Shane Jones’ bank plan could help brothels and casinos

Saturday, 1 February 2025

Resources minister Shane Jones has big plans for the mining industry, and he accused banks of ‘corporate thuggery’ in deciding not to withdraw lending to coal miners.

ANALYSIS: Resources Minister Shane Jones says it’s not the business of banks to impose a “moral order on New Zealand”.

“That’s the role of the state,” said Jones, speaking from the mining town of Waihi where he was touring the town’s gold mine, and unveiling the Government’s minerals strategy, and plan to double mining exports.

New Zealand First is drafting a private members’ bill that would ban banks from discriminating against businesses because of the sector they were involved in when deciding whether to give them a loan.

Under the proposed law, on pain of losing their banking licences, banks would be compelled to decide on whether to lend to companies engaged in legal activity based only on their creditworthiness.

The Reserve Bank Te Pūtea Matua would be the regulator of the law, investigating complaints, though Jones warned the central bank itself would need to be careful not to be captured by climate change “groupthink”.

Jones’ focus was on mining, after being “triggered” by revelations that BNZ had told a coal mining company in the West Coast town of Reefton that it no longer wished to bank it.

Resources Minister Shane Jones unveiled plans to double export earnings from minerals in the next decade.

But he acknowledged that the proposed law would also cover other legal activities that some banks are not keen to be involved with, and in some cases decide not to lend on for moral reasons, including companies involved in sectors like alcohol, prostitution, higher interest lending, tobacco and gambling, which was important for the horse-racing industry.

The coal-mining case that triggered Jones was just the latest in a string of cases involving banks deciding to debank, or withdraw credit from, companies, entities and individuals who they did not want as customers.

Some of the moves were intended by banks to reduce the carbon “intensity” of their loan books so they could meet pledges they had made when they, or their Australian parent bank, joined the UN’s Net-Zero Banking Alliance.

That included budget petrol retailer Waitomo, which complained to Parliament’s banking inquiry last year that its bank with putting the squeeze on it.

But it also included BNZ deciding to stop banking the exclusive Gloriavale Christian community.

“As I have delved into this issue, I can’t help but think there is a streak of puritanism rippling though the BNZ,” Jones said.

Waitomo is a petrol-retailer which called foul on banks for withdrawing finance from petrol stations.

BNZ and the other big Australian-owned banks were approached for comment.

BNZ argued in court when Gloriavale leaders sought to injunct the bank that it had the right to stop banking anyone, and any entity, for any reason, and the court accepted that.

Many banks, including state-owned Kiwibank, have decided there are sectors they wish not to lend into, or are extremely cautious in doing so.

Kiwibank has a policy not to provide banking services to some businesses carrying out legal, but socially questionable activities.

Kiwibank reserves the right not to lend money to brothel-owners.

These included the extraction, manufacture and production of fossil fuel (not distribution or retailing), tobacco companies (excluding vaping) and high cost lenders.

There are also legal but “sensitive” sectors which Kiwibank reserves the right not to lend to, including strip clubs, brothels, pornographic content creators, alcohol companies, and casino operators.

Jones acknowledged there may be push-back that NZ First was intending to intrude on the freedom of the owners of private capital to decide where to invest it.

But, he said of banks: “Their job isn’t to dash off to international conferences and impose their concepts of environmentalism and climate change on a coal mining business in Reefton.

“My leader and I think it is a type of corporate bullying when these small firms, God-fearing Kiwi people are trying to make a living. They are suffering corporate thuggery,” Jones said.

The plan to change the law had been through the New Zealand First caucus, and would now be refined to get it ready to put into the “biscuit tin’ of private member bills, and to ”socialise“ with the party’s coalition partners, National and ACT.

From there it would need to be drawn out in a random ballot to be debated, but if both ACT and National agreed, it could become a government bill.

Jones did not know whether he would get support from NZ First’s coalition partners, but said Finance Minister Nicola Willis had taken a “muscular” stance on the banks, and ACT’s Mark Cameron had done a lot of heavy lifting in this area.

Willis told The Post: “Individual banks will make their own decisions, but I would be concerned if banks collectively decided to stop financing things that New Zealanders need.

“That is why I have suggested the Parliamentary select committee conducting the banking inquiry call bank chief executives back in.”

Michael Reddell, author the Croaking Cassandra economic blog and a former senior Reserve Bank employee, said Jones’ plan was technically possible.

He thought it could be analogous to the Human Rights Act, which outlawed discrimination based on things like gender and race.

BNZ said it did not want to comment on the New Zealand First plan.

However, Jones’ plan was not desirable, Reddell said.

Owners of private capital should be able to take moral choices with how they invested their money, he said.

However, he had sympathy for Jones’ anger at banks like BNZ withdrawing lending from sectors like petrol stations and coal mining.

“Personally, I think it is absurd as we will need oil and gas for decades to come,” he said.

Some in banking circles are keen to speak, but would not be quoted for fear of angering ministers.

Among the questions they have are whether a government that required them to lend to businesses in sectors they are not keen on would underwrite or share in any losses they sustained.

There was little support for government to tell banks who to lend to, but more support for the idea that everyone deserves to have access to transactional banking services.

It’s not only in New Zealand where political pressure is piling onto banks’ carbon reduction plans.

Federated Farmers banking spokesperson Richard McIntyre led the fight to get a banking inquiry.

In Australia in January, some MPs have urged banks to pull out of the UN Net-Zero Banking Alliance claiming it threatens the Australian farming and mining sectors. They also questioned whether big banks in the Net-Zero Banking Alliance could breach the country’s anti-trust competition laws.

That approach is strikingly similar to the campaign run by Federated Farmers late last year and early this year, which called on Australian banks with New Zealand operations to pull out of the alliance. Federated Farmers also complained to the Commerce Commission that banks’ membership of the alliance may break our competition laws by co-ordinating their lending activity.

Federated Farmers and the Australian MPs took heart from American and Canadian banks pulling out of the alliance after Donald Trump won the Presidency for a second term.

Federated Farmers banking spokesperson Richard McIntyre said: “Banks exist to lend, not to lecture.

'It’s the job of elected governments to determine which businesses are lawful ‒ not a handful of banking executives imposing their own moral compass.”

Federated Farmers’ action led to the Parliamentary banking inquiry, which has put scrutiny on big Australian banks’ climate policies. That included their emissions reductions targets for farmers, which The Post revealed late last year were for some big Australian-owned banks tougher for New Zealand farmers than they were for Australian farmers.