Andrew Little doubles down on threats to banks

Andrew Little has doubled down on his threats to banks:

Labour leader Andrew Little said he would not rule out legislating to force banks to pass on cuts by the Reserve Bank, after some banks failed to fully respond to a cut to the OCR to a new record low of 2.25 per cent.

That threat drew scorn from National, and the Green Party responded by saying it was not a measure it would look at.

On TVNZ’s Q+A programme today, Mr Little said he stood by his statements, which were about sending a clear signal to the banks to change their behaviour.

“I stand by the stance I took, which is to get very heavy-handed with the banks. Because the truth is when the banks fail to follow the signal that the Reserve Bank is sending, that’s keeping money out of the back pockets of ordinary Kiwis.  

“If the banks don’t want to play ball when it comes to the way we run our monetary policy, actually, there’s only one outfit that can really take them on, and that’s the government.”

State control has worked so well everywhere else hasn’t it?

Andrew Little is showing just how unprepared he is for government. Talk about strong-arming banks, and forcing them to follow signals shows the cold hand of communism is strong in this fellow. He’d like nothing better than a command and control economy.

If we want to see a run on our banking system watch what happens if it looks like Andrew Little would win an election. The man is a fool and dangerous.

I await his calls for banks to follow signals when the Reserve Bank puts the OCR up.

 

– NZ Herald

 


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  • murrayirwin

    Let’s see how quickly the banks stop lending in NZ because the risk / reward is better elsewhere. Then let’s see how the price of housing collapses, and let’s see how the kiwi battler who saved hard to buy a house, then finds themselves with negative equity. Let’s see how businesses grow – with no finance available. What an idiot.

    • symgardiner

      I think it is more like… Let’s see how much money banks give to National for the next election. I’m pretty confident that Labour won’t see a cent.

      • Whitey

        Yep, good old Labour, alienating all the potential donors one by one. First it was the Chinese, now it is the banks.

  • Second time around

    The foreign banks would be quite happy to sell their dairy book to Kiwibank if Andy wants to keep all the profits on shore. Andy admitted it was not Labour policy and that he had not discussed his stiff arm plan with anyone.– he gets all the support from his caucus that he deserves.

  • Nige.

    He’s just one if those idiots who doesn’t understand the job he’s employed to do, runs around making it up as he goes, all bulldust and bluster hoping to b/s his way through til the next internal poll comes out.

  • Whafe

    Each and every time Angry Little opens his mouth it is an embarrassment to any thinking NZ’er… Goodness me, the man is a danger to business….
    As is always, “Labour, the gift that keeps giving”
    NZ suffers, NZ needs a strong opposition, we have nothing near a strong opposition.

  • hookerphil

    “that’s keeping money out of the back pockets of ordinary Kiwis.” Well actually Andy every time the rate is lowered it’s keeping money out of my back pocket don’t you know.

    • BigDogTalking

      A very good point which is consistently overlooked. The “higher interest rates, bad” idea is founded on the view that the majority are net borrowers which I not sure is true. Not sure where to look to find out but if someone else knows I would be very interested.

    • Totara

      Little Andy doesn’t care about savers — only debtors (and criminals too). You will just have to take comfort in knowing that you aren’t associated in any way with being part of his demographic target group.

  • Isherman

    What effect does he think his daft idea would have on Kiwibank? Their new capital is generated mostly through profits, so they would suffer under this regime, and of course that has a flow on effect. The man displays once again that he is just as much an economic pygmy as a political one. Totally unfit for the office that he was railroaded into.

    • IKIDUNOT

      Little is ‘clever’ enough to suggest his strongarm tactics would only apply to foreign owned banks…..just a thought :))

    • Woody

      But he was dressed nicely. As seen on TV One last night. His dressers can’t seem to removed the nasty spiteful look from his face though.

      • Davo42

        Saw that, I was also amazed at the length of air time they gave him for his insane ramblings. I’m unsure if they were exposing him, or trying to support him?

        • hsvmaloo

          Maybe the media have finally awoken to the fact that Little is totally unelectable and given up the battle for Little so are now advocating their efforts towards the Greens given how much airtime they have recently been giving them.

  • Abjv

    Let’s see him also demand that banks drop their deposit rates when the OCR goes down, and that the providers of overseas funds for our banks also drop their rates when the OCR goes down. Next he will start on the exchange rate and tell the banks what it should be. What about the price of cauliflower? It is expensive at present, why not tell the supermarkets what they can sell cauliflower for?

    Funny how Robbo is keeping out of this lot.

  • R&BAvenger

    If you want to see examples of heavy handed state intervention, Angry, look to Venezuela as one of many examples.

