The Productive Economy Council has welcomed the announcement of an inquiry into bank profits by Labour, the Greens and the Progressives, but cautions that unless its terms of reference are broad enough, it may not get to the root of the problems the country faces with regards to banking and monetary policy.
“NZMEA Chief Executive John Walley says, “Proper debate on bank margins will be helpful because, as Alan Bollard has already noted, short term margins are too high and generally margins have increased since the financial crisis. However, the inquiry needs to go further than this and look at why New Zealand’s interest rates are consistently higher than the rates of many of our competitors and how this is affecting our economic performance.”
“In a survey carried out by the New Zealand Manufacturers and Exporters Association (NZMEA), 86 percent of respondents supported an inquiry into competition in our banking sector, the role of Kiwibank, the factors that negatively impact the real economy and the volatility of our currency. Since the start of the credit crisis 63 percent of respondents said that their bank had increased the margins they pay on credit facilities, 55 percent reported that their bank had increased charges associated with changing credit facilities and 41 percent said they were thinking about changing banks.”
The PEC is delighted to see Federated Farmers requesting more transparency with bank costs, joining the diverse group of organisations calling for a re-evaluation of the makeup of bank operating profits in the current climate.
The proposed four day working week is a prudent step but not enough for an export led economic recovery according to the head of the Productive Economy Council, Selwyn Pellett.
“A four day week may ease the tax burden of supporting an increasingly high number of unemployed but it won’t change our declining position within the OECD or help our exports become more competitive. We need more bold initiatives to get our best and brightest motivated to be more productive and create long term jobs in the process,” he says. “An export led recovery is New Zealand’s best chance for an early turn around and reducing the number of working days on its own is not going to get us there. Trade barriers will soon be the norm around the world and if our exports don’t represent demonstrable value to end users then our products won’t be on foreign shelves and an export lead recovery won’t be realised.