July 6, 2025 • 8 mins
ANZ’s chief executive ponders whether farmers are still paying too high a margin for their rural borrowing, the OCR announcement Wednesday, the prospect of a capital gains/wealth tax, and the age of eligibility (and means testing) for national super.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Joining us in the studio chief executive of the A
and Z Bank and Tonia Watson, I'm right and saying
that's the biggest bank in the country, right, you're right, yep,
and also the bank with the biggest rural portfolio, because
back in the day the Rural Bank combined or got
taken over by the National Bank, and then National Bank
(00:20):
and A and Z merge, So you've still got the
biggest rural book.
Speaker 2 (00:24):
We do indeed the biggest, biggest amount of lending and
by far the biggest number of customers.
Speaker 1 (00:28):
Yeah, okay, Now, last time we chatted, I asked you,
and I've been told by Tarnia Shall that I've got
to play nice today. But I did ask you whether
you not you personally the A and Z, but whether
the banks were ripping or not ripping the farmers off,
but perhaps profiteering by charging farmers and business people too
much of a margin, especially on their overdraft rates.
Speaker 2 (00:49):
So we I would say, no, we're absolutely not ripping
off our customers. We do charge a little bit more
to business and agricultural lending because they're more risky and
we're therefore have to hold higher capital. But the numbers
aren't We actually put them in our market study in
our submission to the Phonance and Expensive to Select Committee
in the month of December. We were farmers were paying
(01:12):
about fifty basis points on average more than a homeowner
for a fixed rate, and they were playing less for
a floating weight.
Speaker 1 (01:22):
Any relevance to the arguments that farmers should get a
borrowing rate the same as residential I mean most of
them have got equity in excess and when you won't
lend it to them, I mean most of them have
at least fifty percent equity, unlike house owners. So you
could always say the bank's always going to get their
pound of flesh even if they you know, if the
(01:44):
business goes bottom up.
Speaker 2 (01:46):
I guess the question i'd ask is do we want
the business to go bottom up and for us to
have this out to sell the farm? And I would
say absolutely no to that one. At farming in general,
the reason there is more risk, there's more capital held
from farming owners because they're more risky, and that's to
do with things like if you think about recent times
when we've had very low, lower milk prices, high on
(02:07):
farm inflation. That impacts every single farmer where the impacts,
you know, maybe the risk of disease, whereas householders housing
lending is much more individual to the particularly particular owner
of the house.
Speaker 1 (02:20):
We've got an OCR announcement on Wednesday. I see your
chief executive, chief executive, you're the chief executive. Maybe she
wants to be a Sharon Zolner, your chief economist. She's
picking a drop in the OCR. But some economists are disagreeing.
And I put it to you, Antonia, and you know
a lot more about banking than me and the economy.
But it would be a real negative if the OCR
(02:42):
is not dropped by twenty five basis points on Wednesday,
because the economy is just stalled at the moment.
Speaker 2 (02:47):
I think that the economy, there's just so much uncertainty
out there, and when you look at the picks for
the OCR, that's just another area that's uncertain and that
is not good for business. It's not good for farmers.
It'd be nice to see some of these green shoots
that have been coming through, just give people a little
bit more confidence to invest, to spend more. But no,
(03:08):
the uncertainty's extreme, I think.
Speaker 1 (03:10):
And I note that Sharon Zohna is picking another two
cuts if over and above what we might get on Wednesday,
she's picking the ocr to eventually drop to two point
five percent? Is she being ambitious that.
Speaker 2 (03:25):
I'm an accountant, not an economist, so I'm going to
leave the expertise to her and her colleagues. But I
know that, as I said, even that's an uncertain pick.
At the moment, she's probably got it more penciled in
than she did a couple of months ago.
Speaker 1 (03:37):
Let's touch on another couple of subjects, because you and
I have got a I guess full disclosure here. We
had dinner with some friends last night, so we were
chewing the fat over some of the issues of the
nation at the moment. So you came out a while
ago and you were a proponent for a capital gains tax.
She was swimming against the tide or webit there in
(04:00):
terms of I guess popular opinion. But we do need
in this country if we're not going to go broke,
we need to broaden the tax base, don't we.