  • Maybe that’s how he’s planning on paying for the first year of the UBI. Nationalise all the banks and nick their profits…..might just about cover about *pulls out envelope and scribble furiously* roughly a tenth of the bill, but he’d be screwed for year 2.

  • Seriously?

    If Labour (or for that matter National) was to do something to put a bit more competition into the banking sector then they should move all of the government’s banking to Kiwibank. They may have to inject some capital in order to get the bank ready for it, but I struggle to understand why I would not send my business to a bank I own.

    • Tom

      Because Kiwibank are not up to the job of an account that size.

      • Seriously?

        I think you’re right, but I guess that is my point. Make it up to the job, invest in the people and infrastructure needed, and then it may well get my business as well as the Governments.

      • Graham

        Thats right. In a previous life I was involved in tendering for the Govt business for one of the other major banks. In the end couldn’t make the numbers work with Westpacs aggressive pricing and cost of transferring the business eg system costs etc

  • Brian Dingwall

    Perhaps he should reflect that commercial borrowers enter voluntarily into contracts with banks when they can use the money to earn more than the cost of borrowing. In other words record bank profits are indicators of a healthy economy not an unhealthy one as he would assert…
    Increasing bank wealth is but a small fraction of the new wealth the businesses in the economy are generating.

    • Woody

      I would second that, I have at times had significant borrowings from the commercial arm of ANZ to enable me to generate more income by supplying a better service to my clients. The bank wins and so do I and so do my clients.

      Little however is focusing on the retail banking sector where borrowings are a much more emotive arrangement, well on the part of the borrower, only commercial reality on the bankers side. Doesn’t alter the fact that every financial crumb tossed out by the tosser is a blatant bribe to get him to the dictatorial position he sees himself well suited to.

  • oldmanNZ

    I can see Little pattern.
    Free money (UBI)
    free tertiary education
    low interest rate (currently)
    low power prices.

    he trying to entice(bribe) voters that Labour will give you more free stuff.

    the golden kiwi dream they say on there website.

    • Dan

      The Golden Kiwi Dream. Sums it up perfectly. Labour still dreaming of the 70s when a lot of people tried to won free money by buying Golden Kiwi Tickets. Labour have about as much chance of governing as winning Lotto.

      • oldmanNZ

        they also looking at starting a horticulture thing like fonterra.
        and the name is? after
        kiwibank
        kiwirail…

        kiwifruit.. (but not all horticulture are fruits?)

  • Lemuzz

    watched him on Q+A. Mumbling and stammering. Jessica Mutch kept asking if he was making policy on the hoof. He was out of his depth against her. He would make a poor PM

    • R&BAvenger

      He makes a poor opposition leader too. Out of his depth sums up him and his parliamentary colleagues to a tee.

    • David

      I thought Ms Mutch did a good job at attempting to get Little to answer her question. It was good to see because usually we have the sycophantic Marxist Dann hanging on Little’s every word without question.

  • Rebecca

    If banks are more interested in protecting profits than passing on interest decreases to NZ borrowers: what else would you expect when banks are foreign-owned? Their billions in profits exit New Zealand to reward Australian Super funds and shareholders to whom the banking executives answer.

    This is not news: Australia itself has laws to prevent foreign control of its banks to avoid this predictable situation. Yet NZ has allowed almost total foreign ownership to benefit a few, and now tinkers at the edges or recites as gospel the flawed policies that caused the issue in the first place.

    Andrew Little: don’t try to invent something stupid like interest rate controls that will get you called a communist with good cause. Simply call for similar regs to those that protect Australia. Who could criticize except the same policy wonks who perceived downsides in NZ banking and priced/advised accordingly while the Australians recognized the opportunity and cashed in on our politicians’ stupidity. Even if the banks continue to profit heavily under NZ control, at least the profit is in NZ subject to NZ tax with the money filtering through our own economy.

    • BigDogTalking

      Here is an easier idea, buy shares in those Aussie banks and get the profits directed to yourself. No regulation required.

      • Rebecca

        That’s a wonderful idea as long as BigDogTalking Ltd is equipped to prepare everybody’s Australian tax returns and takes full responsibility for imputation and any tax investigations. Otherwise it’s smarter to do as the Aussies do.

        • Woody

          Well you could of course do what countless other New Zealanders do and buy your bank shares on the NZ Sharemarket.

          • Rebecca

            And then you can experience the joys(?!) of franking credits/imputation on dividends. All to satisfy a response for something I didn’t suggest. ;-)

          • Second time around

            The Aussie banks are easy- they tell you the exchange rate for the day and they tell you what the NZ imputation credits are for the dividend. You see they do actually pay taxes on their NZ operations and can offer imputation credits here. You do have to file a proper tax return (IR3) because there is no withholding tax unlike NZ company dividends, but most people in business do that anyway.

