We were back to 2001; KiwiBank was in the news. How exciting.
Young readers will not appreciate the irony. Jim Anderton was New Zealand’s premier socialist and Helen Clark needed his party’s 13 seats to form government. One of his conditions was the establishment of the People’s Bank. Build on the infrastructure of the Post Office.
Text-book socialism. A bank run by the state to achieve the government’s economic and political agenda.
Anderton announced that KiwiBank would force the Australian banks to stop closing branches and that his new bank was “…going to have a focus on family banking”. Whatever that meant.
KiwiBank hasn’t fired, but it hasn’t failed either. It has $32 billion in loans and $28 billion in deposits and makes a nice profit. BNZ has over a hundred billion in loans and $84 billion in deposits, by contrast.
Back in 2001 Act declared they would sell the bank, as did then-Opposition leader Jenny Shipley. Now it seems these parties are more interested in re-heating the old socialist working papers.
Finance Minister Nicola Willis has complained that banks are engaged in a ‘cosy pillow fight’. Her solution is to allow “… Kiwibank to raise up to an additional $500 million is the first step towards giving Kiwibank access to the capital it needs to truly compete with the big four Aussie banks while retaining its intrinsic New Zealand identity.”
Text-book socialism. A bank run by the state to achieve the government’s economic and political agenda.
Anderton announced that KiwiBank would force the Australian banks to stop closing branches and that his new bank was “…going to have a focus on family banking”. Whatever that meant.
KiwiBank hasn’t fired, but it hasn’t failed either. It has $32 billion in loans and $28 billion in deposits and makes a nice profit. BNZ has over a hundred billion in loans and $84 billion in deposits, by contrast.
Back in 2001 Act declared they would sell the bank, as did then-Opposition leader Jenny Shipley. Now it seems these parties are more interested in re-heating the old socialist working papers.
Finance Minister Nicola Willis has complained that banks are engaged in a ‘cosy pillow fight’. Her solution is to allow “… Kiwibank to raise up to an additional $500 million is the first step towards giving Kiwibank access to the capital it needs to truly compete with the big four Aussie banks while retaining its intrinsic New Zealand identity.”
Jim Anderton announced that KiwiBank would force the
Australian banks to stop closing branches.
This is Jim Anderton’s economic agenda being advanced by a notionally conservative government. Willis’ ire was sparked by a Commerce Commission report into banking that found a lack of competition. But, the report also outlined why this was the case.
“Banking regulation imposes disproportionate costs on smaller providers. This may hinder a smaller firm’s ability to invest in innovation and, in turn, compete via those initiatives.”
The Commission also found that disruption would need to come from a “maverick competitor”, citing Macquarie Bank in Australia, but that “KiwiBank’s business model does not appear to vary significantly from the four major banks. It offers similar products at similar process through similar sales channels.”
Allowing KiwiBank to raise half a billion in capital will do nothing to re-shape the domestic banking landscape but it does create the impression that Willis and her team are doing something.
Our banks operate in a heavily regulated environment where innovation and risk taking is effectively prohibited by the dead hand of the Reserve Bank’s oversight. Allowing KiwiBank to expand will not change this dynamic.
The challenge for this government is they are unwilling to confront the real issues driving our absolute economic decline so they focus on the symptoms of failure rather than the underlying drivers.
The ritual humiliation and harassment of Fonterra CEO Miles Hurrell last month was another exercise in political theatre. He was hauled to the Finance Minister’s office to explain why butter was expensive and while he was outside Parliament a TV crew was waiting and pestered him about his salary and demanded to know if Fonterra was ripping kiwis off.
Hurrell, perhaps using a white board, managed to deflect Willis’s attention back to the supermarkets reminding the Finance Minister of her other campaign of corporate harassment.
“Miles was candid that different retailers make different choices about the prices they charge and how much margin they have on the product” she said. “What is clear is that different retailers make different choices about what charges they charge.”
Profound insights right there.
