Locke Keith: Reserve Bank of New Zealand Amendment Bill Racing Amendment Bill — Third Readings 
Locke Keith: Reserve Bank of New Zealand Amendment Bill Racing Amendment Bill — Third Readings 
[Volume:634;Page:6104] 
KEITH LOCKE (Green) 
: 
 The Green Party supports this legislation. In terms of banking supervision we support cooperation between Australia and New Zealand. Clearly the fates of the two countries are tied particularly as the four main trading banks in New Zealand are Australian-owned. The ANZ Westpac the BNZ and the ASB are all Australian-owned. They have a total market value of $36.4 billion which is equal in value to the assets of the 12 top listed companies in New Zealand and in 2005 they had net earnings of $2.63 billion. The impact on the New Zealand economy is huge so it is important to make sure that the banking sector is healthy. 
In previous legislation and arrangements we made sure there was relative independence of the New Zealand subsidies of those four banks. This was to ensure that if something happened in Australia and one of the banks fell over because of Australian factors ordinary New Zealand depositors would not suffer. Although we are a long way from any Australian bank falling over this morning’s  
Dominion Post  
has an interesting headline that reads: “Drought debts loom over banks”. The article explains that the long drought in Australia is having a huge impact on Australia’s rural economy and that many farmers will not be able to repay their loans. The drought is having an effect on the whole rural services sector and that also impacts on the banks. The situation could easily get worse particularly with global warming. One of the predictions in relation to global warming is that the east coast of Australia will become even drier and perhaps put into doubt the viability of more and more farms in Australia. Economies go through difficult times in some sectors and farming is one of them. Of course at the moment the situation is counterbalanced by the minerals boom in Australia which I suppose is helping the banks. But we do not want our economy to be hostage to the Australian economy in terms of its up and downs and even of the failure of one or more of its banks in the future. 
The measures we are taking here today to introduce more cooperation in the banking sector are good although I think we also have to look at the other end of things and try to reduce our dependence on Australia in the area of banking. It is good to see Kiwibank moving ahead somewhat. New Zealand has only two independent banks: the Taranaki savings bank and Kiwibank. It is important we assist them because one of the problems with the banking sector being largely Australian-owned is that it contributes very badly to our current account deficit. When net earnings from the Australian banks amount to $2.63 billion that translates into a big outflow in dividends each year and contributes significantly to our current account deficit. 
There is another side to the internationalisation of money flows and we are feeling it particularly in the housing sector. Interest rates in the finance sector and the banking sector differ so much internationally that we have the phenomenon of Japanese housewives as they are often described investing heavily in New Zealand bonds which are higher earning than the bonds they can get in Japan. So there has been a huge inflow into the banking sector often via the money controlled by the Australian banks. That money is then invested heavily in housing and that has put up the price of houses substantially particularly in the absence of any capital gains tax in New Zealand—on investment homes not personal homes. The lack of a capital gains tax has increased that phenomenon often via the Australian banks and I think this is to our detriment. It makes it much more difficult for young New Zealanders in particular to buy a home or to get within reach of buying a home. This situation has also put many families who do buy a home in a huge mortgage-debt situation and the situation could become even worse for them if there is as a lot of real estate people predict a crash in the housing market as has occurred in some other Western housing sectors over the last year or so. Such a crash in New Zealand has been delayed but we could be in for a bit of thump in that area and that could affect the banking sector quite significantly as well. 
For all of those reasons I think it is important to have cooperation between Australia and New Zealand in the banking sector and to make the best job of it we can. With those few comments the Greens will be supporting this legislation.