Big banks victors in banking inquiry: Labour

Saturday, 23 August 2025

Megan Woods, left, left and Barbara Edmonds complained that bank chief executives made deregulation the “dominant focus” of Parliament’s banking inquiry.

Opposition MPs believe the big winner of Parliament’s banking inquiry is the banking sector, and it appears that so do the banks.

The report, which anti-monopolists have described as timid, followed months of hearings by the Finance and Expenditure Select Committee.

Committee chair Cameron Brewer said he had “pushed hard for cross-party consensus” to keep the pressure on the regulators and banking sector.

But in its dissenting view in the inquiry report, the Labour MPs on the committee said they were “particularly concerned that discussion of capital requirements has become the dominant focus of the inquiry”.

Banks had turned the inquiry into an attempt to get Reserve Bank Te Pūtea Matua capital requirements relaxed, rather than keeping the focus on improving competition in banking.

“This narrow emphasis reflects the submissions of the Big 4 banks, whose interests are served by tweaks to the capital rules, rather than a comprehensive assessment of competition or consumer outcomes,” Labour MPs Megan Woods, Barbara Edmonds, and Deborah Russell said.

Kent Duston from the Banking Reform Coalition ripped in the big four banks’ excess profits at the Finance and Expenditure select committee on Wednesday.

“While there are gains to be had from reviewing prudential settings, we believe these are to be found in the rules that apply to Kiwibank, which would improve competition in the markets for home loans and small business lending, and potentially agribusiness.”

The Labour MPs said that “relaxing the capital requirements for the Big 4, in contrast, is unlikely to deliver benefits to consumers”.

ANZ, the country’s largest bank, welcomed the report’s recommendation that the Reserve Bank cease the planned incremental increases to capital requirements.

The Reserve Bank, which has been under political pressure, is conducting a review of its capital requirements.

Labour MPs felt the focus should instead have been on finding ways to boost smaller New Zealand-owned banks, and possibly Māori-owned financial institutions, and speeding up the development of “open banking” by making it easier for tech companies to provide banking services.

Opposition Finance spokesperson Barbara Edmonds was among the Labour MPs who felt the inquiry was more of a win for the “Big 4 Banks” than the public.

They took a swipe at Government MPs in their dissenting statement.

“Labour members have engaged constructively with evidence and with Treasury’s recommendations, seeking to identify where consensus could be reached,” they said.

“In contrast, there was limited engagement by Government MPs on the Opposition’s proposals, which meant that opportunities for genuine bipartisan discussion were missed, even in areas where agreement was possible.”

The inquiry had demonstrated there was genuine potential to advance shared goals in banking regulation and competition, they said.

“But meaningful progress requires constructive engagement across the House and a focus on outcomes that benefit all New Zealanders.”

It was the second time this week that Labour had accused Government MPs of not engaging well on a select committee.

Labour opposes the sale of Kiwibank. The next election could decide whether the bank is privatised.

On Monday, they made similar accusations about Government MPs’ engagement on Green co-leader Marama Davidson’s Right to Repair Bill, which now looks doomed.

The Labour MPs said Māori access to capital should have been prioritised as a core outcome, including collecting and publishing data on Māori banking access, and removing red tape for lending for development on collectively-owned Māori land.

There were also other missed opportunities to strengthen competition, they said.

“We would have focused on the role of Kiwibank as a public banking option and competitor. This means protecting Crown ownership.”

Finance Minister Nicola Willis has spoken about the possibility of Kiwibank shares being listed on the NZX sharemarket in a public offering, but only if the public gives it a mandate to at the next election.

The three Labour MPs’ statement in the banking report indicated Labour would not sell, if it secured power in the next general election, due to take place in 2026.

“We remain cautious about relying on foreign capital to solve structural competition issues,” the Labour MPs said.

They also decried “rollbacks” of consumer protection laws, including lending laws, which they said would reduce responsible lending obligations, and limit redress for borrowers.