NZ kingmaker demands inquiry into Aussie banks

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By Leith van Onselen

The man that looks set to hold the balance of power in the upcoming New Zealand General Election – New Zealand First’s Winston Peters – has demanded a banking inquiry, claiming that Australia’s banks are “like a hole in the hull of the New Zealand economy”. From Interest.co.nz:

[Peters] is calling for a banking inquiry focusing on bank charges, the dominance of Australian owned banks in New Zealand, and bolstering NZ ownership in the sector.

Peters told interest.co.nz that a key problem currently is the “extraction of over $4 billion in profits” out of the NZ economy as a consequence of Australian dominance of NZ banking through the Australian owned ANZ, ASB, BNZ and Westpac.

“That’s a huge amount of money coming out of an economy in any given year. When the BNZ was sold [in 1992] six out of 10 banking clients were with the BNZ. That was a massive loss. We’re saying this level of foreign ownership, and in key institutions, is seriously bad for our economy because it disguises the state of the economy as it relates to benefits for New Zealanders,” Peters said…

If in government Peters says NZ First will begin “the long overdue process” of bringing the banking sector back into NZ ownership. According to the Reserve Bank, the four Australian owned banks account for almost 90% of aggregate bank assets in NZ.

“As a first step we will make Kiwibank the Government’s official trading bank. It is absurd that a foreign bank Westpac should be clipping the ticket on all the NZ Government’s business and financial transactions,” Peters says…

Asked whether he is proposing tipping taxpayers’ money into Kiwibank to build the bank into a position where it could takeover all the Government’s business, Peters said, “Taxpayers money is going into Westpac right now so what would the difference be? The benefit of course would be that the money would be staying in our economy, not going offshore. Right now the taxpayer’s helping the Aussie banks, and helping Westpac in particular…

It sure will be fun following New Zealand politics should a maverick like Peters end up holding the balance of power. He clear wants to shake-up the establishment.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.