          • Rebecca

            Don’t want to start a conversation- but the franking credit/imputation for kiwis is 10% at most down to as little as 0% if I recall correctly compared to the 30% Aussie franking credit that can’t be used by kiwis. It’s a load of malarkey that’s only necessary because most shareholders are Aussies. But looking past the straw man issues about mom and pop investors buying shares: the point is that NZ probably is unique in allowing foreign dominance of its big banks.

          • Woody

            Why Rebecca?
            Andrew Little, James Shaw.
            Two very good reasons right there.

          • Woody

            The point which many, including Andrew Little in his desperation willfully ignore is that the “Big Australian Banks” are actually already owned by New Zealanders as well as Australians. How do I know this? I am not an Australian.

          • Rebecca

            So how much of the BNZ (second most profitable bank in NZ) do you own? Of your Westpac/ANZ shares, what was your imputation credit?
            Would be great if the straw men could go back in the closet since my point relates to sovereign control, not the absurd proposition that I want to buy banks myself.

          • Woody

            In answer to your two questions. None of your business.
            As for the insult, I will let that pass.
            As for “sovereign control”. I now see where your head is at.

          • Rebecca

            My question re BNZ was rhetorical as it only has 5 shareholders, all of which are owned in turn by National Australia Bank, meaning the $1B dividend is scooped off to Australia every year.

            I’m advocating that it’s crazy to allow Aussies (or for them to expect to be allowed) to own almost 100% of any big NZ bank let alone all of them, when you need special government approval to own more than 15% of an Aussie big bank which never has been granted if I understand correctly.

          • Brian Dingwall

            Why does it matter who owns the banks? So long as there is real and fair competition, a route to entry for new entrants, (note how many Chinese banks have entered the market recently), then how are retail and commercial customers worse off? If any given NZ investor (eg you) prefers not to invest, then how are you worse off if an Australian does? Even China has opened its markets for capital providers more widely recently. Back in the 1980’s when building a house in the US my loan was from the then National Bank of NZ LA branch. I’m not seeing the issue with foreign ownership of banks, if successful, they create much more value than they earn themselves. And if they repatriate some NZ dollars as profits, where will they invest or spend them, they are no use in Aussie?

          • Rebecca

            HSBC has had a sub-4% mortgage at the same time as the Aussie-controlled banks stayed over 5%. I’m no expert on banking retention but what I have seen says that NZ bank customer stickiness limits competition. Even government keeps its big bank rather than moving to Kiwibank as was pointed out by another poster. With over 90% of the retail market it appears that the Aussie-controlled banks see few reasons to be competitive with the likes of HBSC – clearly. Meanwhile people like me with cash in a NZ bank can see the split between what the bank offers me and what they charge to lend out my money. Even if (incredibly) the cost of money from overseas is higher than they pay me, there’s still room to reduce interest. It might drop the BNZ’s profit from $1B to only $800M but there’s no natural law that says BNZ should be able to increase its profit over a banking crisis and then increase it 22% last year and never experience any troughs, only peaks.

          • Brian Dingwall

            You call it customer stickiness, I call it customers voluntarily choosing from a raft of options, although it is not surprising that most major banks have similar estimations/evaluations of similar risks, and hence put similar prices on similar loans .

            Changing interest rates (up and down) is effectively repricing risk, and banks do this all the time, as their evalations of risks change. There is often surprisingly little room to re-price risk, when you consider that mispricing risk is the banks biggest exposure, and has historically led to major problems.

            Banks increase profits mostly when demand for credit increases (which happens when things are good); they can then, as any business can, increase prices to winnow demand to the level they can support (given their capital and regulated adequacy ratios), and reduce their dependence on riskier business. In a competitive market the price of money, like milk powder, is simply a function of supply and demand for a given level of risk.

          • Rebecca

            The example I gave was that HBSC offered a much better rate but I heard no thundering hooves as the competitive market responded in droves. No doubt you have an explanation, but the one I’ve seen in research papers attributes it to strong customer stickiness for NZ banking customers that limits normal competitive behavior. That’s their term, not mine. If you’ve better evidence that it’s explained by supply and demand or higher risks for the Aussie banks than HBSC, I’d be keen to see it.

          • Greenjacket

            Rebecca: Ever seen a bank advertisement?
            That banks advertise shows that the marketplace is working.

          • Rebecca

            Curious that Standard & Poor’s recently described NZ’s dominance by the big banks as “oligopolistic” if you’re correct. But what would they know.