Speaker 2 (04:10):
I wouldn't say I as a proponent. I would say
I was a reluctant if you look across the tax
base and the different ways that people earn. I was
a proponent for looking at that, taking a step back,
looking at that from a fairness point of view, and
I don't think it's just capital gains, it's retirement retirement income,
retirement savings is I think we could take a step
(04:32):
back and look at the whole thing because we have
got a significantly aging population and there's a ticking time
bomb sitting there.
Speaker 1 (04:38):
So capital gains would be a much better option than
a wealth tax.
Speaker 2 (04:42):
In my opinion. Yes, that's one of the reasons I
talked about it. Wealth taxes tend to be on on
unrealized earnings, so you'd have to you know, if you
had something like a farm, you'd have to do what
sell part of your farm to pay the portion for
the wealth tax. I think that would be pretty difficult.
Speaker 1 (04:58):
And last night over dinner, we were discussed because there
was about three or four boomers around the table. The
rest were Generation X. Now, see, the boomers, we're the
lucky generation. Even if a capital gains tax comes in,
We've locked in all of our gains. Is a capital
gains tax going to penalize Generation X or Michelle's pointing
at itself, the millennials, even Gen Z.
Speaker 2 (05:22):
That's why we have to take a far more holistic
view than just thinking about one tax for another. We
actually have to step back and think about the changing
demographics of our population and what makes sense in terms
of future proofing our tax base.
Speaker 1 (05:36):
Age of eligibility for National Super I'm hot on this
one because I'm a pensioner. Now. It should be sixty seven.
Speaker 2 (05:44):
As I said, it's a ticking time, but something has
to be done. Or in twenty fifty, well, I think
it's every two working age New Zealanders will be supporting
every one pensioner. So we have to do something. Raising
the age of something could be something, means testing could
be something. But again it's one of those things. I
think we need some sort of cross party agreement to
step back and actually just think about the options and
have a conversation with the country about it.
Speaker 1 (06:06):
Do you think National Super should be a universal benefit
because a lot of people will say, look, I've worked
all my life, I've paid all my taxes. It's an
entitlement I'm due to. Why reward people who have not
got off their backside and done anything.
Speaker 2 (06:21):
The sad thing about saying you've worked all your life
is that you weren't saving for that benefit. It's the
current taxpayers who are paying for it, and when we
get to the position where there's two taxpayers for everyone supernuitant,
I don't think it's even possible that they can pay
for it.
Speaker 1 (06:37):
What would be a fair way of means testing because effectively,
and we discussed this again last night, National super as
it stands at the moment, is sort of means tested
because it's paid to you at the top marginal rate
of tax. So if you're earning, for instance, more than
one hundred and eighty grand, you're paying thirty nine cents
in the dollars, so you're only getting sixty one cents
(06:58):
out of you know, dollar, whereas someone who has no
other income is getting the full A mount.
Speaker 2 (07:03):
Yeah, absolutely agree. And again there's all sorts of ways
you can look at our tax space. You can look
at whether we should have foreign investment fund impacting overseas
dividends rather than the income tax that we get here.
So I think that's why I wouldn't want to put
any specific policy out there. I think it's something that
should be looked at very holistically.
Speaker 1 (07:22):
I did ask for some questions to be texted, and
here's one that's maybe a wee bit tongue in chee Antonia.
Why are there so many females running banks? There has
been a purge of fifty plus year plus year old
men and the big four banks DEI gone mad? And
I think that's slightly our tongue in cheek because I
feel sorry for this stale, pale, middle aged male. We
(07:44):
are becoming a marginalized group.
Speaker 2 (07:47):
I think if you're stale, I would be questioning about
why you're stale, but pale and male. There's absolutely no
marginalization going on there. I've just had to wipe myself
off the floor on that comment. I mean, see of
the population of women, I think we've got five out
of the twenty seven banks New Zealand that are run
by women. So I'm not quite sure that that brings
(08:08):
true quite yet.
Speaker 1 (08:09):
All right, okay, what did you make of the test?
Did you enjoy your weekend out here?
Speaker 2 (08:12):
I love my weekend down here.
Speaker 1 (08:14):
Coming back to your old university haunt.
Speaker 2 (08:16):
Yes, yes, a very proud alumni Vittaga University.
Speaker 1 (08:21):
Okay, great for you to take some time out. Do
you realize every day when we do the show and Tony,
we're looking we're in the Westpac Building, which is ironical,
isn't it. We're looking straight across George Street to the
A and Z.
Speaker 2 (08:34):
We're in bank corner or something, aren't we.
