Perspective with Heather du Plessis-Allan: What problems will buying back BNZ solve?

Here’s a question for you: if you really like Winston Peters’ idea of buying back the BNZ - why? What problem do you think will be solved by buying it back?

Do you think the banks are ripping you off because they’re owned by Australians, and that if only one of them were owned by us again, they wouldn’t?

Take a look at the home loan rates Kiwibank is offering right now. They’re basically the same as - if not higher than -those offered by the Australian-owned banks.

Do you think this might improve competition? In that case, how does taking BNZ and Kiwibank and combining them into a single bank - leaving one fewer bank in the market - help competition?

Do you think it will stop $1.5 billion in profit heading to Australia, making us richer? Sure, the logic stacks up at first glance. But first, we’d have to borrow huge amounts of money to buy the bank and pay significant interest on that debt.

It could take 10 to 20 years before we start seeing those profits flow into New Zealand rather than going toward interest payments.

And all of this comes at a time when two credit ratings agencies have warned that we can’t keep increasing our debt without risking a downgrade next year - which would make all our borrowing more expensive.

That’s not even considering the fact that we can’t be sure BNZ would generate the same level of profit under Government ownership as it does under private ownership. In fact, I would argue the opposite is more likely.

Publicly owned assets often become less efficient - they can grow bloated, unproductive and undisciplined.

That might explain why BNZ collapsed back in 1990 when it was publicly owned and hasn’t repeated that since returning to private ownership.

To me, this policy looks like a classic nostalgia play by Winston Peters - appealing to voters who believe life would be better if we could just go back to 1992.

I suspect this will be the first policy dropped in any coalition negotiations. It’s likely the first thing Winston Peters will let go of because it’s simply too expensive, and he knows it.

So don’t get too attached to this policy. I just can’t see it happening. 

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Episode Transcript

Speaker 1 (00:01):
Ever do for c Ellen. OK, here's a question for you.
If you really like Winston Peter's idea of buying back
the B and Z, here's a question why. What is
the problem that you think will be solved by buying
back the B and Z? Do you think that the
banks are ripping you off because they're owned by the
Aussies and if only one of them was owned by
us again, then they wouldn't rip us off. Go and

(00:22):
have a look at the home loan rates that Kiwibank
off offers right now. They're basically the same as, if
not higher than, what the Aussie owned banks are offering.
Do you think that this might help competition? In which case,
I'm going to ask you the question, how does taking
B and Z and Kiwi Bank and then combining them
into one bank so that you have one fewer bank
out there help competition? Do you think it's gonna stop
one point five billion dollars in profit heading over to

(00:44):
Australia and that will make us richer? Yep, your logic
is good on that one. But first we're gonna have
to borrow huge amounts to buy the bank and pay
huge amounts of interest, So that'll take about ten to
twenty years before we start seeing those profits flow into
New Zealand rather than into the interest payments on the debt.
And that is at a time when WHO credit ratings
agencies have warned us that we cannot keep taking on
more debt or they're going to downgrade us next year,

(01:05):
making all of our debt more expensive. Now this is
not even to mention the fact that we can't be
sure that B and Z will return that much profit
if it's run by the New Zealand government rather than
by private interests. In fact, I would say the opposite
may be true. We can probably take the view that
it will not run as well if we owned it again,
because that is generally what happens with publicly owned assets.
They go the way of the public service. They get bloated, unproductive,

(01:27):
and undisciplined, which may explain why B and Z collapse
back in nineteen ninety when we owned it, and hasn't
repeated that since being in private ownership. Now, I see
this policy as just a classic nostalgia play by Winston Peters,
who knows that there's a voter base out there who
think that life would be really good if we could
just go back to nineteen ninety two. I suspect this
policy will be the first one that's on the cutting

(01:48):
room floor in coalition negotiations. This is going to be
the first thing that Winston Peters let's go of because
it's too expensive and he knows it. So don't get
attached to this policy because I cannot see this happening.
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