Since my first vote in 1975 I’ve been pretty much around the party clock, although I never stopped at Green o’clock. Once I even put a tick beside a Social Credit candidate because Muldoon’s National was just impossible to support in 1981.
I’ve been with Labour and National and Act but in 2023 I went with New Zealand First. That’s because they promised us a proper inquiry into the covid response and that they would ensure if treaty principles were not to be defined, they would at least be taken out of most legislation.
The Covid Royal Commission Phase Two was a complete damp squib which New Zealand First lost control of when an Act minister set the Terms of Reference. Treaty Principles clauses remain in the vast majority of our recent legislation, albeit somewhat watered down but written in such a way that activists in the judiciary will probably find a way to incorporate them into jurisprudence.
So New Zealand First was really struggling to keep me on board anyway. Winston Peters latest outburst means I’ll be throwing them into the briny.
The idea of buying back the Bank of New Zealand is just preposterous.
Crazy.
Off the planet loopy.
For a start it’s not for sale.
Even if it was it would cost the New Zealand Government between ten and fifteen billion dollars. That’s a back of the envelope calculation of the BNZ’s worth based on its current owner – the National Australia Bank (NAB) – reporting an annual profit of its New Zealand operation of between 1 and 1.5 billion dollars each year. A company’s worth is based on a multiple of its annual earnings and in the banking industry an earnings multiple of 8 to 10 is considered normal.
So let’s go at the cheap end of the estimate. This country doesn’t have ten billion dollars to buy a bank. The money would have to be borrowed. We can hardly afford the 9 billion annual interest on our current borrowings.
If, God help us, Winston Peters harebrained scheme ever came to some sort of reality and the government decided it wanted to buy the BNZ but the NAB wasn’t selling, then the only option would be to nationalise it – or to put it more crudely, steal it.
Any government that indulges in that kind of behaviour quickly becomes one you avoid doing business with.
Yes, there is a long and storied history with the BNZ. It was founded by privateers in 1861 and was immensely successful for thirty years before it over-extended itself and needed its first government bailout in the 1890s. That led to Richard Seddon’s Liberal government taking a substantial ownership role which the post-World War Two Labour government took one step further and completely nationalized the bank in 1945.
It was successful in this time of heavy regulation and interest rate controls. But when the Rogernomics revolution of the 1980s happened the BNZ was in boots and all, despite it still being government owned.
Inevitably poor management and overly ambitious lending put the BNZ back in a hopeless financial position. NAB came to the rescue and took a majority share in 1989. With more losses exposed after the 1990 election Jim Bolger’s National government sold the rest. The total deal cost NAB about $1.48 billion.
Predictably the BNZ has been an outstanding investment for NAB. But it’s run by bankers who’re employed by shareholders.
Governments should not own banks. Exhibit A - Kiwibank. It’s so undercapitalized and so small the government itself doesn’t even bank with it. It uses Westpac.
Mind you there are lots of things governments should not own. Radio stations and TV networks and farms and electricity retailing companies come to mind.
But banking should be top of the list of industries that governments have no business in. In a time of a smaller and more regulated economy maybe there was a case. But that era is not coming back.
New Zealand consumers have massive choice for their retail banking. Sure the big four dominate with an 85 percent market share but whose fault is that?
We must be happy with the service we get otherwise we’d be off to Kiwibank or TSB or SBS or Heartland or Co-operative or even Rabobank. With BNZ, ANZ, Westpac and ASB that’s ten choices we have to save our money with.
I call that competition.
If the government is serious about being in the banking game then sell a decent chunk of Kiwibank, keep a controlling but not majority stake, have it properly capitalized and make it more competitive with the Big Four. It won’t happen immediately but until there’s some serious investment in Kiwibank it won’t make much of a dent in customer share.
So Winston, this plan to buy back or nationalize or steal the BNZ from the Aussies is a pipe dream. We can’t afford it and it’s just bad business.
I do though like your compulsory Kiwisaver from birth idea with the $1000 kick start, even if the second part of that has been tried before. Maybe you can convince your next coalition partners to invoke that policy.
Don’t think I’ll be voting for you again though.
Peter Williams was a writer and broadcaster for half a century. Now watching from the sidelines. Peter blogs regularly on Peter’s Substack where this article was sourced.
So New Zealand First was really struggling to keep me on board anyway. Winston Peters latest outburst means I’ll be throwing them into the briny.
The idea of buying back the Bank of New Zealand is just preposterous.
Crazy.
Off the planet loopy.
For a start it’s not for sale.
Even if it was it would cost the New Zealand Government between ten and fifteen billion dollars. That’s a back of the envelope calculation of the BNZ’s worth based on its current owner – the National Australia Bank (NAB) – reporting an annual profit of its New Zealand operation of between 1 and 1.5 billion dollars each year. A company’s worth is based on a multiple of its annual earnings and in the banking industry an earnings multiple of 8 to 10 is considered normal.
So let’s go at the cheap end of the estimate. This country doesn’t have ten billion dollars to buy a bank. The money would have to be borrowed. We can hardly afford the 9 billion annual interest on our current borrowings.
If, God help us, Winston Peters harebrained scheme ever came to some sort of reality and the government decided it wanted to buy the BNZ but the NAB wasn’t selling, then the only option would be to nationalise it – or to put it more crudely, steal it.
