stashed away around the home.

Also a South Australian parliamentary review found only about 30 per cent of shoppers actually recycled their reusable bags.

In the US, studies indicated 40 per cent of shoppers continued to use disposable bags, despite a 5 cent levy.

Moving to a reusable option also doesn’t stop people discarding the new bags either.

Another US study found many people still threw away reusable bags. End quote.

What a ridiculous policy, and one that the happy-clappers and enablers in the media are all too happy to promote rather than doing their jobs and analysing the policy for all of its failings.

This government is all about style and no substance.


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

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