Norman Russel William: Westpac New Zealand Bill — First Reading 
Norman Russel William: Westpac New Zealand Bill — First Reading 
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Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I stand on behalf of the Greens to speak on the Westpac New Zealand Bill which is a private bill coming before this House taking House time and using quite a lot of public money. The Greens will support this bill to go to select committee but we will not necessarily support it further until we look at it at the select committee. 
Westpac is of course one of the oligopoly players in the New Zealand banking system. One of the things that became very clear during the Multi-party Parliamentary Banking Inquiry was that we do not have a very competitive banking market in New Zealand aside from Kiwibank because the four pillars of the Australian banking system are present in New Zealand. They had a cosy arrangement at least before Kiwibank turned up where they did not compete on price. The market was divided up and they sought to maximise their profits which they sent back to Australia rather than competing on price. 
That arrangement was indicated in some of the evidence that was presented to us by Kiwibank at the inquiry. Those who do not really understand the banking sector—which I suspect includes a lot of the National members—do not realise that the banking sector worked through a cosy arrangement involving the big Australian banks and there was no serious competition on price. That is one of the problems we have in dealing with it. Having basically let the banking sector slip into overseas ownership we have this ongoing problem. 
We also have an issue with Westpac and the big Australian banks in respect of their tax avoidance activities. On 23 December last year the big Australian banks were forced to pay back nearly $2 billion to the New Zealand taxpayer—$2 billion in taxes that they had unlawfully avoided. They were caught out by the Inland Revenue Department and lost their cases in the New Zealand High Court. The banks fought their cases as far as they could and then on 23 December—which for those who do not know is 2 days before Christmas when most people are rather busy doing other things—the announcement was made that the banks had agreed to pay back the money or at least some of it. They did not pay back all the money they owed and they did not have any penalties unlike ordinary taxpayers. No one from Westpac or from the other banks was charged with anything. None the less they agreed to pay back a good chunk of the money that they had unlawfully avoided. 
We are pretty cynical about the behaviour of Westpac and the other banks having seen their behaviour in actively and unlawfully avoiding very very large amounts of tax that they owed the New Zealand taxpayer. We have a slightly cynical approach towards Westpac. 
Of course because we have these foreign-owned banks we also have the problem of huge amounts of profit being transferred back overseas. The biggest part of New Zealand’s current account deficit is in the investment income deficit and that is because of the profits that are going back to the overseas owners—largely Australian-based overseas owners—which adds significantly to the current account deficit in New Zealand. 
In fact in the middle of the global financial crisis the Australian banks were transferring more money out of New Zealand than they were actually making in profits. It is one of the untold stories of the crisis that while we were effectively subsidising the banks by providing a wholesale and retail guarantee for them they were shovelling money back across to their owners as fast as they could to make sure that the balance sheets back in Australia looked good. While the New Zealand taxpayers were subsidising the Australian banks basically because we gave them cheap insurance—and they would have been in trouble had the taxpayers not provided a wholesale and retail guarantee—the banks were shovelling money back to their owners. That provided a real problem for New Zealand. During the global financial crisis capital was extremely short so having the banks send the money back to Australia was a big problem. 
We also have an issue with Westpac and the other banks around the treatment of staff. Basically Westpac and other banks incentivise their staff to put people into debt. They have staff incentives where staff get paid bonuses if they can convince people to add more money on to their credit cards or to increase their credit card limits which just creates further debt problems for New Zealanders. 
The other issue specific to Westpac is around the master banking agreement. The last time the agreement was put out for open tender was when David Lange was Prime Minister; we have not had an open tender for that agreement since then. There have been some negotiations with Westpac but it is very difficult for us to be sure that we are getting a very good deal out of Westpac when there has been no open tender agreement. 
Finally of course there is the issue of pay. The chief executive officer of Westpac is given $5 million a year out of the pockets of Westpac customers. They ultimately have to pay that $5 million a year. I think it is grossly inequitable that someone in New Zealand is paid $5 million a year. I think that Westpac should look at itself.