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Hone Harawira Speech On Insolvency Bill

Hone Harawira; Finance Spokesperson for Maori Party

Mr Speaker, last night, while we were discussing the Insolvency Bill, it seems we forgot some really important statistics, SO, being ever helpful, the Maori Party humbly brings the following information before the House to help us understand the Westpac Bill as well.

In 2002, 47% of bankrupts had more than one credit card; 53% had 2-4 credit cards; and 17% of bankrupts were Maori.

Mr Speaker, these are big issues we face, issues which banks like Westpacand other important banks in Aotearoa must address in order to protect their clients’ finances.

And yet, as the cash registers were ringing last Christmas, the Banking Ombudsman was condemning banks like Westpac for encouraging their customers to take on debt they couldn’t afford, for extending credit to clients who couldn’t make the repayments, and for giving credit cards to people who hadn’t even asked for them.

Mr Speaker, there is an old saying about a weka escaping the snare, and not going back to it. In this case though, it was precisely because of the way Westpac snared their customers, and dragged them back into debt, that along with the BNZ, they jointly won the 2005 Roger Award for the Worst Transnational Corporation Operating in Aotearoa, the first banks to ever win the Roger for being corporate criminals.

The Award described how both banks pressured their staff to sell credit cards to people, rather than things which the customers had asked for.

It’s the McDonalds philosophy, except instead of fries with your meal, the banks are serving up debt with your credit.

And they’re making their staff serve it up, by forcing them to meet targets based on increasing customer debt, or losing their jobs.

Mr Speaker, Westpac staff are required to meet a specific target of 8575 points per year, and while every new account opened attracts 10 points, selling a credit card gets them an extra 25 points.

Union spokesperson, Karen Skinner said: “These targets are putting increasing stress on bank workers and on their customers alike, and also placing stress on the New Zealand economy. Why are staff paid incentives to get customers into more debt, and why is it if they don’t sell enough their job can be threatened?"

Mr Speaker, the Maori Party supports this Bill, because it will enable the Reserve Bank to ensure Westpac and all big banks operating in Aotearoa, incorporate here.

We support the view of Trade and Enterprise NZ that because banks are vital and strategic players in our economy, they should come under the control of this country’s laws, and local incorporation offers that greater level of domestic security.

But protectingassets and savings must also recognise the huge levels of bankruptcy, insolvency and credit card debt that this country has.

Think about this folks - New Zealanders are THE WORST savers in the OECD, bar none. For every $1.00 we earn, we’re spending $1.13.

This time last year, we owed more than $4 billion on credit cards, up a full $217 million on the previous year. $4 billion. It’s hard to even contemplate what this year’s credit card debt level might be.

Mr Speaker, we can’t just ignore these facts; we can’t just forget to mention them here; or tut tut, tut, and condemn people for not being thrifty enough and hope it all goes away.

We all have a responsibility to talk about this and deal with it, and Westpac, in lending credit to customers, must be bound by the Code of Banking Practice, to"act fairly and reasonably towards the customer in a consistent and ethical way”.

The explosion in credit cards, the greater use of cards instead of cash, the growth of e-commerce, and the use of performance targets, are forcing Westpac staff to sell more and more debt to Kiwi customers.

Mr Speaker, incorporating Westpac here is expected to protect Kiwi depositors if Westpac goes belly up, because current Australian law gives Aussies first call on the funds, and limits overseas claims.

If that means that when incorporation is complete, it will be Kiwi customers at the front of the line, then we welcome that.

Mr Speaker, the Bill is also supposed to;

 make the New Zealand banking system more resilient in times of financial stress;

 make Westpac subject to the same rules for capital and insolvency as all the other banks;

 make Westpac answerable to the Reserve Bank for regulation, monitoring and discipline; and

 enable the Reserve bank to better manage any potential bank failure.

Hopefully that will mean New Zealand doesn’t have to deal with the wider costs of bank failure, like a collapse in investor and consumer confidence, higher borrowing costs and lower economic growth.

But the questions we keep coming back to are:

 what about Westpac customers trapped in credit dependency?

 what about Westpac customers who are over-spending, and plunging into bankruptcy?

Last night I reminded this House of the dream of Dr Martin Luther King; that hopefully we might never open an account in the bank of justice, only to find it bankrupt.

In Westpac, will we find a bank that dispenses justice to its customers, that treats its employees fairly, justly, with accountability and integrity?

Mr Speaker, when I think of their staff targets, and their drive for profit at any cost, I harbour deep concerns about Westpac’s moral bankruptcy, ethical insolvency, and lack of social responsibility.

Mr Speaker, this Bill also says that current staff who become employees of Westpac NZ should have their contract of employment protected, so we will be watching carefully, to see that this does indeed happen; to see that Westpac employees’ rights are upheld in the process.

Mr Speaker, the Maori Party will support the third reading of the Westpac NZ Bill; to support initiatives which protect our nation’s economy as well as the finances of its clients.

But we will also hold Westpac to account for its investment in social responsibility and its efforts to promote a Genuine Progress Index, where the growing of its assets, is matched by the growth in wellbeing and security of its staff and clients.

Ends


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