Investing in Kiwibank will keep it kiwi

The Government’s decision to provide a line of credit to Kiwibank to support its credit rating through a period of expansion is good news for our economy and ensures that we will keep it kiwi, the Green Party said today.

“I congratulate Bill English for his remarkable turnaround. In only a matter of months, the Minister of Finance has moved from a position of wanting to privatise Kiwibank to one of Government support,” said Green Party Co-leader, Dr Russel Norman.

“The Government’s move is one of several steps they can take to ensure New Zealand owns at least one bank to provide competition against the cosy cartel of the big four Australian banks.”

Foreign-owned banks make up 90 per cent of the banking market in New Zealand. Their profit levels have grown substantially until the recent financial crisis, but even the recession hasn’t stopped the significant proportions of profit distributed as dividends and sent back to Australia. Last year, despite provisions for bad debt totalling $2.4 billion, the banks still managed to distribute 91 per cent of their net after-tax profits.

“John Key’s Government may be finally waking up to the fact that our foreign-owned banking sector drains profits from the country and fails to provide a competitive banking market,” said Dr Norman.

“In the last five years alone, $9.5 billion in bank dividends have gone off-shore, fuelling our current account deficit and starving New Zealand businesses from much needed capital to fund their growth.”

Last year, the Parliamentary Inquiry into Banking found that New Zealand does not have a competitive banking sector. The Inquiry found that up to 70 basis points of Official Cash Rate (OCR) cuts were not passed on to the banks' customers representing an additional $2 billion in interest costs gouged from the farm, business, and home mortgage sectors.

“Kiwibank has consistently offered better deposit rates and lower lending rates than the big four overseas-owned banks, and, by keeping their profits here in New Zealand, has fuelled a small but virtuous cycle of re-investment in New Zealand’s long-term economic prosperity,” said Dr Norman.

“By continuing to invest in Kiwibank’s healthy future, the Government is ensuring there is at least one asset left that won’t fall into foreign ownership.”

ENDS

© Scoop Media