Enough is enough, review of overseas banks overdue

Friday 12 August 2016 - The Big Four Aussie banks are on track for another year of bumper profits at New Zealand’s expense, says New Zealand First Leader and Northland MP Rt Hon Winston Peters.

“In the financial year just ended they are likely to be taking out over $4 billion after tax in profits and dividends from the NZ economy. This on-going drain is a major contributor to New Zealand’s persistent balance of payments deficit.

“Over 90% of the banking sector in New Zealand is foreign owned, largely by the big four Australian owned banks (ANZ, BNZ, Westpac and ASB). The National government has done nothing to reduce New Zealand’s reliance on foreign-owned banks in its time in government.

“The Key Government has totally ignored the extent of foreign ownership of the New Zealand banking sector and the massive penalty this imposes on the economy. The Aussie owned banks are money-making machines – at New Zealand’s expense.

“This has allowed the enormous drain on our economy that this creates to go on unchecked. We have come to expect nothing else from a negligent and self-serving government that always puts the interests of foreign corporates ahead of the New Zealand national interest.

“Enough is enough!

“New Zealand First is calling for an independent review of the role of the overseas owned banks in New Zealand with the aim of identifying:

· the full costs of foreign ownership and its consequences· policies for expanding the NZ owned banking sector.

Background

“The dominant role of the four Aussie owned banks in the NZ banking system is a dubious distinction that is not shared by other OECD countries.

“If there has been one clear winner from New Zealand’s property boom it has been the Aussie owned banks. The big four Aussie-owned banks have been a prime beneficiary of the property boom- and their profits show it. They are now making combined profits after tax of over $4 billion annually – a massive drain on the economy to benefit overseas owned companies. (The four big Australian-owned banks made a combined profit of about $4.5 billion in the 2015 financial year.)

“Foreign ownership creates a massive hole in the hull of the New Zealand economy. The outflow of profits and dividends to the big Aussie owned banks is the single biggest drain in the balance of payments deficit.

“The Aussie banks are a central player in the property boom – having fed and profited handsomely from it. The boom has stoked a housing bubble in Auckland and that escalation is now spreading to other regions. Outside of Auckland 5 other regions are now hitting all time high for median house prices. Total mortgage lending in New Zealand has now reached $228 billion.

“In Australia the banking sector is facing serious and growing criticism. There are now widespread calls in Australia for a Royal Commission into the banking sector. Inevitably, a Royal Commission would be a prolonged and costly process. For that reason, NZ First is calling for a more narrowly focused and urgent review over, say, a six months timeframe conducted by a qualified panel of three experts.

Focus of the Review

“The Aussie-owned banks have a stranglehold over the NZ banking sector. The core of the review would be on how to redress the gross imbalance in the banking system by building a much bigger NZ-owned banking sector.

“The review would consider what is blocking a much bigger role for the NZ owned banking sector – and how that can best beaddressed.

“Among other issues to be covered by the review will be:

Competition

“How much actual competition does the domination of the NZ banking sector by the Aussie banks provide?

“For example, while the interest paid on bank deposits is at an historic low, interest rates on credit cards remain at rapacious rates. Currently ANZ has a Visa Credit Card interest rate of 20.95% per annum on purchases (22.95% p.a. on cash advances). What is really behind these exorbitant levels?“New Zealand First says the big credit card companies have been ripping off Kiwi consumers and businesses through excessive credit card interchange fees about which the government is doing nothing. An investigation of credit card interchange fees is overdue.

Taxation“The review would provide a systematic assessment of existing tax arrangements applying to foreign owned banks and their borrowing practices.

“One area that would get long overdue serious scrutiny would be the Approved Issuer Levy tax (AIL) regime.

“When New Zealanders lend money to banks they are subject to withholding tax on any interest they earn. When the banks borrow overseas from non-residents then the Approved Issuer Levy (AIL) system provides an alternative to Non-resident Withholding Tax (NRWT).

“As a non-resident of New Zealand for tax purposes a person may apply to the IRD and elect to have AIL applied to the interest they receive. This will generally mean they will pay a levy of 2% rather than NRWT of 10% or 15%.

“The Approved Issuer Levy is not small change; it applies to hundreds of millions of dollars of bank borrowing.

Government Banking Services

“In 2015, following a tender process, the government confirmed that Westpac would continue to have the lucrative contract it has had since 1989 to provide the bulk of the government’s banking services. However, there is no inherent reason why NZ cannot provide for a much larger proportion of its banking sector – as it once did. Since its inception, KiwiBank has been a success. Kiwis can run a big bank. The time has come to have a plan and set some targets for New Zealand ownership of the banking sector.

