A reminder of what Winston Peters wants in monetary policy & banking

Business

As the National and Labour/Greens sides both court Winston Peters, here's a look at what he campaigned for in monetary policy and banking, insurance & KiwiSaver

26th Sep 17, 9:26am by Gareth Vaughan

As New Zealanders await with bated breath to see whether New Zealand First leader Winston Peters decides to prop up a fourth term National-led government or get into bed with Labour and the Greens in a three-way coalition, it's worth reminding ourselves where he stands on monetary policy and banking issues.

Of course NZ First's policies in these areas may not be included in any deal he does with National or Labour-Greens. But a quick refresher on what he campaigned for is worthwhile.

The brief monetary and finance policy section of NZ First's economic plan says the party wants to;

Replace Inflation Targeted Monetary Policy with monetary policy based on the Singaporean model.
Grow Kiwibank by making it the Government’s banker.
Introduce a Deposit Guarantee Scheme for majority-owned New Zealand registered banks.
Establish a state-owned insurer to offer retail and commercial services, especially for large assets.
Establish KiwiFund, a government owned KiwiSaver provider, which will have a focus on investing in New Zealand assets and infrastructure.

Meanwhile, as we reported in July, Peters wants a banking inquiry focusing on bank charges, the dominance of Australian owned banks in NZ, and bolstering NZ ownership in the sector. Peters told interest.co.nz that the "extraction of over $4 billion in profits" out of the NZ economy as a consequence of Australian dominance of NZ banking through the Australian owned ANZ, ASB, BNZ and Westpac is a key problem. He also wants a beefed up Kiwibank to take over the Government's banking from Westpac, but wouldn't say how much taxpayers' money might be used to help grow Kiwibank to a position where this was feasible.

Below is the brief detail of NZ First's call for a banking review provided on the party's website.

The big four Aussie banks are ripping our country off. This year, they are on track for yet more huge profits at New Zealand’s expense, taking $4 billion out of our economy.

Over 90% of the banking sector in NZ is foreign-owned, largely by the big four Australian owned banks, ANZ, BNZ, Westpac and ASB. These big banks are like a hole in the hull of the New Zealand economy.

Enough is enough.

NZ First will conduct a review of the foreign-owned banks focusing on competition, how much tax they are paying and how we can grow our own New Zealand banking sector.

It’s time someone stood up to the banks.

Help me send the foreign-owned banks a message by adding your name to the list of New Zealanders taking a stand.

Rt Hon Winston Peters

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47 Comments

by gooki | 26th Sep 17, 9:43am 1506372217

Mostly common sense, if only we had a government willing to do something.

by Randomman | 26th Sep 17, 10:22am 1506374529

Well if WP wants to build a legacy there is more likelihood under a left leaning government.
He could potentially upgrade Kiwibank, establish Kiwisure insurance, Kiwifund and depositor guarantee. Whilst giving the Aussie banks a serve.

by bw | 26th Sep 17, 10:26am 1506374760

How would he upgrade Kiwibank? It's not Government owned - never has been.....

by B-Rocker | 26th Sep 17, 11:02am 1506376954

Yeah it is. It's owned by entities that are owned by the government. Therefore government owned.

by Stephen Hulme | 29th Sep 17, 11:55am 1506639355

When Kiwibank was launched in 2002, a guarantee from the owner New Zealand Post was provided to give customers a level of assurance on the safety of their funds in the new bank.

On 31 October 2016 New Zealand Post provided notice to Kiwibank of the termination of the 2001 Deed Poll Guarantee, under which New Zealand Post guaranteed certain payment obligations of Kiwibank and Kiwibank’s subsidiaries. This notice of termination will take effect on 28 February 2017. Read more

by Randomman | 26th Sep 17, 11:05am 1506377142

https://en.m.wikipedia.org/wiki/Kiwibank
Upgrade in the sense of being offered government contract

by steven | 26th Sep 17, 3:31pm 1506393066

Pump many 10s of millions of tax payers money into it.

by Martin Berka | 27th Sep 17, 9:07am 1506456436

Really? Common sense? Please enlighten us - what is the "Singaporean model" for the central bank? The "common sense" is our problem in NZ. The economy is complex and the last thing you want is someone without a clue using "common sense" to make major changes to its institutions. Why don't we use "common sense" to perform brain surgery or fly planes? You, go ahead, here's the scalpel...

by ex socialist | 26th Sep 17, 10:11am 1506373911

The following radio nz interview shows that WP is credible in 5 min sound bites but anything longer is unsustainable. Most of his policies tend to be 'bumper sticker' stuff. That said, his policies tend to be far more interventionist than Nats - or even Labour.

http://www.radionz.co.nz/news/political/339374/the-leader-interview-win…

by Stephen Rogers | 26th Sep 17, 10:12am 1506373963

Might sound like common sense, but with Winston the devil will be in the detail.
Having a kiwisaver fund investing in infrastucture sounds like a cheap way of raising capital, but probably not a great investment return for the investor, remember Think Big!

by nymad | 26th Sep 17, 10:30am 1506375047

Yea, he definitely comes from the bumper sticker school of economic/political ideology.

