Gog.org.nz

There’s an American sporting term called “putting English on the ball”. It means applying a twist or spin to the object, and probably derives from a sly dig at the perfidious Poms; but it also serves well to describe Finance Minister Bill English’s advice to consumers on how to “beat the banks.” He advises borrowers to put the hard word on their banks by perhaps fixing shorter terms – such as six months – on their loans, or even threatening to move their accounts. Yeah, right. No doubt Bill English is mortgage-free, but he could have sent out one of his cash-strapped public servants to try the tactic on a mortgagor before shooting his mouth off. Despite calls from politicians and Reserve Bank Governor Dr Alan Bollard, banks have refused to lower floating rates, which vary between 5.99 percent at Kiwibank and up to 6.49 percent for standard mortgages at the big four Australian-owned banks.

And for a couple of good reasons.

The first is that much of the money that has until recently satisfied our insatiable appetite for credit comes from overseas, and there are none so greedy as foreigners, especially when they realise just how fragile is our sub-standard economy. In this case, it’s a sellers’ market and the banks either stump up or they don’t get that foreign money to lend to us. Plus, the bankers are naturally worried about defaults from customers who – now that their houses are worth less than before – might not be able to pay their way. We live in the shaky isles, but canny foreigners know that – when it comes to money – we’re dodgy.

The second is local savers, many of whom are retired and may depend, to some extent, on their interest. They are mightily distressed by the dramatic slump in their income. Should they, too, put the hard word on their banks, or threaten to shift accounts? Clearly, many of them already have, and the banks could be ever-so-slightly concerned that those deposits might move on to riskier bond issues or the purchase of gold. But in reality, for savers, there is very little safe room for manoeuvre in our small financial marketplace.


Mr English has a constituency that contains far more borrowers than savers, and he must maintain popularity with those voters who are in hock to the so-called usurers. But in doing so, he ignores the savers – and isn’t it a constant complaint from well-insulated politicians that ordinary New Zealanders do not save enough? Under current conditions, there is even less incentive to put money away for a rainy day. It’s already pouring down.

There is a whiff of irrational Muldoonism in the futile threats emitted by English and Green Party co-leader Metiria Turei (neither of whom appear to have any qualifications in high finance). Turei calls for an inquiry into mortgage and credit card interest rates, and the bonus payments made to bank chief executives, the latter suggestion being merely an impotent display of malice in the face of naked greed. Green co-leader Russel Norman’s latest protestations about banks proved once again that his party’s financial theory is based on the belief that wealth comes out of thin air, some of it is briefly held by poor people, and then it’s whisked away by foreign bankers. Perhaps that’s the true origin of “Green with envy”.

An inquiry into the banks would merely waste more time and even more taxpayers’ money. It would come to nothing, even though everyone knows that credit card rates are extortionate and could easily be controlled, if there were the political will. There is a parallel here with low-life loan sharks, about whom successive governments have also done nothing.

For English (who is supposed to be a champion of free markets and capitalism) to rattle his cardboard sabre of State intervention by shaming bankers, is simply appalling. We all know that bankers are descended from robbers, but there’s little we can do about their bad behaviour when most customers have their backs to the wall. English knows that we have a small and vulnerable economy, where consumer pressure counts for almost nothing and many people rely on loans. Against the banks, they are stuffed.


So eat that useless claptrap, Bill, and stop talking nonsense about how powerless folk could somehow strong-arm such powerful interests. Instead, bend your mind to the constant but invisible drain of billions from our economy, thanks to the exported profits to those Australian banks’ shareholders. That is something you could actually do something to curb.

But of course, you won’t.

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