ACT leader David Seymour has slammed Green MP Chlöe Swarbrick’s call for a windfall tax on banks as they chalk up record profits, describing it as Donald Trump-esque.
The Government faces mounting pressure to investigate banking profits after last year, before tax, banks made $10.2 billion, which equates to roughly $1.1 million in profit every hour. Last year banks had the highest level of after-tax profits they’ve ever made.
The Reserve Bank of New Zealand (RBNZ) said banking would be an appropriate focus for a market study similar to what occurred for supermarkets.
National has called for a “short sharp” select committee inquiry and the Greens are on-board, saying it would support any form of inquiry to look at the “fundamental problems” in the sector.
Finance Minister Grant Robertson wasn’t impressed by National’s calls for a parliamentary select committee, saying it’s not the time for a “quick and dirty inquiry”, as “to do a proper investigation” it would need “to be undertaken in a way where it’s properly resourced and has the powers that it needs”.
But Seymour told AM on Thursday Robertson’s claims are “anti-democratic” and he was “astonished” by them.
“First of all, let me stick up for the six Labour MPs on the committee who Grant Robertson says aren’t up to it,” Seymour said.
“People elect a Parliament, that’s what a democracy is all about, Grant Robertson is saying the people you elected are not up to it and some consultants and bureaucrats somewhere will do a better job. The difference is that they are not accountable. They don’t have to go back to their community and actually talk to the people. So it’s very anti-democratic.”
Appearing alongside Seymour on AM, Swarbrick said the Greens would support any form of inquiry into the banks as they’re making massive profits when Kiwis are struggling.
“I think if we zoom out here and we look at the problems, the things we actually already do know, that we don’t need an inquiry to tell us is the banks made $6 billion in profits after tax at our current tax rates last year. That’s $180 a second,” Swarbrick said.
“At a point in time when so many New Zealanders are struggling. That’s why the Greens have said very clearly and very freely, that money actually hasn’t been made by virtue of any specific hard work, any novel enterprise, any of that investment that David’s been talking about and we’re lagging colossally behind the OECD when it comes to open banking.”
When questioned about the profits banks are making, Swarbrick said areas driving inflation need to be targeted.
A windfall tax is an extra levy imposed by a Government on a company. It targets firms that benefit from something they were not responsible for – in other words, a windfall. A number of European countries have imposed windfall taxes on banks and energy companies.
“What we’ve seen in the past has been targeting specific industries and particularly those industries that are driving inflation. Here in Aotearoa, that could look like the grocery sector, energy and those who a providing building supplies,” she said.
Seymour was quick to say Swarbrick was “going after everyone”.
“Well, actually, you’ll see David, that in very conservative governments, the likes of the Tories in the UK, they’ve also just instituted a windfall tax on their energy retailers,” she said.
But Seymour was quick to hit out at the idea.
“This is like Donald Trump. Populism, go after people. It all sounds good, but when you dig into the details, it’s destructive.”
Swarbrick said the status quo in New Zealand is “deeply unfair” and believes banks should be “paying their way and contributing” to New Zealand. But Seymour was quick to slam that idea saying the costs would just be passed onto the customers, something the International Monetary Fund has warned about.
“Every single dollar that is being taxed will be paid for by their customers. That’s where all of a bank’s money ultimately comes from. So more taxes on banks and more risk that random taxes will be introduced if they do too well is only going to make the cost of living worse,” Seymour said.
“We’re here to make life more affordable, we’re here to take away barriers and increase competition. If Chloe wants to threaten banks with extra taxes … therefore, they’re going to actually charge people even more.”
Watch the full interview with David Seymour and Chlöe Swarbrick in the video above.