August 12, 2024 • 9 mins
The Finance Minister is open to all options when it comes to increasing competitiveness in the banking sector.
The Commerce Commission is expected to deliver their report examining banking competition issues - and drafts have hinted changes need to take place.
Minister Nicola Willis says she's awaiting next week's findings.
"I've committed that I will be completely open-minded about what changes may be required to get good banking competition - we'll see what the Commerce Commission says."
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Right now we have the Finance Minister Nichola will say Nicola, Hi, Heather,
how can you ease the Reserve Bank's capital rules when
the Reserve Bank is independent of view.
Speaker 2 (00:10):
Well, what we will have next week is the report
from the Commis Commission has been asked to look at
banking issues, competition issues in the banking sector. They've indicated
in their draft report that they think changes may need
to be made to the regulatory environment to make sure
that those rules support competition. So I'll await their final report.
(00:30):
But what I do have power over as Minister right
now is the Financial Policy Remit, which the Reserve Bank
has to have regard to when it's making its decisions.
And I've committed that I will be completely open minded
about what changes may be required to get good banking competition.
So we'll see what the Commist commissions right next.
Speaker 1 (00:49):
So are you suggesting that if you needed to, you
could rewrite that remit so they would be forced to
comply to comply with that remit by dropping the capital
rules down.
Speaker 2 (01:00):
Number of options? We could look at the Financial Policy
re Much and the guidelines et sept. So that there
Reserve Bank would have consideration of those in the future,
and we can look at the broader regulatory and legislative
requirement if needs be. But what I'm interested in is
not so much rewriting the entire book on the capital changes,
but what are the things we can do right now
(01:23):
to make it easier for disruptors to come in and
compete with those book.
Speaker 1 (01:28):
You'd have to change the capital rules then, because this
is stopping the disruptors, isn't it.
Speaker 2 (01:32):
Well, let's wait and see. Let's see what the Comments
Commission says. They've had time to consider the steeply they've
taken submissions from the Reserve Bank.
Speaker 1 (01:41):
I mean, how much money do they have to hold
these banks in order to compete as a big bank.
Speaker 2 (01:46):
Well, the rules depend on the which area of the
sector they're competing in, and it depends on how much
they want to lend. But also remember we're now in
a new modern world where you don't necessarily want to
provide all banking. Perhaps you might not be doing mortgages
and bank loans. You might just want to do our
current accounts, or you might just want to do our
(02:07):
cards for traveling overseas. And we want to make sure
that competitors are able to enter those niche areas and
that the capital requirements don't put them off. So we'll
be working through all of that, and don't you worry.
I've asked for advice on what our options might be.
Speaker 1 (02:21):
Because are these the rules that require some of the
banks to hold as many as thirty million dollars? That's right,
I mean that's obviously stopping people getting into the market. Right.
Speaker 2 (02:32):
Well, I will see what the Comments Commission says. But
there's a lot of money to get together, and I
say if we can have more people entering and disrupting
and making it a competitive space, that's good for New
Zealand and I'm up for it.
Speaker 1 (02:46):
Has I mean this was in the paper on Saturdays.
Has Adrian sent you a letter about to get any
angry texts or emails?
Speaker 2 (02:52):
No? In fact I saw him this morning and we
were all smart.
Speaker 1 (02:56):
Did it come up?
Speaker 2 (02:58):
No? It didn't.
Speaker 1 (02:59):
Well that's all as well. So it was in the
paper on Saturday. You said it, he read about it,
and then he didn't even raise it with you when
he saw you.
Speaker 2 (03:06):
No. I think there's a load of respect between the
two institutions. The Reserve Bank is independent from the government
of the day, it does its thing. The government is
accountable to the voters, and we set the legislation and
we set those policies. Each of us has a role
to play. They are independent in separate roles, and what
I'm signaling very clearly is that this government is very
(03:30):
interested in competition and an efficiency and we want to
make sure that the financial rules reflect those totally.
Speaker 1 (03:38):
Has Kibi Ral told you yet why the Outer Teddy
crashed again last week?
Speaker 2 (03:43):
I haven't had detailed brief on that as yet.
Speaker 1 (03:46):
Okay. Is that because you don't expect to get a
detailed brief, or is that because they're playing this game
where they pretend that they don't know what happened until
they finished their investigation.
Speaker 2 (03:56):
Well, it's because I don't really expect to get a
detailed brief, because the ultimate accountable to the maritime rules,
and that means that those independent investigations take place, and
I expect them to comply with those. As the shareholder,
I don't get to direct operations in any way. I
don't get to tell them what to do in their
day to day operations. But together with Paul Goldsmith, we've
(04:18):
said a very clear expectation. We want safe reliable fairy
services and the maintenance needed to deliver that.
