There is often quite some competition for the oddest story in newspaper (this morning, in the Dominion-Post, it was surely the little piece telling readers that the Mormons were pulling 21 missionaries out of Liberia – not, it appeared, because they had been kidnapped to threatened but because Liberia’s economy was proving pretty dysfunctional).
In Saturday’s Herald I reckon it was a big feature article in the business section calling for the Auckland Council to cap the number of restaurants/cafes, at least in “certain areas” of Auckland. Perhaps the oddest thing about the whole substantial article was that it was mostly built off the complaints of one owner, Renee Coulter of Coco’s Cantina, who is quoted at length. Such a cap would, she says, ease “pressures around staffing and fierce competition”, which would no doubt be in her own interest (but not, one assumes, those potential staff owners are competing for) but she offers not the slightest hint as to how such restrictions – less competition, as she says – might be in the wider public interest (and there is no sign that journalist pushed her on the point). Coulter reckons that if you want to enter the industry you should have to buy an existing establishment.
“There’s too many dining establishments, and that’s not me being a big cry baby”, or so she says but it sounds a lot like it.
The article goes on to quote her claiming that “it’s competitive to the point where people aren’t actualy making money, they are just staying trading so that they don’t go under”
But if that were an accurate description – and it must surely be considerably exaggerated – the market has its own mechanisms: eventually, people will go out of business, and those with the best business models for the current market will survive.
Now don’t get me wrong. As someone who doesn’t eat out that much – five adult appetites gets expensive no matter how competitive the market, and anyway I like cooking – I’m always surprised quite how many restaurants and cafes there are. I walked through Newtown this morning – for non-Wellingtonians, a funny mixed sort of suburb with lots of council housing but also absurdly expensive (mostly) small houses, a couple of hospitals and a university just down the road – and counted, quite literally, dozens of eating places, none particularly fancy, some new and some which have been there for decades. I don’t know how they all survive, but I don’t need to: the owners make that assessment, day by day, and there is no obvious need, or public policy interest, in councils getting involved.
The Herald’s reporter managed to find one other owner to offer half-hearted support to Ms Coulter, but even then Krishna Botica (who owns a couple of outlets) said
“Certainly I think it is worth looking into, whether they could come up with something that was accurate and fair, I think there is a larger question mark over that.”
Among other problems, indeed.
But Botica does add some other complaints. Apparently “everybody who lives in Auckland..finds it hard to keep with all the new eateries”, claiming that everyone rushes around all of which is “giving restaurants a very limited time to develop relationships”.
One can see that that might be challenging for business owners. But it is their problem, not ours, not the Council’s.
Botica goes on to complain that business has become too “transactional” which means apparently “survival of the fittest”. Or, on Ms Coulter’s telling, survival of zombie businesses that are making no money? Either way, it just isn’t obvious why it is anyone’s problem other than the owners (and perhaps their immediate families). A restaurant just isn’t one of those entities – unlike, say, a life insurance company – that one really needs to know will still be around 30 years hence.
The Herald did go one better than just two somewhat aggrieved struggling (?) restaurant owners. They tried to talk to the Council, who quite rightly pointed out that they had no legal powers in the matter (that’s good). And then they went to the Hospitality Association. The chair of that grouping didn’t support the idea of capping licence numbers, but he went one better in his calls, claiming that New Zealand needs to have a Minister of Hospitality. To the extent that there is such a function at all at present, it is all under the wing of the Minister of Tourism but (according to Botica, the restaurant owner) “you can not lump them together anymore” given the size and attention they both need. The mind boggles, wondering quite how much government attention – food safety aside – these people think their restaurants and cafes really need. Then again, government’s set a dreadful lead with all the identity or industry-serving ministers they do create (be it Tourism, Women, Pacific Peoples, Ethnic Affairs, Racing, MPI or whatever).
The Herald also talked to the Restaurant Association, who seemed to represent a rather divided membership, noting that “competition can be a good thing and those managing their business well will come out on top” so “whilst we continue to monitor the idea of a cap, we are mindful of the potential limits this could put on creating valid opportunities for new owners”.
Normally, one might suppose that when there was a severe shortage of staff – as those quoted in this article claim – wages for those types of people would rise, perhaps quite a lot. And if that, in turn, left some business unable to operate profitably, those less profitable operators would leave the market. It is how resources are reallocated in a competitive market
But that doesn’t appear to be what these operators have in mind at all. Not once in the entire article is there any reference to (relative) wages rising sharply. No data are cited suggestig they are. Instead, we get the plaintive calls for more cheap migrant labour. Now I might even concede some sympathy with them around MBIE processing times – the stories you hear really should shame a first world country that likes to boast of its good government, responsive services etc – but the idea that governments should be, in effect, capping wages in particular sectors, in effect subsidising operators in thoese sectors, by allowing in ever more migrant labourers, typically with low reservation wages, really should be anathema.
But there is the thrust of the case: push for councils to cap the number of restaurant and cafe licences to reduce competition and choice for the public, all while pushing central government to impose more competition on lower-end New Zealand workers, or squeezing them out of the sector altogether, in favour of cheaper foreigners, temporary or permanent. Wouldn’t life be sweet for the less-than-best operators if somehow government and council were to accede to their calls?
The thing I found remarkable about the article – and it was quite a substantial piece, not a five line snippet – was that there was no sign that the journalist had made effort (or bosses insisted) to get a perspective from anyone who might have other interests at heart. Consumer groups for example, or even an economist specialising in competition and regulation. It was as if it was producer (firm) interests that mattered, not consumers (or even workers), even though – presumably even among readers of the Herald business pages there must be more consumers (that’s all of us) than firm owners. There will always be industry voices calling for reductions in competition – that is in the (at least temporary) interests of the incumbents Governments are supposed to be there for the wider public interests, and – temptations to be too close to business notwithstanding – you’d hope that major media outlets would at least want to sure that the wider public interest was represented when they allow their pages to be used to promote campaigns to limit competition and make life easier for business operators.
(Since I get commenters bagging the Herald more generally, I might take this opportunity to point out the stark contrast in today’s papers between the Dominion-Post (and, I assume, other Stuff outlets) and the Herald coverage of the economic/trade effects of the coronavirus and the various restrictions in place, in China and abroad. The Herald’s coverage is head-and-shoulders better – although even it has important omissions – than the Dominion-Post , and the latter (despite its large public service readership) doesn’t even compensate by superioru isight on the political/bureaucratic machinations. Issues like whether our Foreign Minister really told the Chinese Foreign Minister on Saturday that we were imposing no restrictions, only for the government to adopt the diametrically opposite policy in announcements the following day.)