Economist suggests Gov’t should work with grocery stores on price cuts, rather than blame them
Price controls don’t work.
That’s the opinion of Economist Craig Simmons, who suggests Government is tacitly blaming local grocery stores for contributing to the high cost of living, rather than working with them to find solutions.
Speaking to Gary Foster Skelton ahead of tomorrow’s Budget, Mr Simmons also compares price controls to rent control – which he says impacts the availability of affordable housing.
Ahead of the Budget, Premier and Finance Minister David Burt shared a post highlighting their Throne Speech pledges to create an affordable Bermuda.
At the top of the list is enhancing pricing controls on groceries, and examining the financial records of businesses.
Economist Craig Simmons, however, says Government is villianising local businesses.
“There’s an old expression that you catch more flies with honey”, Mr Simmons says.
“The government’s approach seems to be not to use honey, but to treat businesspeople as the enemy, and the reason why the cost of living in Bermuda is so high”
“The cost of living is so high because we’re out in the middle of nowhere, and it’s difficult getting stuff here.”
Government’s Cost of Living survey finished yesterday, and it included some pointed questions as to whether people believed duty cuts on essentials were being passed on to customers, and whether Government should strengthen price monitoring and enforcement.
Mr Simmons says, “it would make more sense to work with the business community to try and figure out things, in the same way that the government worked with the international business community to bring on a corporate income tax.”
“You seem to treat foreigners nicer than you do your own people.”
Speaking to Gary Foster Skelton, Mr Simmons also compared the concept of price controls to rent controls in the housing market.
Craig Simmons: “Rent control is targeted at the bottom end of the the market. At the top end, you can charge whatever rent you want. And interestingly enough, it’d be easier to find places at the top end than at the bottom end. So my argument is this – rent control is making it unprofitable for contractors, for landlords, to invest money in constructing new affordable housing, because they will be told by the government the maximum that they can charge… rent control in and of itself creates shortages of affordable housing.”
GFS: “…therefore you think some kind of price control could have a similar effect upon grocery stores?”
Craig Simmons: “That’s exactly the argument. It would make more sense to work with the grocery stores to target those items that low income people buy… I would make the argument that grocery stores are trying their best to keep costs down. And when a government stands up and says that you are the problem, that doesn’t bode well for relationships with the business community. And so, there is this sort of hostile standoff between the two that’s not going to bring down the cost of living in Bermuda. The government is going the wrong way.”