Speaker 1 (04:25):
Are they just crashing them now until you give them
a new one?
Speaker 2 (04:28):
Oh, Heather, No one would want to put anyone at
risks like that.
Speaker 1 (04:33):
Well, you know, I mean the alternative is absolute incompetence,
and that freaks me out slightly. But on that subject, listen,
the Maritime Union reckons that the break fee for the
boats that were being built over in koreas five hundred
million dollars. Are they right?
Speaker 2 (04:47):
I'll tell you two things about the maritime Union. First
is we've got no credibility because actually, only three weeks
into me having the job they asked for my resignation.
So the fact they've got that on repeat isn't very interesting.
The second thing is I swear to you the negotiation
for the repudiation of that contract is ongoing. So what
that means is no one knows what the break fee is.
Speaker 1 (05:10):
Does the contract have theakromritime union.
Speaker 2 (05:14):
We are in a commercial negotiation, and what the commercial
settlement is is yet to be.
Speaker 1 (05:20):
But when you sign a contract with somebody to do
something and it says and the break fee shall be,
what does it say?
Speaker 2 (05:28):
Well, I can tell you heither. There are a number
of matters to be worked through, and they're being worked
through by k we Rail with the Kondo Dockyard.
Speaker 1 (05:36):
Okay, are we any closer to figuring out how the
hell we're going to deal with this power crisis?
Speaker 2 (05:43):
Yes, we are. Simian Brown and Shane Jones are working
on that at pace. The first thing is what we
can do in the short term, and of course, one
of the options on the table there is the importation
of liquefied natural gas, and the Gas Security Response Group
is working through the usibility of that. At the same time,
we're encouraging the electricity Authority to use all of its
(06:06):
muscle in making sure that pricing information is available to
consumers and that competition is working. Then in the medium term,
the biggest thing, of course, is we need more generation.
Now we regret that the last government was so reckless
and abandoning the ability for people to explore for gas,
because that has no doubt led to the situation we
(06:29):
are in today. But what we know for the long
term is we're going to need more wind, more solar,
more generation across the board, thermal, and we want to
make sure that the market is able to respond in
that way. We know there's been a huge uptick and
intended investment, but as a government, we're looking hard at
that to make sure we're going to have the generation
we need into the future.
Speaker 1 (06:49):
Yeah, ALERNG might take this is important. ALNG might take
something like twelve months to eighteen months to be able
to get here, which means that we have to survive
this winter and then we also potentially have to I
have next winter, don't we.
Speaker 2 (07:03):
Yeah, that's right. None of the stuff happens overnight, and
that's why that Gas Security Response Group has been working
through these issues in the meantime with the major gas
users to make sure that gas is going to its
most essential purposes. But look, these prices that are I
will throwing they are deeply problematic for industry, for New
(07:23):
Zealand's competitiveness, and we can't allow the situation to be
sustained shutdown. Look that that's a question for methodics rather
than for me.
Speaker 1 (07:33):
What do you think?
Speaker 2 (07:36):
Well, I know that methodics of operations have been curtailed
due to the high price of electricity that is a set.
Speaker 1 (07:42):
And the gas shortage as well. I mean they're running
at half capacity and there's no indication that there will
be any more gas in the short term, So it
must be a real prospect. And if they shut down,
we free up a whole bunch of supply for the country.
It must be a real prospect that they shut down.
Speaker 2 (07:56):
Well, look, you'd have to talk to methoenics about that.
But I tell you, when that last government went out
with their bumper sticker that they were banning the exploration
of gas and coal, did they at the same time
say we're going to make sure that New Zealand loses
thousands of jobs on the way through the electricity prices
spike and there are real concerns about energy security. No,
(08:17):
they didn't, And if they had, which New Zealander would
have thought it was a good.
Speaker 1 (08:20):
Idea, right, Nichola, thank you, has always really appreciated look
after yourself. That's Nichola Willis, the Finance minister. It blows
my mind. It blows my mind. If you talk to
the guys in labor, they still think this is a
fantastic idea and they are committed to the oil and
Gas band because I was told last week they do
not want the gas guys to start looking for gas again.
(08:44):
They don't want them to look for gas again. How
crazy is that we find ourselves in this situation. Methodics
potentially shutting down people paying these prices, and they're like, no,
this is right, yeah, notice it's great. Do we need
to give them a pay cut and labor so they
know what it's like to have to struggle to pay
your bill? I think that the power bill might be
a good idea. Sorry, Heather, but two thirds of sixty
six point six percent as opposed to your arithmetic of
sixty seven percent. Therefore, your reporters mark try harder. Thank you,
(09:07):
Terry Swedish rounding mate seventeen past six. For more from
Heather Duplessy Allen Drive, listen live to News Talks 'd
B from four pm weekdays, or follow the podcast on
iHeartRadio
Right now we have the Finance Minister Nichola will say Nicola, Hi, Heather,
how can you ease the Reserve Bank's capital rules when
the Reserve Bank is independent of view.