Speaker 1 (08:36):
Yes, we are on bank corner. Thank you very much
for coming in on the show today. Antonio Watson, Chief
executive of the A in Z Bank
Joining us in the studio chief executive of the A
and Z Bank and Tonia Watson, I'm right and saying
that's the biggest bank in the country, right, you're right, yep,
and also the bank with the biggest rural portfolio, because
back in the day the Rural Bank combined or got
taken over by the National Bank, and then National Bank
(00:20):
and A and Z merge, So you've still got the
biggest rural book.
Speaker 2 (00:24):
We do indeed the biggest, biggest amount of lending and
by far the biggest number of customers.
Speaker 1 (00:28):
Yeah, okay, Now, last time we chatted, I asked you,
and I've been told by Tarnia Shall that I've got
to play nice today. But I did ask you whether
you not you personally the A and Z, but whether
the banks were ripping or not ripping the farmers off,
but perhaps profiteering by charging farmers and business people too
much of a margin, especially on their overdraft rates.
Speaker 2 (00:49):
So we I would say, no, we're absolutely not ripping
off our customers. We do charge a little bit more
to business and agricultural lending because they're more risky and
we're therefore have to hold higher capital. But the numbers
aren't We actually put them in our market study in
our submission to the Phonance and Expensive to Select Committee
in the month of December. We were farmers were paying
(01:12):
about fifty basis points on average more than a homeowner
for a fixed rate, and they were playing less for
a floating weight.
Speaker 1 (01:22):
Any relevance to the arguments that farmers should get a
borrowing rate the same as residential I mean most of
them have got equity in excess and when you won't
lend it to them, I mean most of them have
at least fifty percent equity, unlike house owners. So you
could always say the bank's always going to get their
pound of flesh even if they you know, if the
(01:44):
business goes bottom up.
Speaker 2 (01:46):
I guess the question i'd ask is do we want
the business to go bottom up and for us to
have this out to sell the farm? And I would
say absolutely no to that one. At farming in general,
the reason there is more risk, there's more capital held
from farming owners because they're more risky, and that's to
do with things like if you think about recent times
when we've had very low, lower milk prices, high on
(02:07):
farm inflation. That impacts every single farmer where the impacts,
you know, maybe the risk of disease, whereas householders housing
lending is much more individual to the particularly particular owner
of the house.
Speaker 1 (02:20):
We've got an OCR announcement on Wednesday. I see your
chief executive, chief executive, you're the chief executive. Maybe she
wants to be a Sharon Zolner, your chief economist. She's
picking a drop in the OCR. But some economists are disagreeing.
And I put it to you, Antonia, and you know
a lot more about banking than me and the economy.
But it would be a real negative if the OCR
(02:42):
is not dropped by twenty five basis points on Wednesday,
because the economy is just stalled at the moment.
Speaker 2 (02:47):
I think that the economy, there's just so much uncertainty
out there, and when you look at the picks for
the OCR, that's just another area that's uncertain and that
is not good for business. It's not good for farmers.
It'd be nice to see some of these green shoots
that have been coming through, just give people a little
bit more confidence to invest, to spend more. But no,
(03:08):
the uncertainty's extreme, I think.
Speaker 1 (03:10):
And I note that Sharon Zohna is picking another two
cuts if over and above what we might get on Wednesday,
she's picking the ocr to eventually drop to two point
five percent? Is she being ambitious that.
Speaker 2 (03:25):
I'm an accountant, not an economist, so I'm going to
leave the expertise to her and her colleagues. But I
know that, as I said, even that's an uncertain pick.
At the moment, she's probably got it more penciled in
than she did a couple of months ago.
Speaker 1 (03:37):
Let's touch on another couple of subjects, because you and
I have got a I guess full disclosure here. We
had dinner with some friends last night, so we were
chewing the fat over some of the issues of the
nation at the moment. So you came out a while
ago and you were a proponent for a capital gains tax.
She was swimming against the tide or webit there in
(04:00):
terms of I guess popular opinion. But we do need
in this country if we're not going to go broke,
we need to broaden the tax base, don't we.
Speaker 2 (04:10):
I wouldn't say I as a proponent. I would say
I was a reluctant if you look across the tax
base and the different ways that people earn. I was
a proponent for looking at that, taking a step back,
looking at that from a fairness point of view, and
I don't think it's just capital gains, it's retirement retirement income,
retirement savings is I think we could take a step
(04:32):
back and look at the whole thing because we have
got a significantly aging population and there's a ticking time
bomb sitting there.