          • Brian Dingwall

            OK fair cop; I’m guilty of writing as if the only differentiator of the banks’ offers is the cost of money, or interest. Maybe we both are.

            A bank, as any merchant does, tries to differentiate its offer with service, quality, and reputational, attributes to greater or lesser success. These attributes can include sign on bonuses, various levels of transaction costs, switching costs, assurances of safety for depositors, fees, access to real humans, on-line access, and so on. Each customer sees only the attributes they value as important, and this helps inform choices.

            Banks want customer loyalty (many of us as depositors exloit that by negotiating rates for our term deposits) and will offer concessions to the clients they want.

            I assume “customer stickiness” (sounds like a customer that enjoys some particular honey-pot :-)) is the reciprocal of customer churn (rate of new clients “acquisition less defections”), has a value (reduced switching costs for both bank and borrower) and can be (and is) measured. To some customers, staying loyal to a given bank is simply “better the devil she knows”.

            After recognizing each bank’s service attributes in the mix that is priced, the laws of supply and demand still prevail….do they not?

            Remember that price is the signal that informs transaction decisions, and ensures efficient allocation of resource hence efficient operation of the economy…

            I still haven’t understood your rationale for just why you think overseas ownership of a bank, or even a number of banks, that bring in foreign investors’ capital for investment here is bad for the economy….

          • Rebecca

            I perceive over 5 billion after-tax reasons last year why it’s better to have banks owned at home especially if it’s an oligarchy. Then there’s the smaller imputation credit for NZ investors compared to the 30% for Aussie investors that kiwis can’t access. Then there’s the expansion of bank margin on lending that got down to 1.7% when locally owned Kiwibank was pushing hard on prices. Apparently it’s 2.2% today when banks claim they can only pass on only 10 or 20 points of the OCR reduction because of various trite soundbites non of which include the bumper margin, more than any of the other markets referenced by S&P including these banks’ own Australian home market. So I “get” Andrew Little’s motivation though I don’t agree with his proposed method. Better to start by applying the same protections seen in Australia to our own market. The alternative is that the Chinese and Indian banks might do it for us, but that still sees billions of reasons to protect bank ownership flowing unnecessarily abroad and significantly affecting NZ’s balance of payments to a level that no other first world nation permits.

          • Brian Dingwall

            Oh dear, sorry Rebecca, I’m not following your argument here. The OCR is not the banks’ cost of capital; I think you mean oligopoly not oligarchy (a type of government, another is monarchy).

            Are you saying we would be $5B better off if they didnt bring foreign capital in to invest here?

            Or are you saying that these fierce competitors are in some cosy (and illegal) arrangement to fix interest rates that imposes $5B of costs on borrowers that represent superprofits to the conspirators?

            Bank margins rise when demand for credit rises….demand for credit rises when the economy is healthy, surely thats the simple explanation for the rise in bank margins? When ever demand for a limited resource (credit in this case) rises, its cost rises. Margins are up on the lowest interest rates since my childhood…again isnt this an indicator of a healthy.

            When bank profits are strong, it means the wealth created with the money they have lent ( borrowing is a voluntary activity) is orders of magnitude greater. In other words they show we have a healthy economy. It is wrong IMO to look jealously at only their earned profits and say they are baddies….and remember the profits earned in NZ are in NZ dollars and must be reinvested or spent here….

            Maybe we have to agree to disagree….

          • Rebecca

            You’re right that I meant oligopolist rather than oligarch!

            Yes, NZ bank margins are higher than in Aussie- or in the other markets identified by S&P. I agree that margins ought to respond to market, but also that OCR influence on interest rates is the tool that NZ gave to its Reserve Bank to control inflation. So if foreign-dominated banks won’t cooperate when clearly they could except that they’ve decided that banking margins are inviolate, then why not align the rules with those across the ditch and see whether that fixes the problem. After all, the NZ economy is maintained by NZers for NZ benefit and there’s no prize for the purest unique laissez faire policies that undermine your intentions and enrich others.

          • Brian Dingwall

            Rebecca, “the official cash rate (OCR) is the term used in Australia and New Zealand for the bank rate and is the rate of interest which the central bank charges on overnight loans to commercial banks”.

            You are right in that the RB governor, having agreed a target inflation band with his Minister, uses it to control inflation within that band. It is a fairly blunt tool, and short of intervening in forex markets its the only one he has. (For comparison to control inflation the central bank of one of our major trading partners can adust the RRR, reserve requirement ratio, what we would, call capital adequacy ratio, or the cash rate, or the currency value….these are not independent variables, but it stops punters gaming the central bank decisions as occurs here).

