'No more cosy oligopoly': Nicola Willis signals action on banks amid economic gloom

Sunday, 4 August 2024

Finance Minister Nicola Willis says the Government will take action on the “cosy oligopoly” of banks, as it seeks to grow the “green shoots” of an ailing economy.

She confirmed a partial sell of Kiwibank to provide stronger competition was one possibility to boost competition in the sector.

She made the comments in a speeh to National Party faithful gathered for their annual general meeting at the Due Drop Events Centre in Manukau, on Saturday.

She questioned why Kiwis should “tolerate weak competition between the major banks”, and referred to a draft Commerce Commission market study as proving “disruptive forces are needed to drive change”. That disruptive force should be Kiwibank, she said, which needed to grow - possibly through raising capital by selling part-ownership of the Government’s bank.

“I want New Zealanders to get the best deal possible on their banking services, competitive banking services, fair interest rates, good access to loans to capital, and I want a banking system that delivers that,” Willis said, in an interview with the Sunday Star-Times after the speech.

“If we need to change the law, change the regulations, we should, and that includes thinking about the role of Kiwibank.”

Willis said options to make Kiwibank a stronger challenger to the Australian banks included the Government tipping in capital, but there “isn’t a lot of dollars in the coffers”, so she was suggesting the New Zealand Super Fund or ACC might invest. She was yet to take official advice on this, however.

“When I talk to New Zealanders about the concerns they face, they do raise the banks, they do say look, am I getting a fair deal on my mortgage? Am I getting a fair deal on my term deposit? Am I paying fair fees?

“Actually, New Zealanders probably have this right. There's something going on here. And I think as a Government, we have an obligation to respond to that.”

Willis’ comments about compelling greater competition in a sector dominated by four Australian banks come three weeks before the Commerce Commission delivers its final report on the year-long market study into banking.

It was the final note of a speech which talked up National’s efforts to restart a struggling economy and deal with the cost of living crisis which is hitting Kiwi workers hard.

“Well, here in the National Party we stand with working people, we trust them with their own wages and we back them to get ahead: This is the party of the worker,” Willis said, of the tax cut package.

Willis has been battering Labour with the claim National was the true party of the worker in the House in recent weeks, and again on Saturday lamented Labour’s decision not to support the tax package through Parliament.

The mixture of tax cuts and rebates, which came into effect this week, has been aimed at working families. It promises families with two children in early childcare $252 a fortnight, with progressively less in tax cuts for those without children, down to $25 a fortnight for minimum wage workers.

But critics say the tax package was outweighed by still-rising prices, or - according to Labour - the sum total of housing costs and unwound policies such as free prescriptions and public transport subsidies.

Willis said rebuilding the economy remained “target number one” for the National Party, and this meant not only tax cuts and getting inflation within the 1- 3% target, but making the economy more competitive. Taking on the banks was about “making sure capital can flow into the productive parts of the economy and … making sure that New Zealanders face fair fees”.

Prime Minister Christopher Luxon, who will deliver a speech to close out the event today, opened with a brief speech in which he declared the party was doing as it promised - getting New Zealand “back on track”.

Throughout the day, National Party members appeared in good spirits. Variations of the refrain, “How good is it to be in Government?”, were repeated by many who took the stage.

Party delegates travelled from across the country for the $350-a-ticket event, which had corporate sponsors such as online trading platform Tiger Trade and bed manufacturer Slumberzone in order to keep the cost down.

During an afternoon session, closed to members, Luxon took to the stage with a “special guest” - former prime minister Sir John Key - for what sounded like, given the response to Key, the act of a comedy duo.

Alongside the speeches and entertainment, delegates dealt with business such as electing the party board. Branded mugs, caps, and T-shirts were for sale, and a silent auction run for a framed photo of former National Party prime minister Robert Muldoon, signed by Muldoon, to raise funds for the party’s Ōhāriu branch. The auction had reached $500 by Saturday afternoon.

As the plates were cleared after a buffet lunch of curry and salad, Brian Hamilton, a member from the Port Waikato electorate who has attended 10 conferences, said there was “good energy” among the party’s grassroots.

He said the party’s efforts to push government expenditure down to hopefully push inflation, and then interest rates down, was working. Though, he said, claiming success for driving down food prices was more due to weather than policy.

“They just gotta keep doing what they’re doing, keep doing it well, and get the basics right,” he said.