Kiwibank To Cost Taxpayers Another $40 Million

Wednesday 23 Jul 2003 Rodney Hide Press Releases -- Economy

ACT New Zealand Finance Spokesman Rodney Hide today said that the taxpayer injection of another $40 million into Kiwibank has proved critics right.

"Cameron & Company's report into New Zealand Post's banking proposal said that the bank would need capital of at least $100 million to have adequate financial flexibility. They argued that $83 million wasn't enough. The Treasury advised the Government that `Crown capital provisions would count against the Government's capital provisions irrespective of their form'," Mr Hide said.

"The taxpayer has now had to stump up a total of $123 million for Jim's Bank.

"The Kiwibank roosters are crowing that they have 150,000 customers, and are ahead of target. The problem is, they only have $450 million in deposits - that's only $3,000 a customer.

"NZ Post's base-case put to the Government predicted that, by the end of year two, Kiwibank would have 142,000 customers with average deposits of $6,500 - they have the customers but not the money. The customers are the cost, deposits are the revenue. The costs are higher than predicted, and the revenue is down.

"Meanwhile, the taxpayer is $123 million out-of-pocket.

"Jim Anderton said that Kiwibank would bring down, what he called, bank `monopoly' profits. Kiwibank has only one percent of household deposits and banking profits are up.

"Kiwibank is just another expensive Jim Anderton failure where, once again, he didn't listen to advice," Mr Hide said.

ENDS

For more information visit ACT online at http://www.act.org.nz or contact the ACT Parliamentary Office at act@parliament.govt.nz.

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