Productive Economy Council urges Labour to expand scope of banking inquiry

The Productive Economy Council has welcomed the announcement of an inquiry into bank profits by Labour, the Greens and the Progressives, but cautions that unless its terms of reference are broad enough, it may not get to the root of the problems the country faces with regards to banking and monetary policy.

"It's great to see some parliamentarians taking the issue seriously, after the Finance and Expenditure Select Committee choked on proceeding with its own inquiry," says PEC spokesman Selwyn Pellett, "but it seems that right now they are simply focusing on the relationship between the Official Cash Rate and short term interest rates. David Cunliffe says that the aim of the inquiry is for New Zealanders to have the opportunity to learn why banks are making the decisions they are making, and to discover if customers are getting a fair go or not. But there is much more at stake here than consumers getting a fair go from banks," he says.

"The banks' behaviour and policies have a direct effect on the economy, and that has implications for all of us. This country does not have a future without an export-led productive economy and that export sector has for a long time been the victim of our lack of a monetary policy that puts the interests of the economy, not the banks, first and foremost. Export businesses are perpetually at the mercy of our volatile currency, and if you follow the bread crumbs, the trail leads back to the Australian owned-banks and the currency traders. This isn't just about consumers paying less for money during a recession. It's about the long term health of our economy and the future of our country," says Pellett.

"We'd like to see the inquiry following the scope of the 1956 Royal Commission on Monetary, Banking, and Credit Systems. The country doesn't need a band-aid right now, it needs serious surgery if the economy is going to regain long-term health. That means establishing an appropriate Monetary Policy for New Zealand, getting control of our exchange rate and giving both the government and the Reserve Bank better tools to drive the economy in the right direction and prevent it being derailed by the self-interest of the banks and other third parties.

"The government is happy to set up a Productivity Taskforce, with what many assume to be a privatisation agenda, and yet they blocked an inquiry into the banking sector. If the government really wants to know why we lag behind Australia in productivity, then surely they need to look closely at all relevant factors, including how the banks influence the productive economy. And if Labour wants to gain widespread support for this inquiry then they need to delve deeper into the issue than just how banks affect the fortunes of home buyers. This issue is too important for the ideologies of left and right to simply use it as catalyst for trundling out the same old solutions. The country needs better than that from its politician and we hope that this inquiry can be a starting point for getting a real debate of all the issues and possible solutions out in the open," says Pellett.

ENDS

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