The National Party wants an inquiry into competition within the retail banking sector after the Reserve Bank hit out at banks for hiking mortgage rates quicker than term deposits.
The Greens are on-board, saying it would support any form of inquiry to look at the “fundamental problems” in the sector.
Last month, when discussing the Reserve Bank’s most recent Monetary Policy Statement (MPS), Governor Adrian Orr said banks are pushing mortgage rates up quickly, but not following through at the same pace with interest rates on term deposits.
“What we are calling out across the banks is they have been very quick to increase their mortgage lending rates but deposit rates have lagged behind and bank margins are holding up.”
Speaking to Newsroom last week, Reserve Bank chief economist Paul Conway said he believed the banking sector “would be an appropriate focus for a market study should the Government wish to go there”.
National’s finance spokesperson Nicola Willis has now written to members of the Finance and Expenditure Select Committee asking for “a short, sharp inquiry into any potential competition issues in New Zealand’s retail banking sector”.
“This comes at a time when bank profitability is high, even as access to credit has become harder to obtain for some borrowers and many mortgage holders are feeling crushed by rapidly rising interest rates,” said Willis.
“National believes New Zealand bank customers deserve answers to questions about the adequacy of competition in our retail banking sector, why increases in interest rate rises for deposits have lagged rate rises for lending, and the impact of new regulations imposed by the Government.”
She wants the inquiry to have a “narrow” scope and “the hearing of evidence should be limited to a narrow group of stakeholders”.
“After considering this evidence the Select Committee could then make recommendations to Government about any next steps that may be warranted, including whether it sees merit in progressing the Reserve Bank’s suggestion of launching a market study,” Willis said.
“A formal Commerce Commission market study would take a long time and be extremely resource-intensive, creating a lucrative opportunity for lawyers and consultants, but highly unlikely to give New Zealanders any immediate answers to what are urgent questions.”
She’s got the backing of the Green Party, which is also pushing for an excess profit tax on banks.
“When the Reserve Bank and Monopoly Watch argue there’s something far more sinister under the hood of these banks, politicians of course should take a deeper look,” said Greens revenue spokesperson Chlöe Swarbrick.
“That’s why we also support an inquiry, of whatever form we can get across the line, to look at far more fundamental problems.
“The bottom line remains: the big banks are fleecing New Zealanders and should be taxed to help pay for the cyclone clean up. The only thing standing in the way is political willpower.”
Swarbrick said four Australian-owned banks made $180 a second in the past year – at the same time low-income Kiwis face a cost of living crisis.
“These banks make, on average, adjusted for income, 20 percent more from New Zealand customers than their Australian counterparts,” she said.
“There’s a clear and immediate solution and that’s an excess profits tax. A 10 percent tax on those excess billions would raise more than half a billion and go a very long way to supporting flood and cyclone-impacted New Zealanders.”
Commerce and Consumer Affairs Minister Dr Duncan Webb told Newsroom last week that no decisions have been made about the focus of the next market study.
Market studies have previously been conducted to investigate petrol prices, competition in the supermarket sector and building supplies.