            But banks borrow heaps more than that which they owe to the RB overnight. That’s why, in a nutshell, the OCR does not reflect the rate each bank pays for its borrowed money which it then onlends.

            And even more complicatedly banks can and do create credit without having borrowed….they can lend more than they borrow…..and they do, and with different terms (length of the time the money is borrowed and or lent for). They borrow from other banks, from depositors, and if necessary could raise more equity capital from investors.

            They must keep enough liquid funds to prevent a run on the bank.

            The point I am making is that when the RB governor changes the OCR, it may have a negligible effect on all but the overnight rate…in your mind don’t just take the OCR, add a fair margin and assume that that then becomes the fair price of money lent by/borrowed from a bank, it doesn’t work that way.

            I myself have a couple of long term deposits with the bank at 5%….amazing that some mortgages are below this right now.

            Over and out….I think our banks do compete hard for the most part, and play a conservative but valuable job in our economy. Cheers

          • Rebecca

            When the RB Governor said his OCR reduction could and should be passed on in full, you can’t hope to attribute that to silly little Rebecca misunderstanding the OCR, or deny that the big foreign-dominated banks ignored him.

            Screeds of banalities don’t overcome this basic issue of sovereignity. The OCR is supposed to influence interest rates but now we see that foreign-dominated banks can effectively veto the Reserve Bank Governor.

            Don’t forget that the OCR reduction is half the recent increase in margin that the banks awarded to themselves. IOW even if they failed to notice inflation trends and locked themselves into unwise borrowing arrangements that rely on inaction by the RB, the banks could comply simply by returning their margins closer to previous levels. They’ll still be hugely profitable, they just won’t have the biggest margins, at least for a while. Whereas if these banks show defiance like this, then NZ has every right to assert itself in legislation or otherwise to make it so.

          • Brian Dingwall

            Sorry Rebecca, we are now just boring everyone, and it seems to me you are either not listening, or choosing to misunderstand how banks operate and are funded.

            Yes banks have the right and ability, but no obligation to pass on the reductions in overnight rates, a tiny part of banks overall funding. (compared to deposits and interbank lending). As a bank would you price a fixed two year mortgage rate (say) on what rate you pay for one night that can change every two months? Borrow short lend long is the traditional recipe for disaster right?

            Consider for a second how forex rate changes impact on overseas borrowing for example.

            Competitive forces mean banks that don’t pass OCR decreases on lose market share, (and gain when they are slow to pass on increases) hence they have an incentive to do so. And they do, otherwise it wouldn’t work as an inflation control.

            No bank that I am aware of has any influence over our sovereignty…red herring alert….

            Clearly you dont trust banks, that is your prerogative, best of luck.

            Heading out now…

          • Rebecca

            You say the Aussie owned banks have no obligation to obey Wheeler: equally, NZ is not obliged to allow economic risk because foreign owned banks insist on bumper profits. Some would say that government not only can, but is obligated to change the rules if Wheeler’s capability is undermined like this. Please remember that these are not natural laws that King Canute cannot change: they are man-made imperfect attempts to benefit society and if they don’t work to best effect, of course they can be changed.

            You won’t listen to Rebecca, but a quick Google search will confirm that the banks disobedience was to protect their profits, not because they locked themselves into incompetently high cost of money or gambled unsuccessfully on exchange rates or the other banal smokescreens that never were mentioned when the OCR rose. Even the smallest importer/exporter is expected to be more competent than that.

            Those who remember the OCR’s intriduction will agree it’s an imperfect instrument, but to paraphrase Churchill: it’s the worst instrument apart from all the others that have been tried from time to time. If mirroring the Australians’ own laws on the topic is too ghastly, how would you propose that NZ preserve its ability to use the OCR as intended? Or are you advocating some other tool for the Reserve Bank?

          • Brian Dingwall

            “You say the Aussie owned banks have no obligation to obey Wheeler:
            equally, NZ is not obliged to allow economic risk because foreign owned
            banks insist on bumper profits”.

            Sorry Rebecca, I didn’t make either of these statements……and both are categorically incorrect.

            The first reminds me of the amazement my Chinese visitors expressed on being introduced to JK when they learned that he cannot command any company to do any specific thing.

            Wheeler changes the OCR, he doesn’t issue instructions that must be obeyed. More on this below. He also issues a monetary policy statement that flags any isses he sees in the near and middle future…markets read and respond to this. “Bank disobedience” is just not a thing. Wheeler’s opinions and OCR movements are interventions in the market place not law.

