Time to crack down on the Aussie banks

The Green Party has called on the Government to broker a better deal for Kiwi businesses, workers and home-owners from the big Australian-owned banks following a critical report from the Finance and Expenditure Committee yesterday.

The Finance and Expenditure Committee report confirmed that the Reserve Bank governor could not guarantee that the Australian banks were treating New Zealand fairly.

“Australian-owned banks are not giving New Zealanders a fair go - however, the Government has plenty of leverage because it has underwritten these banks with its deposit and wholesale guarantee schemes”, said Green Party Co-Leader Dr Russel Norman.

“It’s high time for the Government to use the strong leverage it has over the Aussie banks to require them to behave in the best interests of New Zealand.

“The Aussie banks must be required to make credit available to New Zealand businesses on the same terms as they do for equivalent Australian businesses.

“They should also protect the jobs of New Zealand workers, and give home-owners a break by reducing their long-term fixed mortgage rates if they want New Zealand taxpayers to keep underwriting them.”

The Finance and Expenditure Committee’s Financial Review of the Reserve Bank released yesterday stated its concern that: “We sought assurance from the governor that the Australasian banks treat New Zealand corporations and Australian corporations of similar financial strengths identically, and avoid any perception of New Zealand being treated as a marginal market. The governor told us that he could not give us such an assurance.”

The Committee also stated that: “New Zealand businesses find it increasingly difficult to access credit from the major Australian-owned banks, where lending decisions are reportedly now being made by offshore bank parties rather than onshore relationship managers.”

Dr Norman continued, “This follows on the heels of the big Aussie banks laying-off New Zealand workers. According to Finsec, the ANZ-National bank cut around 200 management jobs last year and downsized branch staffing by around 190 roles through voluntary redundancy. It also announced that 500 jobs would be sent to India, and despite promises to redeploy all affected staff, by the end of January this year only 58 staff have been redeployed into other work.”

“The Finance and Expenditure Committee’s concerns also follow the very unusual step of the Governor of the Reserve Bank in issuing a warning to the banks that the level of their long-term fixed mortgage rates are ‘unwarranted and inconsistent with the monetary policy outlook’.”

Dr Norman concluded, “In a recession during which New Zealand taxpayers are underwriting the Aussie banks, the Government must use its leverage over these banks to make them behave responsibly on lending, layoffs and long-term fixed interest rates.