To The Front: Tackling The Aussie Banks

It was good to see Green Party co-leader Russell Norman have a go at the Australian banks in his speech at the Green Party annual conference over the weekend. He pointed to the drain they have on the economy and how they are milking New Zealanders.

Norman said the Green Party was serious about fixing our banking system so we are no longer "mortgage slaves to the Aussie banks". He was referring to the big four (Westpac, ANZ/National. ASB and BNZ) which despite their names (Auckland Savings Bank and Bank of New Zealand for example) are all wholly owned subsidiaries of Australian banks.

As we know New Zealanders have borrowed heavily in the last decades on the back of rising property prices. In part this has been due to a determined drive from the big banks to push debt onto New Zealanders. Frontline staff have had their performance measured by how much debt they can sell to bank customers. Those unable or unwilling to meet their bank's debt target face disciplinary action for poor performance. It doesn't matter how indebted a customer is - banking staff are told to get them further into hock and all in the pursuit of banking profits.

Plenty of commentators pointed to this abuse of bank customers but the banks thumbed their noses at any attempt to discourage their predatory practices. Naked self-interest drove their efforts to get us further into debt. It was only the financial crisis of 2008 which brought any sense of reality and by then so much damage had been done to customers and to the banks themselves that our government offered the big banks a deposit guarantee scheme for their customer deposits.

As well as damage to bank customers, the damage to the New Zealand economy is huge. In a typical year the big four Australian banks repatriate around two billion across to their parent companies in Australia. Together they are the single biggest contributor to our current account deficit which is a measure of the extent to which money generated by New Zealanders is stripped from this country by foreign investors.

It's no exaggeration to say we are four million kiwi sheep being farmed for profit by foreigners.

Norman also took a swipe at New Zealand politicians who keep our government accounts with Westpac. Despite having our own Kiwibank to do the job the government is happy for the benefits of managing New Zealand taxpayer money go to Australia. It's impossible to imagine the Australians returning the favour. That country has enough self-respect to go much further and prevent foreign ownership of their banks.

Abandoning Westpac is a no-brainer. It's possibly the worst of the big four. Certainly its CEO George Frazis is no example we should emulate. He is the highest paid executive in New Zealand (salary package of over $5 million) and recently received a pay increase of $45,000 per week (sic).

But somehow the faux nationalism of our corporate-sponsored national sports teams is a satisfactory replacement for any genuine national pride.

When Kiwibank was established Prime Minister Helen Clark said sniffily that she personally wouldn't be opening a Kiwibank account and was content with the service from the Australians. Likewise her government's accounts could stay with Westpac in perpetuity as far as she was concerned.

In the private sector there is no real difference in whether we are being farmed for profit by foreign capitalists or local capitalists. The local variety have no more loyalty to New Zealand than the foreign variety.

However there is value in a respectful national pride which comes from knowing that our local community assets are being managed by a local community-owned bank with the benefits flowing back to all of us. Having the government accounts managed by Kiwibank would be a small step in the right direction.

ENDS

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