No End in Sight: New Zealand’s Astronomical Cost-of-Living


I’ve thought long about whether I should do this post. The subject has bothered me for some time since it affects me—or, I should say, members of my family—personally. The astronomically high cost-of-living in New Zealand.

How do the Kiwis do it? It’s been getting more expensive to live there year by year. Wages haven’t kept up with inflation for 30 years. Sticker shock for even the most common items, including groceries, is so commonplace that it is the norm.

My wife and I have been to New Zealand several times already. We visit our daughter and her family in Christchurch whenever we can. We wish it could be more often, but airfares being what they are to that part of the world, we have to pick and choose the times we can go. But the prices we pay are nothing compared to what they must when they come here for a visit, practically double. Why is that? In fact, why are prices in general so outrageously high in New Zealand?

My daughter was the first to call this to our attention after she moved there a few years ago. We have since corroborated her observation just by comparing prices of common goods. Other foreign travelers, including those from other industrialized countries, have made the same comment. More than that, why are NZ products here in the States so much less than in their country of origin? I can, for example, buy a block of Kiwi sharp cheddar cheese (called tasty cheese over there) at Trader Joe’s for about $2.50 US but easily expect to pay at least $10 NZ for 500g in Christchurch at the local Countdown or New World. A bottle of Oyster Bay sauvignon blanc is priced at around $13 US here but over twice that much in NZ. And forget about consumer goods whose prices run about three times what I can purchase them for here. A baby’s car seat commands over $600 NZ that I can get through Amazon at $250 US, which is the reason why my daughter asked me to bring one over from the States for a friend who would otherwise not have been able to afford it.

Much has been written about this problem, including the feature piece (“The Great NZ Rip-off”) in the April issue of North & South magazine, a monthly Kiwi publication. One argument for high prices is that the cost of production has to be spread over the relatively small New Zealand population of 4 million people (1.5 million living in Auckland alone), not anywhere near the numbers of the world’s most populous cities. But does this adequately explain the high prices?

Not necessarily, it seems.

A supplier told North & South that the supermarkets, for example, strive for a 30 to 40 per cent gross margin of the retail price. Here in the U.S., it’s closer to 6 per cent. There are only two grocery chains in NZ, one owned by Kiwis (e.g., New World), the other by Aussies (such as Countdown). Wanna play Monopoly, anyone? There are many more choices (competition) in the States. When I’ve gone to the local Countdown where my daughter lives, it hasn’t been unusual to fork close to $100 NZ for just a couple days of groceries. Pure and simple price gouging. The industry is totally unregulated, even if there is a Ministry of Consumer Affairs. It is revealing that, at any given time, almost 60 per cent of items purchased were on sale, meaning that consumers shop by price lest their grocery bills be even higher. In one sense, my daughter has become more self-reliant by cooking her own pumpkins for purée and other things from scratch, like pizza dough, for example. But she does this out of necessity as much as or more than choice. Both she and my son-in-law are both vegetarians, so they aren’t faced with the need to cut back on meat and fish since their prices continue to escalate.

The price of electricity, a state-run monopoly, has doubled since 1986, the article points out, while it has gotten cheaper in other developed countries. Why should publicly owned utilities not be run in the public interest, with CEOs getting $3 million salaries, investing “public” funds in questionable financial investments and spending millions on advertising? Someone has to pay these expenses, and that someone is the average NZer. The same kind of story apparently is true for other services such as water and telecommunications.

Other external pressures work against the average Kiwi’s pocketbook. Even though the NZ dollar has been getting stronger lately against many currencies, why haven’t imports become cheaper? They have instead been stuck at the same high prices, which means there isn’t enough competition to drive prices down. Even if New Zealand is a food-producing country, most of it, about 90 per cent, goes abroad which has driven up export prices and therefore prices at home.

Is it any wonder that there is a diaspora of Kiwis to other countries where it’s cheaper to live and wages are higher? There are half a million living in Australia alone. The middle class is becoming increasingly strapped and may go the way of the dinosaur, a refrain we in America have been hearing lately as the gap widens between rich and poor. Where is all this headed? Is there any end in sight?

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s