Speech: Local Government Borrowing Bill

TE URUROA FLAVELL (Māori Party—Waiariki)

Tuesday, 17 May 2011
First Reading

Tēnā koe, Mr Assistant Speaker. Kia ora tātou katoa. As others have said, the purpose of the Local Government Borrowing Bill is to allow for more cost-effective borrowing by local authorities. It allows for the establishment of a bond bank or funding agency to allow local authorities to borrow money from overseas at a cheaper rate to fulfil their purpose. To cut to the chase, that is pretty much what it is all about. But I would like to offer some other ideas that maybe need some consideration in order for the Māori Party to consider going with this bill into the future. It seems to us that there is something wrong with the picture.

Just last week the Prime Minister announced that the Government intends to reduce the amount of money it has to borrow from overseas to put into KiwiSaver, and increase the amount of genuine savings from the private sector—that is what he said. It was couched in the context that Budget 2011 will be responsible and measured. What are we to think, then, with this bill, which is promoting a local government - owned bond bank, and hoping to attract investment from overseas? The question would be whether that is responsible and whether it is measured. Another part of the purpose of allowing for the most cost-effective borrowing by local councils is the provision allowing for the Auckland Council to borrow in foreign currency.

I was interested in the kōrero given by Sue Kedgley about some of the concerns—perhaps not all of the ones that she set out but certainly some—that she set out. From what we can see, the whole aim of the bill is to remove a range of regulatory impediments to permit the funding agency to borrow money and re-lend to local authorities as if the funding agency was a local authority. As Sue Kedgley outlined, there are some concerns in respect of that.

One of the things that has concerned us is Australian-owned trading banks using New Zealanders as a cash cow to line the pockets of Australian shareholders. This is where we would like to offer some ideas about Māori investment—indigenous investment, if you like. Why do we not turn to our own natural partner, indigenous people—Māori? We have always thought that Māori have a large collective asset base and could set up their own bank.

People like Mark Solomon have certainly promoted this idea, and it is supported by groups such as the Iwi Leaders Forum. My colleague Dr Sharples recently held a Māori economic summit conference, which revealed that the asset base of the 2010 Māori economy was estimated at $36.9 million. Would it not be something if the Māori economy could be used to re-circulate profits and benefits into the communities that generate them, rather than to have them siphoned off overseas like this bill suggests?

The idea of a community development bank that would provide low-interest loans to families and small-business operators has always been a part of Māori Party policy. The community development bank would make small loans without collateral, no charges, low interest, but higher levels of support and controls. The community bank would lend to those at the lower end of the income and asset scale to help them improve their position. The bank would create access to credit on reasonable terms, enabling the poor to build on their existing skills, and to earn a better income. Ours is not the first plan for a Māori bank. Rua Kēnana set one up, and T W Rātana had a bank as well. In fact, many Māori communities have relied on places like credit unions since the Post Office Bank and the big banks closed in rural areas.

This policy also draws on ideas about collective economic development such as the Grameen Bank in Bangladesh and the Mondragon Cooperative Corporation in Basque country. The idea is that each lender is sure to repay their loan, not because the bank will confiscate their property if they do not but because they know other borrowers depend on them.

Sadly, however, this bill is not about borrowing against the Māori economy, or even providing tāngata whenua with an opportunity to contribute. We suggest that it is just another means of doing more of the same but by a different name—reverting to borrowing overseas without even considering the contradictions. We will not support the bill at its first reading, but, having said that, we will be listening keenly to what Māori have to say at the select committee in order to guide us in our subsequent votes.

ENDS

© Scoop Media