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Anderton: Horowhenua Grey Power meeting

Hon Jim Anderton

Minister of Agriculture, Minister for Biosecurity
Minister of Fisheries, Minister of Forestry
Associate Minister of Health
Associate Minister for Tertiary Education

Progressive Leader

22 February 2008 Media Statement

Horowhenua Grey Power Association meeting

Thanks for your invitation to discuss setting up Kiwibank and Progressive Party policies.

I enjoy coming to Grey Power, and I think it’s because I have a unique perspective on parliament that is very relevant to Grey Power members. I’m the only member of Cabinet who was born before the Second World War.

Like many Grey Power members, I grew up in a time when memories of the Great Depression were fresh in our parents’ minds. When war was something that happened to us, not just to places America invaded.

And when you experience those tumultuous times, you don’t forget it as you go on and confront new issues over the years.

In particular, it gives a sense of perspective about what works for people.
You learn that shadows that fall across the pathway of life are never new, but just new variations on old themes.

There are a few that keep coming up that I think older New Zealanders recognise.

One is the idea that New Zealanders aren’t good enough to do things for ourselves.

Another is the experience of people who promise to do one thing before they get elected, and then do something else when they’re in office.

And a third theme is the experience we have all had of the need to have the strength to care about New Zealanders who want to work hard and contribute.

Whether it’s a young family struggling to buy their first home, a kid going into huge debt for their education, or kids getting wasted on drugs and alcohol.
Most of us have seen it before. We know how hard it is to save for a home. We have a pretty good idea how hard it is to pay off those huge debts. And we know people whose lives have been wrecked by substance abuse.
I think when you know about it, you develop a new perspective.

That was the way I felt about ten years ago when I started to think about a Kiwi-owned bank for New Zealand.

Let me take you back to the nineties to remind you of what was involved in setting up Kiwibank.

By the end of last century we were the only developed country in the world that didn’t have a single nationwide domestically-owned financial institution.
The only institutions that were New Zealand owned were small regional players, like the TSB. There was one in Southland and a network of credit unions.

They were all doing a good job for their communities.

But 99 percent of our banking and insurance industry was owned overseas.
And where they went, huge profits went with them.

We paid higher interest rates than other countries.

We faced ever-increasing fees.

And local branches all over the country were closing.

Even profitable branches were closing!

The big overseas banks would close a profitable branch because they could make even more money if all the customers went to a branch further away.
There were parts of New Zealand that didn’t have any bank branch at all: Small towns in the Manawatu and in the Wairarapa, as well as Southland, Northland and more.

And even in the cities, local suburban branches were being closed all over town.

The way it happened was pretty much the way I said it would when the government I was in was selling off all our banks.

I was thrown out of the Labour Party because I wouldn’t vote for it in 1989.
I said that if we sold the BNZ and the Postbank and the other assets Richard Prebble and Roger Douglas sold, the new overseas owners would cut services and put up prices and drain all the profits overseas.
Guess what happened?

So then I said, why don’t we open a new bank of our own.

People have conveniently forgotten the chorus at the time.

“You can’t do that Jim! New Zealanders can’t run our own bank!”

And then when I said - with the support of Grey Power - that maybe we could, they confidently predicted the bank would fail.

They were certain we couldn’t deliver lower interest rates, lower bank fees and more branches.

Guess what happened?

We delivered the lot.

600,000 people have now joined up.

It is still growing at about 1500 new customers a week.

It has more than seven billion dollars of deposits and loans.

And the bank is making a profit.

It will declare a profit of $40 million this year.

That’s half of what it cost us to open it - in just one year!

So it’s paying for itself, even before we look at the economic advantages to New Zealand of not sending those profits overseas.

It’s paying for itself because competitive pressure has forced competing fees down by even more than the value of the $80 million we spent to open the bank.

Banks that opened on the weekend. Free kids’ accounts.

These were Kiwibank innovations and the other banks only started to copy them once we came on the scene.

Service levels for all banks have improved. Fees have come down and loan margins have been substantially trimmed.

Other banks have tested the market by opening at the weekends and they’ve even opened some new branches.