            Banks make profits as any business does when they offer services and products that their customers buy voluntarily, the implication is that by so buying they are better off (ie wealthier). No company can “insist” on profits, competitive markets don’t work that way. (Note that market co-operation between competitors is illegal, and this law is enforced).

            OK so what happens when the OCR changes? I suspect it will come as a surprize but the RB does not lend money, and charge interest.

            It does , however, insist that interbank balances do actually balance at the end of each trading day. To do this each bank has a settlement account with the RB. (so when we buy something say by eftpos, our account is debited, it may be the next day before the receiving account is credited, this creates imbalances).

            If any bank is in credit it receives the OCR, if in debit it pays the OCR on the interbank, overnight, balances in the settlement account. Thats it. Period.

            And it works to control (local) inflation, perhaps less well with imported price movements (eg oil prices) . What ultimately helps with price stability is when movements in productive capacity stays in sync with movements in demand (and when it doesn’t we get situations like the Auckland house price inflation…the industry cannot respond to rising prices because the land is just not available).

            I get you don’t like overseas banks (even though they increase wealth for all of us that voluntarily bank with them, or borrow from them), and that they bring in heaps of capital to deploy in NZ (you yourself pointed out that most of the shareholders are overseas).

            You are entitled to your view, as I am entitled to the view that yours is rather illogical.

            Geninely hoping this helps you understand.

          • Rebecca

            Sorry if I misunderstood the non sequtur in your previous essay.

            For clarity: the overwhelming consensus, including from their own reporting, is that the banking oligopoly has bumper margins that it is protecting, simple as that. Bulky banalities do not trump this and you might consider whether patronizing presentation of the irrelevant obvious comes across as misogynist rather than learned.

          • Brian Dingwall

            with the greatest of respect Rebecca, goodbye.

          • Rebecca

            OK. I’ll miss being told that I think the RB lends money or that the OCR is banks’ cost of money and all the other respectful suggestions you contributed. “Genuinely hope this helps you understand”: (sic) Meanwhile I agree that the issue is stale and time will tell whether government does or doesn’t agree with either of us and will or won’t modify rules to assist Wheeler’s instrument to work as intended.

          • Greenjacket

            “With over 90% of the retail market it appears that the Aussie-controlled banks see few reasons to be competitive with the likes of HBSC – clearly.”
            With over 90% of the retail market it appears that the Aussie-controlled banks are providing a service that NZ customers prefer – clearly.

          • Rebecca

            As long as you completely ignore the proposition that stickiness of NZ bank customers limits competion. If you’re saying that people ignored the HBSC better deal because the Aussie-controlled banks offer a service that NZ customers prefer: do you have evidence?

          • Greenjacket

            ” If you’re saying that people ignored the HBSC better deal because the Aussie-controlled banks offer a service that NZ customers prefer: do you have evidence?”
            There is abundant evidence – NZ customers are choosing the Aussie banks. That is self-evident.
            That banks feel compelled to advertise like crazy is a graphic illustration that customers shop around in a fluid marketplace.
            Your entire argument relies on “stickiness” without any evidence at all.

          • Rebecca

            That’s a circular argument that completely ignores the proposition that customer stickiness reduces competition. I understand the theory of what you say, but when a Westpac CEO jokes in 2014 that leaving your bank is like leaving your wife, clearly this is not a simplistic proposition like selecting a brand of cereal.

        • BigDogTalking

          You don’t require ownership to control something if you are the government.
          This is exactly Andy’s idea that he will legislate and or regulate the banks.
          The wisdom of doing that in relation to passing on OCR changes is the issue people have doubts about but I don’t think we have any issues with regulating the banks per se. The Reserve Bank already does this in a myriad of ways.

    • Second time around

      The profit the Aussie banks make in NZ is taxed in NZ just as any other business would pay tax. There was a big test case a few years ago that set the rules.

    • CheesyEarWax

      Its simple really, if Kiwi-owned banks wants to make huge profits all they have to is win customers off the foreign-owned banks. If huge profits moving off-shore is an issue, I didn’t hear anyone saying we should legislate Fonterra when they were making huge profits for their farmers.

    • Graham

      You need to look at the terms and conditions of the HSBC offer eg must have deposits of at least $100k with HSBC. Wonder what interest rates they are paying for the deposit. You are comparing apples with oranges.

  • Dan

    Andy can go around having air time over something that he admits is not policy in an area where he is not the shadow minister and yet if the shadow ministers speak or tweet things not policy he expects them to publically apologise.

    I cannot see him lasting 2016 as their leader.

  • Time For Accountability

    Why stop with bank profit margins.

