22 July 2009 Media Statement

It’s about New Zealanders, Mr English, not politicians

The Government’s arrogant dismissal of a cross-party inquiry into banking profits as pointless is, in fact, a dismissal of the concerns of thousands of New Zealand families and businesses, says Labour finance spokesperson David Cunliffe.

The cross-party inquiry, announced yesterday by Labour, the Greens and the Progressives, is about New Zealanders, David Cunliffe said.

“It’s not about politicians as Finance Minister Bill English and Prime Minister John Key claim. Their rejection of the inquiry is blatantly political, and it’s an outrage that they are trivialising the concern being felt by thousands of New Zealanders.”

David Cunliffe said the most reliable recent statement on bank interest rates was Reserve Bank Governor Alan Bollard’s statement of July 6 in which he said that the spreads between marginal funding costs and floating mortgage rates had widened in recent months to ‘historically high levels’.

“There appears at least to be a case to answer that New Zealanders are paying too much for floating mortgages, that interest rate spreads are even worse for small businesses, and farmers are facing a debt burden that is seriously eroding farm profitability in this country.

“Over the past year the Reserve Bank has cut the OCR by 575 basis points, but business lending rates have only fallen by 243 points, and the floating first mortgage rate has fallen by 446 points,” David Cunliffe said.

“The Reserve Bank says it has no other options left to drive down bank interest rates, so it is hollow for the Government to say it will listen to fresh options the Reserve Bank might bring to them. That is just an excuse for it to sit on the sidelines and wash its hands of the pain New Zealanders say they are experiencing.”

David Cunliffe said the inquiry announced yesterday represented the only public forum available to get all the facts on the table. “Participation is invited across all parties. The committee will be supported by reputable external advice and will work to produce a high quality report with recommendations that can be actioned.

“I am encouraged by the responses so far from a range of sector groups, including banking and finance entities, and from individuals, and I expect there will be a significant number of submissions.”

ENDS

© Scoop Media