Kiwibank was first with text banking and first with comprehensive mobile phone banking.

Kiwibank has a very modern and safe Internet facility which is used by an amazing forty per cent of its customers.

The best decision we made with Kiwibank was to make it part of NZ Post.
At the time, the Post was worried about its future.

Letter volumes were dropping and cash flows were slowing.

But the company had some real strengths.

New Zealanders loved it.

It had a network of 6000 shops that touched virtually every community in the country.

And the numbers through the shops were impressive: foot traffic of 700 thousand a week and turnover of two billion dollars a year.

So when I started to push for a bank in the government, New Zealand Post seized the opportunity.

Kiwibank has now been operating for more than six years.

In fact it is almost literally six years ago today that we stood in a PostShop in Palmerston North and declared Kiwibank open for business.

Kiwibank has now been named bank of the year two years running by Consumer.

Its term deposit interest rates and home loan rates are beating the big banks.

Kiwibank has had a good relationship with Greypower too.

Over the years some of Kiwibank's strongest support has come from Grey Power members.

In the past Kiwibank has been the key sponsor of the Grey Power conference and on several occasions Chief Executive Sam Knowles, has been the keynote speaker

Just over a year ago Kiwibank and Grey Power signed an agreement where Kiwibank agreed to pay the Federation a commission on the funds invested by their members.

To date over 700 Kiwibank customers have informed Kiwibank that they are also Grey Power members. This number is increasing every day and every notification will lead to an increase in the commission that is paid to the Federation.

To date Kiwibank has made payments of close to three thousand dollars to Grey Power.

One of the issues that has worried Greypower members and me over the years has been people not being able to get a credit card.

A lot of people don’t want one - but if you want to make airline bookings on the Internet or stay at a hotel then today a credit card is essential.

The problem is - the banks keep saying that if your only income is your superannuation, you don't earn enough to have a card.

I think that is ridiculous and assumes that people can't budget.

Kiwibank made a number of changes to its policy for credit cards after representations from Greypower.

But now I understand they have something new they are about to announce with New Zealand Post that will appeal to many older New Zealanders.

They will be launching a reloadable credit card.

It will use your money - not money borrowed from the bank.

It is a variation on the Prezzie card that operates now, but with this card you can top it up, not use it then throw it away.

The card will be excellent for people on low incomes who have been denied a conventional credit card and for people who don't like using borrowed money at all.

With this card, it is your money to use as you like and you can put more money on the card if and when you like.

I understand it will operate through Visa and so can be used anywhere Visa can be used.

So I’m pleased with the progress Kiwibank has made.

The Kiwibank story shows that smaller parties can make a real difference to the flavour of a government.

We generally go along with the direction and content of Labour in government. That is why we stand and fall as a committed coalition partner with them.

But MMP also gives us the opportunity to support the direction of the government and also to emphasise our priorities.

This year, we are emphasising several that distinguish us from Labour.
And, like KiwiBank, they are possible if we can win the support of New Zealanders for them.

There are three issues I want to mention today: Alcohol and drug policy; Student debt and affordable housing.

On drug policy - I’ve been the minister in charge of drug policy since 2002.
I’ll tell you why, in a nutshell, Progressives are opposed to drug and alcohol abuse.

I want to see our young people make the most of their talents and become the best they can.

You can’t do that if you’re out of your mind on drugs or alcohol.

When I went to see forestry companies about investing more in New Zealand, I asked them about the obstacles to getting them to process more wood here.

One issue was skills - it’s not that there weren’t kids where they grew trees. But they had a problem with drugs in those communities, which created safety issues. It created reliability issues and so on.

It has a huge effect on our communities.

I saw an article in the Herald last year that was headlined “Children aged 7 hooked on cannabis.”

And if seven year olds are the rare exception, it is certainly true that addiction agencies are regularly seeing primary school children smoking cannabis.

The Herald said New Zealand has one of the highest rates of cannabis use in the developed world.

A psychiatrist talked about seeing young people who started smoking cannabis as young as eleven years old.

And the experts quoted in that story went on to say that, of course, you don’t just get one drug used on its own.