Speaker 2 (00:10):
Well, what we will have next week is the report
from the Commis Commission has been asked to look at
banking issues, competition issues in the banking sector. They've indicated
in their draft report that they think changes may need
to be made to the regulatory environment to make sure
that those rules support competition. So I'll await their final report.
(00:30):
But what I do have power over as Minister right
now is the Financial Policy Remit, which the Reserve Bank
has to have regard to when it's making its decisions.
And I've committed that I will be completely open minded
about what changes may be required to get good banking competition.
So we'll see what the Commist commissions right next.
Speaker 1 (00:49):
So are you suggesting that if you needed to, you
could rewrite that remit so they would be forced to
comply to comply with that remit by dropping the capital
rules down.
Speaker 2 (01:00):
Number of options? We could look at the Financial Policy
re Much and the guidelines et sept. So that there
Reserve Bank would have consideration of those in the future,
and we can look at the broader regulatory and legislative
requirement if needs be. But what I'm interested in is
not so much rewriting the entire book on the capital changes,
but what are the things we can do right now
(01:23):
to make it easier for disruptors to come in and
compete with those book.
Speaker 1 (01:28):
You'd have to change the capital rules then, because this
is stopping the disruptors, isn't it.
Speaker 2 (01:32):
Well, let's wait and see. Let's see what the Comments
Commission says. They've had time to consider the steeply they've
taken submissions from the Reserve Bank.
Speaker 1 (01:41):
I mean, how much money do they have to hold
these banks in order to compete as a big bank.
Speaker 2 (01:46):
Well, the rules depend on the which area of the
sector they're competing in, and it depends on how much
they want to lend. But also remember we're now in
a new modern world where you don't necessarily want to
provide all banking. Perhaps you might not be doing mortgages
and bank loans. You might just want to do our
current accounts, or you might just want to do our
(02:07):
cards for traveling overseas. And we want to make sure
that competitors are able to enter those niche areas and
that the capital requirements don't put them off. So we'll
be working through all of that, and don't you worry.
I've asked for advice on what our options might be.
Speaker 1 (02:21):
Because are these the rules that require some of the
banks to hold as many as thirty million dollars? That's right,
I mean that's obviously stopping people getting into the market. Right.
Speaker 2 (02:32):
Well, I will see what the Comments Commission says. But
there's a lot of money to get together, and I
say if we can have more people entering and disrupting
and making it a competitive space, that's good for New
Zealand and I'm up for it.
Speaker 1 (02:46):
Has I mean this was in the paper on Saturdays.
Has Adrian sent you a letter about to get any
angry texts or emails?
Speaker 2 (02:52):
No? In fact I saw him this morning and we
were all smart.
Speaker 1 (02:56):
Did it come up?
Speaker 2 (02:58):
No? It didn't.
Speaker 1 (02:59):
Well that's all as well. So it was in the
paper on Saturday. You said it, he read about it,
and then he didn't even raise it with you when
he saw you.
Speaker 2 (03:06):
No. I think there's a load of respect between the
two institutions. The Reserve Bank is independent from the government
of the day, it does its thing. The government is
accountable to the voters, and we set the legislation and
we set those policies. Each of us has a role
to play. They are independent in separate roles, and what
I'm signaling very clearly is that this government is very
(03:30):
interested in competition and an efficiency and we want to
make sure that the financial rules reflect those totally.
Speaker 1 (03:38):
Has Kibi Ral told you yet why the Outer Teddy
crashed again last week?
Speaker 2 (03:43):
I haven't had detailed brief on that as yet.
Speaker 1 (03:46):
Okay. Is that because you don't expect to get a
detailed brief, or is that because they're playing this game
where they pretend that they don't know what happened until
they finished their investigation.
Speaker 2 (03:56):
Well, it's because I don't really expect to get a
detailed brief, because the ultimate accountable to the maritime rules,
and that means that those independent investigations take place, and
I expect them to comply with those. As the shareholder,
I don't get to direct operations in any way. I
don't get to tell them what to do in their
day to day operations. But together with Paul Goldsmith, we've
(04:18):
said a very clear expectation. We want safe reliable fairy
services and the maintenance needed to deliver that.
Speaker 1 (04:25):
Are they just crashing them now until you give them
a new one?
Speaker 2 (04:28):
Oh, Heather, No one would want to put anyone at
risks like that.
