8 Nov 2022

National urges govt to probe monetary policy over banks' huge profits

5:51 am on 8 November 2022
ASB, Westpac, BNZ and ANZ bank signs.

Bank earnings have surged, with Westpac reporting its annual profit hit just over $1 billion. Photo: RNZ / 123rf

The government is being told if it is worried about banks' mega profits it should take action and investigate.

Bank earnings have surged, with Westpac reporting its annual profit had risen by 12 percent, hitting just over $1 billion.

There are also predictions the banking sector could post an annual profit of $10 billion.

Prime Minister Jacinda Ardern called the profits wrong, as many New Zealanders struggled with the cost of living.

"What we're seeing currently, I don't think is justifiable," she said.

Ardern said those running banks should consider "whether or not they're serving their communities well."

The National Party was also uncomfortable with the whopping earnings.

Its finance spokesperson, Nicola Willis, wanted the government to investigate what's behind the earnings. Specifically, if the monetary policy decisions in response to Covid-19 that made it easier for people to borrow have played a part.

"It's more important than ever that New Zealanders understand exactly who profited from those decisions, and what impacts New Zealanders are feeling today as a result.

"The Prime Minister owes New Zealanders a duty. She must enquire to find out what is driving these profits, and whether or not her government's decisions have contributed to them," Willis said.

Ardern didn't think it was a problem for the government to solve.

"It is not unusual...for companies, or indeed other operators in our communities, to assess whether or not what they're doing, at any given time, is the right way from a corporate responsibility perspective to be behaving. It doesn't always take government intervention for that kind of self-reflection to occur.

"I think it's time the banks operating in New Zealand did that very thing."

The Green Party has been calling on the government to tax excess profits made by banks, supermarkets, and fuel companies.

Finance spokesperson Julie Anne Genter said it was a political choice.

"The question is, are the profits going to private investors and banks more important than investment in our most vulnerable people, and ensuring that our people have what they need to thrive?

"I think it's fair to ask the big corporates who have been creaming it to contribute to more of the public good. And especially right now."

ACT leader David Seymour wanted the attention to turn from the banks, back to the government.

"The government has increased its tax take by $10.5 billion in the last year, that's more than all of the big four banks' profits combined."

Ardern is defending that tax take, saying the government is using it to pay for things like the fuel subsidy and half-price public transport.

Despite those measures, the cost of living is still making life tough for many.

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