4 November 2013

They said Kiwibank would fail too....

The arguments being made by large corporate institutions against KiwiAssure are exactly the same arguments that were made against Kiwibank ten years ago, says Kiwibank founder and former Deputy Prime Minister Jim Anderton.

The Labour party announced at its conference this weekend that it would set up a government owned insurance company - KiwiAssure - to compete with the overseas owned insurance companies.

New Zealand Post, which operates Kiwibank, would run the insurance company.

“Ten years ago the banking sector campaigned against Kiwibank. They said it would be a dog, that government couldn’t run a bank, and there was nothing wrong with the banking system anyway. The National party agreed with them and accused us of returning to the Polish shipyards of the 1970s.

“Well, the success of Kiwibank proved them wrong. Their arguments were flawed then, and they’re flawed today.”

Kiwi bank helped to change the behaviour of the big foreign owned banks, who at the time were closing regional branches, charging high fees, and reducing customer service. That trend changed once Kiwibank started opening it’s more than 300 branches.

“Before Kiwi Bank, New Zealand owned about 1% of all its financial institutions - less than any other developed country. Even Greece owned more than us.”

“Banking profits were going overseas, contributing every day to New Zealand’s current account deficit - the difference between what we spend and earn as a country. We still don’t own enough of our financial institutions, but Kiwibank has helped and Kiwi Assure will do the same. NZ Post’s retail network which caters for around one million customers each week will give it’s now insurance arm a huge advantage.”

Last year, overseas owned insurance companies repatriated over $1.5 billion of profits from New Zealand clients.

“New Zealand Post is struggling and needs more revenue. We need to reduce the vast sums of money sent off-shore by overseas owned financial companies. A Kiwi insurance company would help to keep the big players honest and reduce insurance premiums.

“I have spoken to Ross Armstrong who was the chair of NZ Post when Kiwibank was established and he is very enthusiastic about extending, to financial business base info insurance.”

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