Speaker 1 (04:38):
So capital gains would be a much better option than
a wealth tax.
Speaker 2 (04:42):
In my opinion. Yes, that's one of the reasons I
talked about it. Wealth taxes tend to be on on
unrealized earnings, so you'd have to you know, if you
had something like a farm, you'd have to do what
sell part of your farm to pay the portion for
the wealth tax. I think that would be pretty difficult.
Speaker 1 (04:58):
And last night over dinner, we were discussed because there
was about three or four boomers around the table. The
rest were Generation X. Now, see, the boomers, we're the
lucky generation. Even if a capital gains tax comes in,
We've locked in all of our gains. Is a capital
gains tax going to penalize Generation X or Michelle's pointing
at itself, the millennials, even Gen Z.
Speaker 2 (05:22):
That's why we have to take a far more holistic
view than just thinking about one tax for another. We
actually have to step back and think about the changing
demographics of our population and what makes sense in terms
of future proofing our tax base.
Speaker 1 (05:36):
Age of eligibility for National Super I'm hot on this
one because I'm a pensioner. Now. It should be sixty seven.
Speaker 2 (05:44):
As I said, it's a ticking time, but something has
to be done. Or in twenty fifty, well, I think
it's every two working age New Zealanders will be supporting
every one pensioner. So we have to do something. Raising
the age of something could be something, means testing could
be something. But again it's one of those things. I
think we need some sort of cross party agreement to
step back and actually just think about the options and
have a conversation with the country about it.
Speaker 1 (06:06):
Do you think National Super should be a universal benefit
because a lot of people will say, look, I've worked
all my life, I've paid all my taxes. It's an
entitlement I'm due to. Why reward people who have not
got off their backside and done anything.
Speaker 2 (06:21):
The sad thing about saying you've worked all your life
is that you weren't saving for that benefit. It's the
current taxpayers who are paying for it, and when we
get to the position where there's two taxpayers for everyone supernuitant,
I don't think it's even possible that they can pay
for it.
Speaker 1 (06:37):
What would be a fair way of means testing because effectively,
and we discussed this again last night, National super as
it stands at the moment, is sort of means tested
because it's paid to you at the top marginal rate
of tax. So if you're earning, for instance, more than
one hundred and eighty grand, you're paying thirty nine cents
in the dollars, so you're only getting sixty one cents
(06:58):
out of you know, dollar, whereas someone who has no
other income is getting the full A mount.
Speaker 2 (07:03):
Yeah, absolutely agree. And again there's all sorts of ways
you can look at our tax space. You can look
at whether we should have foreign investment fund impacting overseas
dividends rather than the income tax that we get here.
So I think that's why I wouldn't want to put
any specific policy out there. I think it's something that
should be looked at very holistically.
Speaker 1 (07:22):
I did ask for some questions to be texted, and
here's one that's maybe a wee bit tongue in chee Antonia.
Why are there so many females running banks? There has
been a purge of fifty plus year plus year old
men and the big four banks DEI gone mad? And
I think that's slightly our tongue in cheek because I
feel sorry for this stale, pale, middle aged male. We
(07:44):
are becoming a marginalized group.
Speaker 2 (07:47):
I think if you're stale, I would be questioning about
why you're stale, but pale and male. There's absolutely no
marginalization going on there. I've just had to wipe myself
off the floor on that comment. I mean, see of
the population of women, I think we've got five out
of the twenty seven banks New Zealand that are run
by women. So I'm not quite sure that that brings
(08:08):
true quite yet.
Speaker 1 (08:09):
All right, okay, what did you make of the test?
Did you enjoy your weekend out here?
Speaker 2 (08:12):
I love my weekend down here.
Speaker 1 (08:14):
Coming back to your old university haunt.
Speaker 2 (08:16):
Yes, yes, a very proud alumni Vittaga University.
Speaker 1 (08:21):
Okay, great for you to take some time out. Do
you realize every day when we do the show and Tony,
we're looking we're in the Westpac Building, which is ironical,
isn't it. We're looking straight across George Street to the
A and Z.
Speaker 2 (08:34):
We're in bank corner or something, aren't we.
Speaker 1 (08:36):
Yes, we are on bank corner. Thank you very much
for coming in on the show today. Antonio Watson, Chief
executive of the A in Z Bank
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