    Should all businesses keep the same profit margins if their cost of goods don’t change take the price of bananas. If a shop was making say 10c on A dollar cost should it make 10c if there is a shortage and the cost price doubles to $2? What about the finance cost of holding inventory.

    The man and the party have no idea how the economy works

    • metalnwood

      I should have read your post before I did mine..

  • Cadwallader

    The Left in NZ have had problems with (apparently) Australian owned Banks. We can recall Jim Neanderton’s insistence that Kiwibank be created as a New Zealand owned instituion. He conveniently overlooked SBS and Taranaki SB as they negated his argument that the Banks were all Australian owned. The fact that the other banks are all allegedly Australian owned is wrong. I, and plenty of others who reside in NZ have super-funds (Westpac in my case) which own shares in Australian banks.
    Further, even were these targeted Banks all Australian owned is that a bad thing? No! During the GFC the Australian Banks’ strengths were indisputable. Their lending policies are beyond reproach and their capital reserves give confidence. Little Angry is yet again a disaster looking for yet another disaster! He resembles a mouth ulcer in the corner of my mouth. If I ignore it, it will eventually go away, if I acknowledge it, it is a huge discomfort.

  • EpochNZ

    It sounds to me very much like Andrew Little is trying to fight an internal battle within the party to retain his leadership. Everything we’ve heard in the last few days is real “preaching to the choir” stuff, trying to elicit the support of those who put him there (like the die hard labour supporters and the unions). All the sound bites ring of the old tired slogans used by Labour since the year dot…..I dont think the readers of this blog (or most of middle New Zealand for that matter) are the intended audience.

  • Wheninrome

    I see that the Greens and Labour do not see “eye to eye” on this one. What now, where is their common ground? If socking it to the wealthy banks isn’t something the Greens are comfortable with where to now. Labour has put a very big stick in the ground on this one.

  • 10cents

    What I find truly disturbing is that there is still 28% of the population that think the Labour party is a credible recipient of their vote. Is there a correlation between national numeracy and literacy levels, and Labour party support?

    • hsvmaloo

      Unfortunately I think it is inbred vote and will take a whole generation to eradicate.

    • Nige.

      This 28% do so blindly. They have no intention of opening their eyes or ears to what is said and done by that party.

  • metalnwood

    Next he will be telling businesses that they follow a maximum profit guideline because consumers are under pressure and and shouldn’t have to pay more than 4% than what it costs a company to produce something. It’s fair after all.

    Then he will will wonder why tax revenue is down.. Thats right little, tax is based on profit but I understand, it’s not your strong point.

  • kayaker

    Angry just doesn’t understand the monetary or banking systems or economics. I heard a financial expert talking with Hosking this morning. He said when the OCR goes down, the cost of money for the banks most often does not. It’s not linked. He said if a government makes it hard for the banks to do business, then the consumer and business will suffer as a result. That then flows into to the economy. Doh, Mr Little!

  • Graeme

    When you look at the announcements from Shaw and Little is it any wonder that they cannot gain ground in the political area. Oops I forgot that Shaw has experience in business but didn’t say it that business was successful.

  • Time For Accountability

    The so called nasty Australian banks are owned by their shareholders just like any other public company.

    I know many folk who benefit through owning those shares.

    What’s next lets campaign against the profits of power companies owned by mum and pop investors. Oh sorry been there and done that.

    • Aucky

      Aussie bank shares are owned by tens of thousands of Kiwis including Kiwisaver funds.

      The commercial naivety of Andrew Little is really unbelievable and one has to wonder who is providing him with economic advice. For any potential government to want to alienate the international banking system in this day and age is bordering on insanity. Interesting that this is even a step too far for the Greens.

  • Ross

    He’s an idiot if he thinks the OCR represents funding costs for banks. Similarly, the gap between wholesale and mortgage rates reflects all sorts of conditions such as loan defaults, funding costs, competition, etc. In general, I’d suggest we are all pro free-market proponents. Legislating to ensure banks mirror the move in OCR is disingenuous at best. After a quick glance of the mortgage rate table provided by interest.co.nz, the range in variable/floating rate mortgages is between 5.45% – ~7.00%. So really, what has legislating banks to mirror the change in OCR got to do with the price of fish?

  • Hard1

    ” Because the truth is when the banks fail to follow the signal that the Reserve Bank is sending, that’s keeping money out of the back pockets of ordinary Kiwis.”

    That’s Little encouraging people to get into debt. It also looks like the banks owe money to ‘people’ when using the phrase “keeping money out of the back pockets of ordinary Kiwis “. In Little’s doublespeak, the money owned by the bank rightfully belongs in ordinary people’s back pocket. Is this a primer for some sort of revolution?

