The Green Party will strengthen Kiwibank so that it can compete with the big four foreign owned banks leading to better interest rates, the Green Party said today.
To achieve better bank interest rates, the Green Party will:
Inject a further $100 million of capital in Kiwibank to speed its expansion into commercial banking;
Allow Kiwibank to keep more of its profits to help it grow faster; and,
Give Kiwibank a clear public purpose to lead the market in passing on interest rate cuts.
“The Government has limited Kiwibank’s ability to scale up and compete, leaving the big foreign banks free to make unnecessarily large profits off Kiwis, rather than pass on recent interest rate cuts to us all,” said Green Party Co-Leader James Shaw.
“New Zealanders could be getting better interest rates no matter who they bank with if Kiwibank was allowed to properly compete with the big four Australian banks.
“Under our plan, a first home buyer in Auckland with a $500,000 mortgage could save $690 per year, meaning they pay off their mortgage earlier.
“Across the entire economy, these mortgage savings alone translate into savings of $312 million per year. That’s a massive saving for NZ Inc.”
New Zealand’s banking sector is amongst the most profitable in the developed world. Four foreign-owned banks control 87 percent of New Zealand’s banking industry — a situation ratings agency Standard & Poor's recently described as ‘oligopolistic’.
“Our plan will help Kiwibank lead a change in New Zealand banking, by giving it a clear public purpose that requires it to drive competition to generate better interest rates for New Zealanders,” said Mr Shaw.
“We’ll help Kiwibank to grow faster by injecting $100 million of capital into the bank and let it retain more of its profits.
“Strengthening Kiwibank so it can create competition in the banking sector is the smartest way to ensure all banks pass on the best interest rates to Kiwis.”