The Green Party has called on the Government to raise corporate taxes — including on banks — to address the rising cost of living on ordinary New Zealanders.
It comes as the Government announced a market study into banking competitiveness today. The study, which will be conducted by the Commerce Commission, is expected to deliver its findings in August next year.
Banks say the sector already is competitive but it will engage with the study "constructively". An association group says its profits "look big" because the businesses are big.
Green Party finance spokesperson Julie Anne Genter said while her party welcomed the study, it urged the Government to "act now and raise corporate taxes".
"Banks have made eye watering record profits recently due entirely to circumstances out of their control, while low income people in Aotearoa spend more and more of their income on essentials."
Finance Minister Grant Robertson says it's "not about bank conduct and culture" but ensuring people get "the best deal possible". (Source: 1News)
She said a banking market study would be "useful" but wanted to see an income guarantee — a recently announced Green Party election policy — to lift every family out of poverty, and to pay for it with a "fairer tax system".
"It should not take an inquiry to realise that we have thousands of people struggling to cover the basics, while huge banks are able to line the back pockets of their wealthy shareholders.
"While we support this investigation, the Government does not need to wait a whole year to act.
"Banks are making billions of dollars that could be taxed fairly and the money used to help people to make ends meet."
Genter said raising the corporate tax rate would be a way for large corporations to "pay their fair share" and "make sure everyone in and out of work has the peace of mind that they can always cover life's essentials".
Banking association responds
New Zealand Banking Association chief executive Roger Beaumont said the inquiry would help ease any concerns in the community about competition and innovation in the banking industry.
"Our banks are transparent, and will engage constructively with the Commerce Commission.
"We have a competitive banking sector, with 16 retail banks operating in New Zealand and easy bank switching."
He said members were "open to the opportunity to discuss the contribution banks make to support the New Zealand economy, households, and businesses".
He said banks were "highly regulated, well capitalised, and profitable".
"That helps makes them resilient, and with recent overseas bank failures we’ve seen why that’s important."
"In recent years we have seen bank teams tied up with significant regulatory requirements, limiting the ability to focus on new product development.
"We hope the Commerce Commission will look closely at the regulatory environment as part of its study."
He said the Government and the industry were progressing on work on open banking.
"This will allow customers to securely share their banking information with other service providers to access other products and services that suit them. This will help make banking even more competitive."
Beaumont said New Zealanders were "well-served" by their banks.
"We saw [banks] step up quickly in the North Island flooding and cyclone events earlier this year, making $1.4 billion available in low-cost lending, and donating $6.5 million to disaster relief funds.
"They also provided loan repayment relief and access to term deposits, and worked closely with government agencies to get cash to impacted areas."
He said profits "look big" because banks were "among our biggest businesses".
"Last year banks made a net profit of $7.18 billion. They also spent $9.1 billion running their businesses and paying tax here.
"That's a net positive contribution of $1.92 billion.
"Providing a return to shareholders helps maintain their investment in New Zealand, and ultimately some KiwiSaver funds share in those returns."
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