Tell ‘im ‘e’s dreamin’

Someone needs to tell James Shaw that Kiwibank would need a whole lot more capital than $100 million to allow it to compete with the Aussie banks.

Kiwibank would get a $100 million capital injection to turbo-charge its expansion and create more competition in the banking sector, under Green Party policy.

In announcing the policy today, co-leader James Shaw said a lack of competition among the big Australian-owned banks meant Kiwis were missing out on lower mortgage rates.

“Beefing up” Kiwibank would lead to lower interest rates and could save homeowners hundreds of dollars, Mr Shaw said.

“Under our plan, a first-home buyer in Auckland with a $500,000 mortgage could save $690 a year, meaning they pay off their mortgage earlier.”  

Across the entire economy, these mortgage savings alone translate into savings of $312 million a year.

That’s a massive saving for NZ Inc.

“We’ll help Kiwibank to grow faster by injecting $100 million of capital into the bank and let it retain more of its profits.”

What a load of rubbish. There is not guarantee that chucking $100 million into Kiwibank would do anything of the sort.

In fact all that allows Kiwibank to do is fund 100 million dollar houses in Auckland.

Maybe if he was promising to capitalise Kiwibank with a billion dollars he might be believed…then mocked for such an outrageous promise.

Yet again the Greens and James Shaw prove how inept and as a consequence of the that ineptness just how dangerous they are.

Daryll Kerrigan needs to call James Shaw and tell ‘im ‘e’s dreamin’.

 

– NZ Herald

 


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  • Time For Accountability

    James –

    I would like you opinion on subsidising other small banks such as SBS, heartland and TSB as examples of smaller banks.

    Surely subsidising Kiwi bank alone will harm other small banks.

    We should not forget the origins of Kiwibank – it was a bribe by Labour to buy the electoral favours of Jim Anderton.

  • jaundiced

    So, you can make a business more competitive by giving them millions of dollars of taxpayer money.
    That’s brilliant – if we nationalise all businesses we will be a thriving, competitive economy.
    According to Gareth Morgan, it works well for North Korea.

  • Ruahine

    I bank with the TSB. That is the Taranaki Savings Bank. Mr Little why are you not giving my bank and my fellow depositors and lenders a $100000000? Is it because the people of New Plymouth would not vote for you? If it is good enough for the Greens leader to be giving away money to Kiwibank surely you can match it.

  • Second time around

    Kiwibank are not in farm lending and even with another $100 million of play money would still not want to go down that route or into any serious funding of start up companies. Shaw does not understand banking, but, because he once worked in PWC is the best the Greens have got.

  • Graeme

    I do hope that Shaw insists that when Kiwibank, (or the old Post Office Savings Bank,) drops the mortgage rates for borrowers, it also raises the term deposit rates for pensioners after it gets the big Government propup

  • cows4me

    Stuff Shaw, I don’t bank with Kiwibank so why should I have my taxes given to this bank as a financial bonus. If Kiwibank are the bees knees they should offer shares, oh that’s right if you are a socialist institution you play by different rules.

  • Annoyed

    Ok James, you want to make Kiwibank more competitive with the Aussie banks, here’s what you do:

    Step One:
    You strip it away from NZ Post. Set it up as a solitary business with its own assets, liabilities & profitabilities. Make it saleable. This isn’t to sell it but, making it a good investment will enable Kiwibank to borrow more money more cheaply.

    Step Two:
    Borrow more money, more cheaply. This will give Kiwibank the ability to enter more lending markets and be more competitive in those markets. It will also massively increase its profits, allowing it to reinvest those profits in further lending.

    That’s it. Not too hard really. Yes, I realise that this is what is happening under National. I guess it’s a good idea to have a bunch of guys with corporate experience running a bank.Who would have thought?

  • Day Day

    In what way is Shaw qualified to make these type of determinations? He has to make rational case for the public to be satisfied.

  • Toby

    This has very little todo with Kiwibank and a lot to do on the recent polling the greens have done that says that most people dislike banks. Labour is in on it as well.
    The thing is, if Banks are doing well, it means that the country is doing well.
    The left would sooner have the banks on the brink of falling over which of course would mean our economy was in dire straits.
    The one thing I would agree with him on is the need to decrease the incentive to lend on houses and increase the incentive for banks to lend to business to really drive real growth.
    However, you could do this with legislation (and not the kind angry andy is talking about) without directly intervening in the banking sector.
    You intervene in banking with public money at your own peril.

  • Alan Beresford B’Stard

    When you can get a mortgage for less than 5%, then I would say that’s pretty competitive. I just don’t see the need for this.
    When I bought my first property interest rates were over 20%, then Shaw would have a point.

  • Keanne Lawrence

    Shaw has been keeping a low profile for awhile it seems with the Material Girl left to give the people more amusement than things to muse over. Then up he pops with this gem to confirm he is worthy of his place on the sideboard with the other jug type half leader. A matching pair or are they really bed pans?
    Kiwibank was another of Labour’s paid for by the people for the people type brides to target retail banking in a bid to bring back a made over POSB. Still don’t know why their old bankbook was pink but that is irrelevant now.
    My reaction was the same as many. Only a $100 million? Or should we be adding “for now?” If Kiwibank want to be a real bank it is time to change the business model and not throw more taxpayers funds at them to prop them up. It does however again illustrate how so many of Labour’s short term bribes turn into long term problems. Could it be their pink tinted specs that make them so short sighted?

  • localnews

    If he was at the controls of the reserve bank, why wouldn’t he just alter the capital reserve requirements for that bank to give them an advantage. Alternatively he could give them an explicit government guarantee (which they all really have anyway)
    Neither of those would cost any money and achieve the same thing.
    Then James could waste the $100m on some other wacky scheme

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