Locke Keith: Westpac New Zealand Bill — Second Reading 
Locke Keith: Westpac New Zealand Bill — Second Reading 
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KEITH LOCKE (Green) 
: 
 The Green Party will be supporting this bill. We think that legislating the incorporation of Westpac is a move in the right direction. Westpac has been the hold-out bank that resisted pressures in that direction through 2004 arguing that it was very unlikely there would be a collapse of the bank so people did not need to get worried. But as Rodney Hide pointed out there are no guarantees against a bank failing. The problem is that if the bank had failed as a purely Australian bank New Zealanders might not have got anything out of it. There were no guarantees that what money there was would not have been paid to Australians before New Zealanders. 
We have had a history of failure of financial institutions in New Zealand including banks. The BNZ in the 1980s was a prime case from the banking system. Of course systems have been improved since then in terms of the monitoring of banks and speakers today have referred to some of the ways in which the newly incorporated Westpac bank will be monitored. 
I think there is some problem for New Zealand society in the way that all our banks except for the TSB Bank have been taken over by foreign banks particularly Australian banks. It is a large part of our bigger problem of having $80 billion of foreign-owned assets in New Zealand whereas New Zealanders own only $20 billion in assets overseas. That difference in terms of dividend transfers is a major contributor to our huge current account deficit of $14.5 billion. As Hone Harawira just pointed out the profit of the Westpac bank is $708 million and a lot of that profit is being sent back to Australia along with profit from all the other banking institutions that are Australian owned. It is a big problem as I say in our current account deficit. 
Australian-owned banks including Westpac have not always played very fair in New Zealand society. There was of course a big battle with the Commerce Commission over currency transaction fees relating to credit cards. It is interesting to note that Westpac was the worst offender in that respect. As of 2004 it had four types of credit card and the currency conversion rates ranged from 2.95 percent to 3.05 percent whereas the New Zealand-owned bank the TSB Bank had the lowest rate of 1.75 percent. The banks that offended in that way were forced by the Commerce Commission to apologise to their customers. The banks’ argument that the currency conversion fee could be seen just as part of the exchange rate was not accepted. So we are not looking at owners who have New Zealanders’ interests foremost in that respect. 
Another problem for New Zealand society is the way in which the banking system has operated particularly in the absence of any capital gains tax on housing—not of course in terms of one’s own home but in terms of investment housing beyond one’s own home. In respect of that investment money has really poured in from Australia. I think there has been about $30 billion of foreign-owned money pouring in over the last 2½ years and that is essentially equivalent to the extra amount that has gone into housing with the value of housing loans over the last 8 years going from $55 billion to $130 billion. That is a huge burden on this economy and when we pay our mortgages a lot of that money does disappear back to Australia and a lot of it does disappear back to Westpac. 
So that is a problem we have to bear in mind and we have to keep a very close scrutiny on those Australian-owned banks. It is good that they will now be locally incorporated and that we will be able to apply proper supervision to them.