Attacking supermarkets for the high price of butter is as sensible as blaming a thermostat for a heatwave; and either Willis knows this and is stirring up animus against private firms for political gain, or worse, she doesn’t.
KiwiBank should not be recapitalised. It should be sold. The solution to a sluggish banking system is deregulation; not to recapitalise Jim Anderton’s People’s Bank.
We will not solve the cost of living crisis by breaking up supermarkets; but by addressing the fundamental constraints preventing the investment and innovation needed to raise productivity.
The harassment of individual corporate leaders and selective businesses has not gone unnoticed in the boardrooms of Aotearoa, nor has Willis’s reluctance to wear the political cost of real reform.
Willis had the opportunity to tackle the structural fiscal deficit she inherited from Grant Robertson and set these islands onto a low-tax high growth economic trajectory. She has elected to engage in populist tropes and petty harassment to cover for her failure to address the profound economic issues facing New Zealand..........The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
This is Jim Anderton’s economic agenda being advanced by a notionally conservative government. Willis’ ire was sparked by a Commerce Commission report into banking that found a lack of competition. But, the report also outlined why this was the case.
“Banking regulation imposes disproportionate costs on smaller providers. This may hinder a smaller firm’s ability to invest in innovation and, in turn, compete via those initiatives.”
The Commission also found that disruption would need to come from a “maverick competitor”, citing Macquarie Bank in Australia, but that “KiwiBank’s business model does not appear to vary significantly from the four major banks. It offers similar products at similar process through similar sales channels.”
Allowing KiwiBank to raise half a billion in capital will do nothing to re-shape the domestic banking landscape but it does create the impression that Willis and her team are doing something.
Our banks operate in a heavily regulated environment where innovation and risk taking is effectively prohibited by the dead hand of the Reserve Bank’s oversight. Allowing KiwiBank to expand will not change this dynamic.
The challenge for this government is they are unwilling to confront the real issues driving our absolute economic decline so they focus on the symptoms of failure rather than the underlying drivers.
The ritual humiliation and harassment of Fonterra CEO Miles Hurrell last month was another exercise in political theatre. He was hauled to the Finance Minister’s office to explain why butter was expensive and while he was outside Parliament a TV crew was waiting and pestered him about his salary and demanded to know if Fonterra was ripping kiwis off.
Hurrell, perhaps using a white board, managed to deflect Willis’s attention back to the supermarkets reminding the Finance Minister of her other campaign of corporate harassment.
“Miles was candid that different retailers make different choices about the prices they charge and how much margin they have on the product” she said. “What is clear is that different retailers make different choices about what charges they charge.”
Profound insights right there.
Attacking supermarkets for the high price of butter is as sensible as blaming a thermostat for a heatwave; and either Willis knows this and is stirring up animus against private firms for political gain, or worse, she doesn’t.
KiwiBank should not be recapitalised. It should be sold. The solution to a sluggish banking system is deregulation; not to recapitalise Jim Anderton’s People’s Bank.
We will not solve the cost of living crisis by breaking up supermarkets; but by addressing the fundamental constraints preventing the investment and innovation needed to raise productivity.
The harassment of individual corporate leaders and selective businesses has not gone unnoticed in the boardrooms of Aotearoa, nor has Willis’s reluctance to wear the political cost of real reform.
Willis had the opportunity to tackle the structural fiscal deficit she inherited from Grant Robertson and set these islands onto a low-tax high growth economic trajectory. She has elected to engage in populist tropes and petty harassment to cover for her failure to address the profound economic issues facing New Zealand..........The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
1 comment:
As one of our banks is Kiwibank I found your article interesting. Our reason to use Kiwibank is because is not owned by the Aussies. Maybe the Govt shouldn't own it and sell it to Kiwis only. We have also supported Cooperative Bank/PSIS for more than 50 years. What are your views on that?
I am surprised that you use "Aotearoa' and therefore help perpetuate this nonsense that this country should change its name. Maybe just a 'tongue in cheek'.
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