Speaker 1 (04:33):
Well, you know, I mean the alternative is absolute incompetence,
and that freaks me out slightly. But on that subject, listen,
the Maritime Union reckons that the break fee for the
boats that were being built over in koreas five hundred
million dollars. Are they right?
Speaker 2 (04:47):
I'll tell you two things about the maritime Union. First
is we've got no credibility because actually, only three weeks
into me having the job they asked for my resignation.
So the fact they've got that on repeat isn't very interesting.
The second thing is I swear to you the negotiation
for the repudiation of that contract is ongoing. So what
that means is no one knows what the break fee is.
Speaker 1 (05:10):
Does the contract have theakromritime union.
Speaker 2 (05:14):
We are in a commercial negotiation, and what the commercial
settlement is is yet to be.
Speaker 1 (05:20):
But when you sign a contract with somebody to do
something and it says and the break fee shall be,
what does it say?
Speaker 2 (05:28):
Well, I can tell you heither. There are a number
of matters to be worked through, and they're being worked
through by k we Rail with the Kondo Dockyard.
Speaker 1 (05:36):
Okay, are we any closer to figuring out how the
hell we're going to deal with this power crisis?
Speaker 2 (05:43):
Yes, we are. Simian Brown and Shane Jones are working
on that at pace. The first thing is what we
can do in the short term, and of course, one
of the options on the table there is the importation
of liquefied natural gas, and the Gas Security Response Group
is working through the usibility of that. At the same time,
we're encouraging the electricity Authority to use all of its
(06:06):
muscle in making sure that pricing information is available to
consumers and that competition is working. Then in the medium term,
the biggest thing, of course, is we need more generation.
Now we regret that the last government was so reckless
and abandoning the ability for people to explore for gas,
because that has no doubt led to the situation we
(06:29):
are in today. But what we know for the long
term is we're going to need more wind, more solar,
more generation across the board, thermal, and we want to
make sure that the market is able to respond in
that way. We know there's been a huge uptick and
intended investment, but as a government, we're looking hard at
that to make sure we're going to have the generation
we need into the future.
Speaker 1 (06:49):
Yeah, ALERNG might take this is important. ALNG might take
something like twelve months to eighteen months to be able
to get here, which means that we have to survive
this winter and then we also potentially have to I
have next winter, don't we.
Speaker 2 (07:03):
Yeah, that's right. None of the stuff happens overnight, and
that's why that Gas Security Response Group has been working
through these issues in the meantime with the major gas
users to make sure that gas is going to its
most essential purposes. But look, these prices that are I
will throwing they are deeply problematic for industry, for New
(07:23):
Zealand's competitiveness, and we can't allow the situation to be
sustained shutdown. Look that that's a question for methodics rather
than for me.
Speaker 1 (07:33):
What do you think?
Speaker 2 (07:36):
Well, I know that methodics of operations have been curtailed
due to the high price of electricity that is a set.
Speaker 1 (07:42):
And the gas shortage as well. I mean they're running
at half capacity and there's no indication that there will
be any more gas in the short term, So it
must be a real prospect. And if they shut down,
we free up a whole bunch of supply for the country.
It must be a real prospect that they shut down.
Speaker 2 (07:56):
Well, look, you'd have to talk to methoenics about that.
But I tell you, when that last government went out
with their bumper sticker that they were banning the exploration
of gas and coal, did they at the same time
say we're going to make sure that New Zealand loses
thousands of jobs on the way through the electricity prices
spike and there are real concerns about energy security. No,
(08:17):
they didn't, And if they had, which New Zealander would
have thought it was a good.
Speaker 1 (08:20):
Idea, right, Nichola, thank you, has always really appreciated look
after yourself. That's Nichola Willis, the Finance minister. It blows
my mind. It blows my mind. If you talk to
the guys in labor, they still think this is a
fantastic idea and they are committed to the oil and
Gas band because I was told last week they do
not want the gas guys to start looking for gas again.
(08:44):
They don't want them to look for gas again. How
crazy is that we find ourselves in this situation. Methodics
potentially shutting down people paying these prices, and they're like, no,
this is right, yeah, notice it's great. Do we need
to give them a pay cut and labor so they
know what it's like to have to struggle to pay
your bill? I think that the power bill might be
a good idea. Sorry, Heather, but two thirds of sixty
six point six percent as opposed to your arithmetic of
sixty seven percent. Therefore, your reporters mark try harder. Thank you,
(09:07):
Terry Swedish rounding mate seventeen past six. For more from
Heather Duplessy Allen Drive, listen live to News Talks 'd
B from four pm weekdays, or follow the podcast on
iHeartRadio
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