New Zealand banking inquiry scuppered

To understand these cartoons*, you have to know something about the background. The following article by Adam Bennett, headlined Cunliffe hits out over bank inquiry, appeared in the July 2, 2009, edition of The New Zealand Herald:

National, Maori Party and Act members of Parliament's finance and expenditure committee voted against an inquiry into the margins banks are charging on variable rate mortgages and short-term business lending, Labour's David Cunliffe says.

Chairman and National MP Craig Foss said following a briefing from the Reserve Bank, the committee yesterday voted against either an inquiry into the relationship between the official cash rate and short-term interest rates or a wider investigation into "recent banking practices including a particular focus on retail interest-rate margins".

Labour Party finance spokesman Cunliffe told the Business Herald his party had favoured the broader inquiry covering margins on medium-term rates and credit-card borrowing as well as short-term rates.

However, on being informed by the Reserve Bank that it was reasonably happy with the medium-term picture, Labour's position was that it would have been satisfied with a narrower inquiry. That was an approach Government members had given "every indication" of supporting.

Not only does that mean there will be no further action on it from the committee, but it also in my view calls into question the integrity of the process.

"We went through an exploration, the prima facie case was established by the Reserve Bank, and Government members voted against it anyway.

"Thousands of New Zealand homeowners, businesses, farmers and exporters have every reason to ask why Parliament's watchdog on the economy is, by a majority vote, choosing to stay muzzled," Cunliffe said.

Federated Farmers' economics and commerce spokesman, Philip York, said his organisation had also gained the impression there was cross-party support for an inquiry and was now disappointed with the committee's decision.

Foss said yesterday's decision was made following "various briefings", including additional presentations from the Reserve Bank.

"I think the committee has a lot more information at hand to reach the conclusion by majority that it did today, but I'm sure all members will be looking forward to the next Financial Stability Report and the next Monetary Policy Statement from the RBNZ."

Foss also echoed Prime Minister John Key's comments last month that an inquiry was of limited value.

"At the end of the day an inquiry could only ever inquire. Could it affect and impact on actual interest rates or effect change? Obviously it can't."

Campaigns director Andrew Campbell of bank workers' union Finsec said the decision "shows the Government is either impotent or on the side of Australian-owned banks".

"The mere thought of the taxpayer having a look at how they set interest rates is seen as too much. That is a blow to transparency," he said.

Calls for an inquiry into short-term interest margins came after the RBNZ repeatedly said it was concerned these particular margins were too high given April's 50-basis-point OCR cut.

The committee picked up on this criticism and published a report calling on the banks to bear more of the burden of the recession.

It emerged the committee had also received advice from its special adviser warning that excessive bank margins may be worsening the effects of the recession.

Neither BNZ bank, which has said it would welcome the chance to respond to the committee, nor Westpac, which said it saw no value in an inquiry, would comment yesterday.

* The first cartoon is from the Manawatu Standard of July 4, 2009, and the second cartoon is from the Manawatu Standard of July 8, 2009. The character on the right in the second cartoon, saying "No, no, no! I meant REAL solutions!", is Prime Minister John Key.

Madoff contemplates his fate

From the Manawatu Standard of July 1, 2009.

Jobs Summit 'incubation period' ends

During the past 12 years, whenever my company has failed to perform to its owners' expectations, it has invariably called for "ideas". But in the end, it has ignored most of these, and simply made more workers "redundant".

The above cartoon is from the Manawatu Standard of June 29, 2009.

McDonald's has the last laugh

Fast-food outlets seem to be among the few businesses prospering at the moment. Incidentally, what's the point of telling people they should eat more healthy food when they are increasingly unable to afford to buy it?

(The above cartoon is from the Manawatu Standard of June 26, 2009. Click on the cartoon to enlarge it.)

Reflections on the 'Jobs Summit'

I'm surprised that anyone still remembers the "Jobs Summit" of February 27, 2009. I had to go to the New Zealand Herald to refresh my memory. Here is part of what I found:

"A nine-day working fortnight, an investment fund worth hundreds of millions of dollars and – the surprise item – a cycleway the length of New Zealand are among the few specific ideas to emerge in a 21-point plan to counter the ailing economy.

"Prime Minister John Key will give priority to working on taxpayer-paid training subsidies for businesses that cut a working fortnight to nine days, with nine days' pay."

All these proposals seem to have been eclipsed by the continuing loss of jobs.

(The above cartoon is from the Manawatu Standard of June 25, 2009.)

No liftoff in economy

On June 11, the Reserve Bank kept the official cash rate at 2.50 per cent, prompting the above cartoon in the June 12 edition of the Manawatu Standard. Looking at movements in the rate during the past few years, it's hard to believe that, between July 2007 and June 2008 it was unchanged at 8.25 per cent.

Bank interest rates on the deposits of pensioners are still appallingly low, though they have recently moved to about 4.25 per cent. Someone in the office says, "I'm waiting for the suicide rate among pensioners to skyrocket".

Loaded Web directory a winner

"Here at Loaded Web we are trying to be the first purely geo-based blog directory. This means we want to organize blogs primarily by geography - where the blogger is from.

"So we have to grow slowly but surely - first [covering] countries we know a lot about (Canada, the US, the UK, Australia, and New Zealand) before we expand into other countries."

That's all the info I can find at Loaded Web, which promises to be a very useful directory.


Yellow Pages for Palmerston North, New Zealand