Not a Regulatory Review

“The review New Zealand First proposes is not intended to replace the existing regulatory role of the Reserve Bank. For that reason it will not cover the prudential, security or resilience capacity of the banking system that the Reserve Bank monitors.

“A special IMF Review is due to report early in 2017 and that review will focus on resilience and the ability of NZ financial system to withstand shocks.

Summary

“New Zealand First believes New Zealand needs a strong, competitive and profitable banking sector – but to the greatest possible extent the banking sector should be in New Zealand, not foreign ownership.

“The purpose of government is not just to enrich foreign corporates. New Zealand First says the government’s inaction on the dominance of overseas-owned banks in the New Zealand banking system is a total abdication of responsibility.

“For our government to be just sitting on its hands while profits pour out of the country to foreign-owned banks is just not good enough.

“New Zealand has been a cash cow feeding the profits of Aussie-owned banks for far too long.

“It’s time to stand up for New Zealand’s economic sovereignty!

“Action to protect New Zealand’s national interests in the banking sector is imperative and the first step is a comprehensive review of the role of overseas-owned banks as New Zealand First proposes,” says Mr Peters.

Chinese control of our meat industry

Friday 12 August 2016 - New Zealand First says Silver Fern Farms’ shareholders will regret selling majority control of their co-op to the Chinese but expects the Overseas Investment Office will greenlight it at breakneck speed.

“Today was the owners of Silver Fern Farms last chance to preserve one of New Zealand’s great assets for present and future farmers,” Mr Peters says.

“Last year, the suits and directors at Silver Fern Farms (SFF) said the co-op was in crisis and faced receivership or liquidation. They now say last year was a good year, so this 180 degree about-turn condemns them out of their own mouths.

“Then again the directors, the very people who got the co-op into this mess, carved out a $7m slush fund for themselves - the purpose of which shareholders both didn’t know and more pointedly, didn’t want to know about.

“Only so much can be done for an industry which is voluntarily following infant formula into foreign control. I guess it proves ‘you can take a horse to water but you cannot make it think’.

“As parts of the added value operation start to close around the country and plans are hatched to shift value-add processing abroad, large sections of provincial New Zealand will see that they were simply sold down the drain.

“Typically, not one member of the National Party caucus had the guts to raise a finger in protest. Then again most of them wouldn’t know a cow from a bull.

“If the Chinese do complete this deal, it will mean a majority of New Zealand’s red meat industry will be in foreign hands. Most of ANZCO is Japanese, while foreigners have big stakes in Blue Sky, United Beef Packers and Lean Meats.

“That doesn’t count the debacle that was Chinese-owned Prime Range Meats. It really does not bode well for the remaining Kiwi owned processors because foreigners will control the price on the hook in New Zealand. They’ll make up the difference in value-add offshore and those offshore profits will not be going to New Zealand farmers.

“It is bizarre shareholders would do this given all the heavying of Zespri and Fonterra in retaliation for complaints over Chinese steel being dumped here. Chinese control will also cause massive problems in a highly sensitive and lucrative United States beef market.

“How is it that foreigners can see value in what we produce, but the producers and this government can’t? Meat progressively joins forestry and increasingly dairying to condemn farmers as price takers at the bottom of the heap.

“As for the stock transportation arrangements established within SFF without any proper disclosure to shareholders, it will become a matter for the Serious Fraud Office,” says Mr Peters.

NZ first bringing light on true extent of foreign ownership

Thursday 11 August 2016 - New Zealand will no longer be in the dark over how much New Zealand land and housing is in foreign hands thanks to a new bill from New Zealand First.

“Foreign ownership of New Zealand properties, businesses and houses poses major risks to our economy and sovereignty and today’s drawing of the Land Transfer (Foreign Ownership of Land Register) Amendment Bill in Parliament is the first step to address them,” says New Zealand First Leader and MP for Northland Rt Hon Winston Peters.

“It is well past time for New Zealand to have a comprehensive database on the extent of foreign ownership of land and property.

“Currently, government has no plan to stop the offshore takeover of New Zealand’s most strategic asset, the rural sector – New Zealand First does.

“Our Bill will ensure a comprehensive register of all foreign-owned New Zealand land is compiled and made available to the general public and policy makers.

“The register will apply to all dealings in ‘land’ as that term is defined in section 2 of the Land Transfer Act 1952 and will provide transparency for concerned New Zealanders.

“With the huge increase of foreign ownership and flood of immigrants into New Zealand, New Zealand First believes this bill is urgently needed,” says Mr Peters.

“After all, what government interested in defending the rights of New Zealanders would want to continue on in blissful ignorance of who owns land and houses in this country.”