    • Ross

      Alternatively, legislating to drop rates by 25 bps when the RBNZ cut the OCR also means savers are having money kept out of their pockets.

      • Hard1

        Pennies, Ross. You weren’t paying a mortgage under Muldoon like I was. 14% ended up over 20% interest on my first mortgage. Little is talking about icecream money.

        • Ross

          20% also reflected the capital appreciation on your property. But yes, I completely agree he’s picking the wrong fight on this one. Does he still think this is 2008 and every man and his dog wants a piece of the banker?

          • dennis

            If you buy and sell on the same market there is probably no profit unless you down grade which for most people is unlikely.

          • Ross

            I am not quite sure I understand your comment…

            But yes, in essence, rates are moved because of the liquidity and relative value of money. E.g. if your property increases by 20%, and you sell that to buy another property that’s increase by 20%, but it’s cost you 20% to fund that in the mean time, then yes in essence the net change is your real estate agent buys a new car.

          • dennis

            What I was getting at is that while your property appreciates there is no benefit to the owner unless they down grade. The council however enjoys the higher rate take. Most real estate agents don’t sell enough in one year to make it a high paying occupation.

          • Ross

            Of course there’s benefit. You own an appreciating asset. My real estate agent comment was in jest. Ask anyone who owned property in the 70s and 80s if owning property was a worthwhile investment, despite 20 percent mortgage rates. Rate increases were like many service increases, which also correlated with wage inflation.

      • SlightlyStrange

        That’s my take too. Keeping the mortgage rates up by .25% might also mean savings rates stay up that .25% as well.
        Because savings rates are ridiculously low at the moment. You don’t even make back inflation.

        • Ross

          Savings rates aren’t attractive, but inflation is globally benign and the biggest issue central banks face at the moment. The fact is central banks don’t want people sitting on cash at the moment, they want demand to drive inflation higher.

  • CheesyEarWax

    Banking legislations are never a vote winner, and are designed to strengthen the banking system. But Mugabe Little wants to change all that.

  • Radvad

    Two questions for Little:
    1. What is your definition of an ordinary kiwi?
    2. Do you have any policies for extraordinary kiwis?
    That should get the stammer going big time.

    • kayaker

      He’s just copying off Helen Clark – in the lead up to the election that she lost, she kept referring to “ordinary average hard-working Kiwis”. We always followed that by saying “who wants to be ordinary and average?”

    • Cadwallader

      Answers for the guidance of Little Angry:
      1 Anyone who doesn’t vote for Labour and Greens.
      2 No, we have no policies at all.

  • hsvmaloo

    Andy claims the Australian owned banks are “keeping money out of the back pockets of ordinary Kiwis” He won’t allow this to happen because in all reality he wants his party to pick pocket our back pockets.

  • Gravedodger

    Someone needs to waterboard little until he understands if oil was one dollar a barrel petrol would still be well over a dollar a litre from taxes transport, refining and of course freakin profits.

  • Isherman

    So in short, Little’s grand plan is to Stiff arm the banks (hitting profits) while at the same time somehow forcing them to unconditionally support failing dairy operations, to make sure none are allowed to fall over, all while preparing to going through some dramatic downturn which he keeps telling us is imminent. Gee, the way he’s going he’s going to need to stiff arm the whole Reserve Bank act…cant wait for that.

  • Keanne Lawrence

    Frightening stuff from a sorry little individual. The one thing Labour did was get their list members ranking closer to reality than they planned. Most likely done with marbles or scribbled names in a felt hat. They ranked him below Moroney which is a telling sign but then shock horror they got a pasting at the polls as well as Angry Andy failing dismally in his electorate. Then it came down to the next bus on the rank and he scraped in as they waited for the final count.
    The only consistency he displays is it is always the left foot in his mouth first perhaps since the right foot is the one constantly being shot. The silliest thing of all is that the diehard lefties are so gullible and think it will mean more in the back pocket. The truth, as unaccustomed as is of using it would mean very skinny back pockets when they have to pay for all their party’s promises. If he keeps this up even his reflection will be telling him just how dumb he is.

  • Diehard

    If we had interest rates in the high teens I could understand him making an issue of it but, aren’t we all currently enjoying record low mortgage rates? Dumber than dust.

  • Bryan

    well Andy here are facts not dreams my current loan, days after dropped .25 by the reserve bank my loan was dropped by my bank from 5.50 to 5.05 that’s .45 and you say they don’t pass it on . don’t remind me when i paid 22% on my housing loan under labour when they allowed banks to go from 7% to 10% to 14% to 18 then finally to 22% and did they stiff arm tackle them then NO

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