Any government that indulges in that kind of behaviour quickly becomes one you avoid doing business with.
Yes, there is a long and storied history with the BNZ. It was founded by privateers in 1861 and was immensely successful for thirty years before it over-extended itself and needed its first government bailout in the 1890s. That led to Richard Seddon’s Liberal government taking a substantial ownership role which the post-World War Two Labour government took one step further and completely nationalized the bank in 1945.
It was successful in this time of heavy regulation and interest rate controls. But when the Rogernomics revolution of the 1980s happened the BNZ was in boots and all, despite it still being government owned.
Inevitably poor management and overly ambitious lending put the BNZ back in a hopeless financial position. NAB came to the rescue and took a majority share in 1989. With more losses exposed after the 1990 election Jim Bolger’s National government sold the rest. The total deal cost NAB about $1.48 billion.
Predictably the BNZ has been an outstanding investment for NAB. But it’s run by bankers who’re employed by shareholders.
Governments should not own banks. Exhibit A - Kiwibank. It’s so undercapitalized and so small the government itself doesn’t even bank with it. It uses Westpac.
Mind you there are lots of things governments should not own. Radio stations and TV networks and farms and electricity retailing companies come to mind.
But banking should be top of the list of industries that governments have no business in. In a time of a smaller and more regulated economy maybe there was a case. But that era is not coming back.
New Zealand consumers have massive choice for their retail banking. Sure the big four dominate with an 85 percent market share but whose fault is that?
We must be happy with the service we get otherwise we’d be off to Kiwibank or TSB or SBS or Heartland or Co-operative or even Rabobank. With BNZ, ANZ, Westpac and ASB that’s ten choices we have to save our money with.
I call that competition.
If the government is serious about being in the banking game then sell a decent chunk of Kiwibank, keep a controlling but not majority stake, have it properly capitalized and make it more competitive with the Big Four. It won’t happen immediately but until there’s some serious investment in Kiwibank it won’t make much of a dent in customer share.
So Winston, this plan to buy back or nationalize or steal the BNZ from the Aussies is a pipe dream. We can’t afford it and it’s just bad business.
I do though like your compulsory Kiwisaver from birth idea with the $1000 kick start, even if the second part of that has been tried before. Maybe you can convince your next coalition partners to invoke that policy.
Don’t think I’ll be voting for you again though.
Peter Williams was a writer and broadcaster for half a century. Now watching from the sidelines. Peter blogs regularly on Peter’s Substack where this article was sourced.
3 comments:
If one looks at the past "political operations" of Winston Peters, you will find consistency in - "who he speaks to, and/or aims his verbal comments at" - The Older Generation.
This domain has been his past voting strength, and many thank him for the Gold Card, but sadly not many NZ business 'got into the act' on that - many still avoid it.
If you also go back the establishment of MMP, look at how WP "played" the cards with Jim Bolger, who had no time for WP, but "needed" his support to establish & maintain a Govt. Bolger has only one intent to be PM. Sadly even now some of Nationals Policies of then have shown to be a continuing liability.
I would hope that he Author of said article looks back at why (and by whom) we had "a fire sale of Govt owned entities" and who became the biggest 'buyer's' of them.
Also the Author needs to reflect on past comments and no doubt will be made going into the future re Aussie Big Banks (ANZ at the fore) who are perceived as taking money "off shore" but never investing in NZ.
Oh and Peter, when the Aussie's came calling, to buy NZ Banks, the "threats" to the small local Banks & Financial enterprises (e.g. HB Savings Bank) that acted as banks was stunning - the TSB was the only one that told them f.... o...
As to KiwiBank - the idea & inspiration of Jim Anderton, whose concept was to have a NZ Bank that countered the Aussie Banking System. Sadly this Bank has shown that it is more PC than Bank, with who it will allow to become customers and who they do not want - example Fuel Companies, Mining.
Oh yes, this 'statement" was broadcast via NZ MSM, when said bank presented it.
As to voting for NZ First - many Kiwi's will tell you - "No way, vote for a person who put Jacinda in power, not likely".
That 'hurt & pain' still has repercussions, for many.
I am going to suggest a concept -
- we seek to become a State of Australia
- we fly the Aussie Flag & sing their National Anthem.
Maybe an Aussie Company will then buy KiwiRail (again) but this time make it work!
Interesting that Peter touches on the Covid inquiry. Now that this has been completed and the 20+ recommendations made, will Peter continue to follow through and holding Winston to account implementing the recommendations? We can’t walk away from this without doing something.
I agree with you Peter. Although I do have time for Winston, and I think he has finally come of age as a statesman. It's only every three years that he appears to go a bit loopy and propose idiotic stuff like this. And that's because he is dependent on a voting constituency that is largely comprised of disgruntled people with stupid ideas, who won't support the mainstream parties. Six months before every election, NZ First polls its support base and finds out their five biggest bugbears. Those then become Winston's election manifesto, dumb or not. And it gets him re-elected. There's no chance he will actually follow through with his proposals for the BNZ, the Gentailers, the supermarkets, the fuel companies, or whoever. I think we owe him a debt of gratitude for going into coalition with the first Ardern Government. NZ First no doubt vetoed many of Labour's loony policies. And in the current Coalition Government he appears to have been a reasonably steady hand on the tiller. I'm not saying let's vote for him, but I am saying there's very little to fear.
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