Monetary policy - that's a terrible idea for New Zealand.
Facilitating the banking sector in New Zealand is a good idea, but KiwiBank is in no way ready for that.
Equally as scary sounding is a state owned insurer.

by gooki | 26th Sep 17, 11:13am 1506377590

Nothing wrong with a state owned insurer. The insurance market is quickly becoming a monopoly/duopoly. Some extra competition will help quell price rises. My personal belief is the government competing with he private sector is much more preferable to heavy regulation which benefits big companies by making it harder for new companies to enter the market.

If you look at the general gist of his policies, it's to keep our money in our economy. When money is kept within the economy it is spent, it cycles through many times helping make everyone richer.

China knows this hence their far reaching crack down on capital flight.

If our Aussie owned banks are making a 2% spread on mortgages, and your mortgage debt is 5x your income, that's 10% of your income going out the door, never being cycled back through the NZ economy.

As a government, if we are borrowing 10 billion from overseas investors at 3%, that's three hundred million going out the door. Yes the return might be the same as you'd get in a conservative kiwisaver fund so you as the individual are no richer, but as a country we are much wealthier.

I didn't vote for W.P. but at least his policies are inline with with their party name: New Zealand First.

by Didge | 26th Sep 17, 4:37pm 1506397055

"Yes the return might be the same as you'd get in a conservative kiwisaver fund so you as the individual are no richer, but as a country we are much wealthier." I am not qualified in "monetary" fields to be sure about this but I suspect it is something we need to try.

by nymad | 27th Sep 17, 9:22am 1506457378

There is plenty wrong with a state insurer.
In fact there is everything wrong with a public department, exaggerated by the fact that they are also competing with private entities.

What you proclaim as the best way is mercantilism for New Zealand.
I don't know if you know how a small economy works, but it certainly doesn't work best by that method of macroeconomic policy. Sure, it (sort of) works in a powerhouse economy like China but that's very different.

What you fail to realise is that the reason we import banking services is because they can be offered more efficiently by the Australian banks. I whole heartedly agree that we should be facilitating more financial and professional services in NZ, but the majority of the country don't want that. Instead they are happy to focus on subsidising low value add goods such as dairy products and tourism.

by gooki | 28th Sep 17, 1:19am 1506514767

Let's see where government competition is working well in NZ.

- Banking, the introduction of KiwiBank greatly reduced customer fees
- Public healthcare greatly reduces the cost of private health insurance
- Construction industry remains competitive thanks to local government owned business like CityCare

I'm sure there plent of examples of government owned fuckups. Running a business isn't easy. But when we'll managed they can be very effective in keeping industries competitive, and reducing costs to the tax payer.

by theglc | 26th Sep 17, 11:13am 1506377616

State Insurance use to be government owner and performed exceptionally well until sold off.

No reason it cant happen again

by The best statu… | 26th Sep 17, 10:33am 1506375199

And leave the country in another Labour led financial hole. Just like 2008.

by O4 normal | 26th Sep 17, 10:42am 1506375723

Are you blaming labour for the GFC

by nymad | 26th Sep 17, 10:44am 1506375847

What is this hole we keep hearing about?
Are you sure you aren't just parroting?

by theglc | 26th Sep 17, 11:14am 1506377683

the hole is utter fiction

by Didge | 26th Sep 17, 4:40pm 1506397256

"And leave the country in another Labour led financial hole. Just like 2008." Sadly, if we have a sizable percentage of voters being able to be missled by utter lies such as this, I do wonder about democracy.

by Ocelot | 26th Sep 17, 11:20am 1506378006

https://tradingeconomics.com/new-zealand/government-debt

5/6ths of our current government debt has come from the last National government. And I hate to think how much of our private debt has come during that period too.

by Smalltown | 26th Sep 17, 2:02pm 1506387758

Don't forget the spondooly from the sale of the power companies which has disappeared up some irrigation hole for their mates.

by Rumpole | 27th Sep 17, 1:16pm 1506471390

So how would Labour have paid for the Earthquakes and the effects of the GFC - a sprinkle of Jacindas Angel Dust?

