Axing of GST on food ‘good start’

While some University of Otago academics are welcoming the Labour Party’s proposal to axe GST on fruit and vegetables, others are urging the party to take the initiative even further.

The GST cut, combined with changes to Working for Families, is expected to benefit about 160,000 families, costing the government about $2billion over four years.

The party said it was a targeted way of easing the cost of living pressures.

World leader in human nutrition, diabetes and obesity, Healthier Lives National Science Challenge director and University of Otago Medical School professor Sir Jim Mann said some found the policy unpalatable, but he believed it was a "good start" and a "useful step" in the right direction.

"I don’t think it’s a bad thing. It’s not going to solve all our problems, but it is one little step — one positive step.

"I think it’s ridiculous for people to say, ‘it won’t work, it can’t work, it doesn’t work’.

"Just about every country in the world has been able to do it. Why can’t we do it?"

University of Otago human nutrition senior lecturer Dr Claire Smith said given the large increase in fruit and vegetable prices in recent years, anything which lowered the cost of them would be seen positively by most New Zealand households.

However, she said the policy did not go far enough to address household food insecurity, and believed GST should be cut on other food items as well.

"I agree that anything that makes healthy food more accessible has to be positive, both for our health and pockets, but we also need to consider that low-income households will gain less from the GST removal."

She said the 2019 household expenditure survey conducted by Stats NZ showed the average New Zealand household spent $23 per week on fruit and vegetables.

"Therefore, removal of GST represents a savings of less than $4 per week.

"Furthermore, the affordability of food is not just about food prices.

"Other fixed expenses such as housing costs, petrol, childcare, and utility bills also affect how much households are able to spend on food," she said.

"I am pleased that the government is removing GST on frozen fruit and vegetables, in addition to fresh fruit and vegetables.

"This should also be extended to canned fruit and vegetables, and canned legumes which can be healthy if syrups and brines are drained."

Overall, the policy was a "plus" for middle-income New Zealanders, but it was not enough for those most likely to be affected by household food insecurity.

"Further policies which specifically target this, are needed for equitable outcomes."

john.lewis@odt.co.nz