Where there is cannabis being used, there is likely to be alcohol being used.

These are children we are talking about.

There was a time when our community responded to drugs and alcohol by turning a blind eye. Ignoring the problem. And it just got worse and it wrecked lives and it wrecked communities.

And then there are those who think we can just crack down. More laws and more enforcement.

Well we do have a three-pronged approach of education, treament and enforcement.

I have tightened up the laws around methamphetamine.

I’ve worked to ban BZP.

And I voted against the decision to raise the legal age for buying alcohol at the corner dairy - it should go back up to twenty.

But the truth has always been that the problem is deeply rooted. The law alone can’t possibly deal with it.

The whole community has to accept responsibility.

So we set up community programmes all around New Zealand and they’re making a difference.

Getting all of our communities aboard the boat and rowing, not only helps each individual community; It helps row the boat faster too.

And if we want to care for our young people, then the other priority we should have for them is to remove the tax on education.

We need to stop throwing kids into gigantic lakes of debt.

Our standing in the first rank of economies slipped around the same time we started putting a ticket collector at the classroom door.

Over the next fifty years we will increasingly compete with the developed world to attract skilled workers and retain our own. It’s getting easier for our best and brightest to move and work anywhere. New Zealand needs to keep more of them here.

Every sector of New Zealand is screaming out for skilled staff. Back in the last century the government tried to create a low-cost, low-value, low-skill economy, where skills weren't so important. Apprenticeships became a dirty word. In education the focus moved to a proliferation of low-value, high-volume courses that had very little to do with the needs of high-value, successful exporting businesses. There was no skills shortage because there was always a pool of unemployed. Too many people with talent were not being called on to contribute.

The chickens came home to roost. You cannot sustainably create high value businesses and higher incomes by reducing skills and pushing incomes down!

Today, as our economy transforms to be job-rich, high value, high-income and high skill, businesses in every industry are wondering where they can get enough qualified people. There are more opportunities for young people, wages are being pushed up and our economy has been through its longest continuous period of growth in decades as a result.

If we want to speed up our development further, and reduce the skills shortage created by reducing unemployment, the best thing we can do is remove the tax on tertiary education.

Today I want to propose an alternative to student debt.

We should say to students this: If they are prepared to stay and work in New Zealand after they graduate, we will reduce your debt.

It would work like this: After a student graduates, they could pay off their debt by staying and working in New Zealand. If they wanted to go overseas, they could go and take their student loan with them, as they do now.

It's an idea we have tried successfully in New Zealand in the past.

When I went to teachers’ college teachers used to be paid to go to Teachers' College, and then they would have to work in a country area for two years. The arrangement helped ensure we had enough teachers in country schools and it made teaching a more attractive profession.

Today we have shortages of many different skills. We are short of doctors and vets. The nature of the industry is that vets are needed in rural areas, but vets want to work in urban areas. Why don't we say to graduating vets, "go and serve in a country area, and every year we will wipe off some of your debt. If you stay for five years, all your student loan will be gone and you won’t have to pay a special tax as you do at the moment."

Not something for nothing, but something in exchange for your service.
We would help to keep our best and brightest here at home.

Along with debt, if we want to give young families a good chance to get started, someone is going to have to have the political courage to address the issue of housing affordability.

I’m sure the government will move on the supply side this year - as the Prime Minister has announced.

Progressives also want to see more action n the demand side - we want to help people more with their deposits.

Already a couple can get a $10,000 loan through Kiwisaver.

I think we should also allow young families to capitalise their family support payments.

That’s what I did to buy my first home.

Housing affordability remains a top political priority for me. It must be a priority for anyone who wants a stronger and more caring New Zealand.
So, action on drugs and alcohol, bring down the student debt and more affordable housing.

The theme is one of creating a strong, caring New Zealand.

These are policies that the Progressive Party is making a priority out of this year.

The success of Kiwbank shows that smaller parties in coalition with larger ones can make a real difference.

We can come up with good positive policies, and make them work. And they are capable of being adopted if we get support and we can convince others that the ideas work.

We need to have the strength to care about our future.

Ends


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