by O4 normal | 26th Sep 17, 10:58am 1506376730

2008,9,10,11 and other than Auckland to 2012, 13 was a downturn for nz and would have been a lot worse if labour didn’t have such a GOOD set of books. 2011 was when key changed the rules on overseas investment into housing. Creating a bubble from hell. NOW WE PAY FOR THAT. It so makes me laugh how some think you can change affordability and push dept through the roof without paying in the end. You can run a economy smooth and steady or push things up downing the boom bust option which is the way nz every decade seems to prefer but you pay in the end. Affordability and dept always balances in the end. Has to. Of course bringing overseas investors into the calculation is truly disgusting

by unaha-closp | 26th Sep 17, 4:18pm 1506395924

Wow, you even notice the Auckland discrepancy and yet still blame overseas investors.

In 2010 Len Brown slashed land supply to Auckland, so he could justify opening up vast sprawl in the Warkworth et. al. areas. This made 2 things happen - building slowed leading to increased homelessness and land prices went through the roof. 2012,2013, 2014 were all "boom years" for Auckland, but pretty dull for the rest of NZ property. This was because Len Brown had cut land supply, to make sure Auckland prices were jacked up.

Now if it was like you suggest just down to investment changes, then all of NZ property would have boomed in 2012 - 2014. But it was just Auckland, caused by Len Brown building his mega sprawl.

by O4 normal | 26th Sep 17, 4:55pm 1506398148

The people investing at the time was mostly Auckland. The people that sold moved elsewhere . Maybe you didn’t notice the auction rooms going insane and RE agents driving BUS loads of investors around, houses made empty. It takes a massive amount of people and money to start a boom. That was the main starting point and outside Auckland the massive starting point there was Aucklanders moving out. Local investors had a big part to play naturally and supply and demand (Len brown)

by abnz1 | 26th Sep 17, 12:04pm 1506380681

Does Winston Peter has any real policy besides Immigration and foreign buyers.

Anything for power.

by PocketAces | 26th Sep 17, 12:46pm 1506383213

Haha, those are the self same things that National rely on for an "economy". Someone in any coalition between Nats and NZF is going to have a bare bottom.

by Grant A | 26th Sep 17, 1:08pm 1506384482

Yes PocketAces, and unless there's a manageable compromise it will be both of them with the bare bottoms eventually when the economy turns down and spending promises on both sides become more difficult. Same will apply with Labour/Greens/NZF even more so.

by O4 normal | 26th Sep 17, 1:20pm 1506385227

And peters would rather see Jacindas bare bottom

by Merrydaze | 26th Sep 17, 5:54pm 1506401640

NZF has lots of policies including power. Go to their website and have a look www.nzfirst.org.nz

by Grant A | 27th Sep 17, 1:09am 1506427758

Merrydaze - Go and listen to the Guyon espiner interview with WP and then tell me that his policies have any creditablity - an interview where he basically imploded as he had no idea of the cost of many of them, and didnt even have an understanding of what. Number they'd put on them - most embarressing polictial interview Ive ever heard and he's deciding the Govt policies?

by KH | 26th Sep 17, 1:16pm 1506385002

Winston talks sense much of the time. But hard to vote for given his behaviour when interviewed.

by O4 normal | 26th Sep 17, 1:30pm 1506385801

Yeah he’s got a short fuse and a smartass . The meeting with bill will be very short. Theres no way in hell peters could work with bill but he needs to put up that appearance to get a good deal with labour when we all know it labour he really wants. Hope Jacinda has a good poker face

by Fritz | 26th Sep 17, 1:34pm 1506386086

I met an acquaintance today who is a New Zealand based Chinese investor / developer, he;'s really worried about the prospect of a Labour / Green / NZF coalition.

by Groen_mamba | 26th Sep 17, 1:38pm 1506386284

Thanks Fritz! You've made my day!

by O4 normal | 26th Sep 17, 2:56pm 1506390973

Fritz. It’s a bit worrying that some would be more worried over labour as far as overseas investment and immigration. That’s like saying national left in could change a downturn which is largely to blame from the Chinese government stopping the flow of money and peters wouldn’t put a stop to all this with national if he went with them and overseas investors surely don’t think national will get away with immigration levels this high for much longer . I like the Chinese but this game we’ve been playing lately would never have gone on for much longer labour or national. It’s already showed it’s hand to be over. Of course yes labour will be blamed but every time I see it I’ll remind focks the downturn started over 6 months before the election under national at the same time China tightened, dept levels got to high forcing in LVR with large complaints all over the country about immigration levels. Thinking national could change or do anything different is utter rubbish . Property/ investors should have known for a while now a correction is coming and the election or the results has nothing to do with it. People have been dreaming if they thought housing could carry on like the last 3 years. If I was to blame anyone I would. 1 . Blame national for changing the rules in 2011 concerning overseas investment into housing. 2 . The minute seeing what it was doing stop it. 3 . After seeing local investors getting out of control ether putting interest rates up (RBNZ) or DTI restrictions but this should have been done years ago. You could blame the Chinese, greedy investors , RE and banks but if you let someone do something they will do it

by Fritz | 26th Sep 17, 4:53pm 1506397982

The view expressed to me was foreign ownership might be tightened up, and the prospect of cgt down the line. Maybe a bit of reality, but also some perception as reality

by O4 normal | 26th Sep 17, 5:32pm 1506400341

I’m not sure how this foreign ownership game really works . The figures and timing seem to confuse me. On one hand we have high immigration, higher than ever, and also we have foreign ownership that hasn’t really changed. BUT the Chinese and lets be frank here it’s the especially large volumes from the Chinese that are moving the needle here. But the Chinese have slowed down massively buying houses. Why. There’s more than ever come in . We haven’t stopped foreign ownership. Why. Where was the money coming from. Was it here , if so has the LVRS made a difference. The only other thing that has happened is China has stopped the out flow of money. But isn’t that only to do with overseas investors. What has that to do with people moving here and why haven’t they continued buying houses . Are they suffering the same fate as FHBers. Can’t afford it. In the same boat?

by jh | 26th Sep 17, 2:15pm 1506388522

Would have been better for someone outside the political establishment to take on the internationals left/ proprty developer fraternity. Winston seems to not quite get what it is all about?

by flebus | 26th Sep 17, 6:49pm 1506404979

TOP are well out of the political establishment and would take it head on, but due to some electoral anomalies, David Seymour pointlessly has a seat while TOP, with several times as many votes, has none.

by Patricia | 26th Sep 17, 7:44pm 1506408273

This was a comment on Stuff a few days ago. So so true. Let it happen. MMP could be really good for this country. Couldn't say it better.
"As a 'lefty' this is the second best result possible. Go ahead Winston side with National, the opposition will be ruling from the other side, why?
Look at NZ First's policy, then look at the other parties, L/G can get most of their policy passed via amendment and private members bills, NZ first is then obligated to support those policies (as they are also their own).
People need to realize a party with less than 50% of the house cannot pass laws, it requires a majority of 50% or more (61 or over votes). Those saying NZ First (or Greens) should just support National, (cause they are the biggest) are asking for a lame duck parliament. National will have to get at least one of the parties that for the last nine years have voted against most of their policies to suddenly change their thinking (and principles) and vote with them. Sure there will be a couple of areas were the Nats and Winston agree, but they are few and far between and on the big ones they are not even close"
Please God. Please God. There may be a future for this country after all.

by swapacrate | 26th Sep 17, 9:27pm 1506414430

Thanks for that comment, I never thought about it like that. MMP at work you got to love it.

by Rustee1970 | 27th Sep 17, 8:10am 1506453054

Has WP considered the impact at all on all those NZ'ers that are employed by the "Aussie Banks" when proposing these changes at all? The 4 'main banks" in NZ employ roughly between 5000 and 7000 staff each as I understand it?

And I can't help but think that redirecting both Kiwisaver and Government banking to just one single "Bank" potentially has implications across the board when it comes to the provision of all Government services.....so much for free enterprise I guess.

by gooki | 28th Sep 17, 1:13am 1506514422

It's not a wholesale ban on Aussie banks, or the redirection of all KiwiSaver funds. It's the promotion of local competition, and switching the governments bank accounts from an Aussie owned bank to a NZ one.

It'll have sweet fuck all impact.

As the customer make up swings to be in favour of the local banks, they will hire staff from the Aussie banks.

by Grant A | 28th Sep 17, 1:43am 1506516219

Gooki - understand the facts - Kiwibank for instance was never a possiblity to win the tender for the Govt's business and indicated so immediately - and no, they wouldn't just pick up staff. They do not have the systems, capital or expertise yet to compete with the larger banks greater resources. If Kiwibank for instance did have the business because the Aussies banks weren't here, every NZer, and more particularly, every business, would be worse off for it.

All this stuff sounds fine in theory, and works well in politics when you don't have to implement it, a disaster if you got into Govt and tried (temporarily) - do remember the reason why NAB ended up buying BNZ when it was NZ owned (poorly run without the capital to get it through a major recession and series of bad debts- sold to survive).

http://www.stuff.co.nz/business/industries/8825146/Kiwibank-not-after-G…