Over the past weeks, a familiar mood has cropped up when I have been out talking to members of the ethnic community on the street, at events and in shops.The mood is one of anger and outrage at the reluctance of the National-led Government to support an inquiry into banking profits and its failure to stand up on behalf of all hard working New Zealand families.
Many people I have spoken to believe they are paying higher interest rates than they should be paying. It seems to me the best way to work out whether hard working New Zealanders and businesses are getting a fair deal is to hold an inquiry into the relationship between the Official Cash Rate and short term interest rates. This way all the facts will be put on the table and people can see whether they are being treated fairly by their banks.
The mood has generated huge media attention in the Asian communities.
As a result, the Auckland-based World TV, which broadcasts 10 channels in Chinese, Japanese and Korean, sent its crew to the electoral office of the Leader of the Opposition, Hon Phill Goff, and invited Labour finance spokesperson, Hon David Cunliffe, to specifically talk to the Asian communities on this issue.
I had the pleasure of appearing alongside Hon Phill Goff and David Cunliffe.
Asians are passionate about numbers, so I reiterate a startling statistic which was mentioned in the interview on World TV:
Over the past year the Reserve Bank has cut the OCR by 575 basis points, but business lending rates have only fallen by 243 points, and the floating first mortgage rate has fallen by 446 points.
The Labour Party, Greens and the Progressives announced on July 27 their intention to hold the equivalent of a parliamentary select committee inquiry into bank profits.
As a member of the Finance and Expenditure Committee, I witnessed how hard the Labour team – led by Hon David Cunliffe – fought in vain to convince the Government to hold such an inquiry.
The feedback from Asian communities has been over-whelming in favour of such a move. Mr Sam Lee of Pakuranga rang me expressing his approval and support of Labour’s move. ”All we ask is an inquiry. What is National worried about? All we want is a fair deal,” said Mr Sam Lee.
If you would like any more information visit the bank inquiry website: http://www.bankinquiry.org.nz
Good to see you enter the blogging world. Being Chinese but having come from a 3rd generation kiwi family, I feel there aren’t enough positive messages coming from Pansy Wong and the National government when it comes to ethnic issues.
There is a huge gap open for a political party to actually use issues such Asian immigration in a positive manner, because many Asian people are actually getting stuck into the kiwi culture and contributing positively.
Now that Winston is out of the picture for the time being I feel that there isn’t that negative ethnic bashing present as there once was.
Keep up the good work.
Now that Winston is out of the picture for the time being I feel that there isn’t that negative ethnic bashing present as there once was.
Keep up the good work.
“All we ask is an inquiry. What is National worried about?”
They arnt worried about anything. Why infer that just because they believe that this is a waste of time that they are worried.
The reasons for the rates have been clearly given. A toothless meeting of the opposition is not going to be able to do anything to change the facts.
Yet again – its trying to point score on what labour believe to be a populist issue. BTW – look at interest rates we had under labour. People actually have more money in their pockets at the end of the month.
[...] Read the rest of this great post here [...]
So if an inquiry were held & the findings were that there was no issue? Then what? Scape-goat lost Raymond? Also, being that low interest rates leads to malinvestment and low savings resulting in recession, is it sensible to force or bully banks into lowering the cost of interest? And how much profit is to much anyway? By what standard? By what right do you have to force that rate to be otherwise? If the banks were deemed to be profiteering, would possible forced measures against them not force them out of the country to friendlier ones? So much taken for granted Raymond; why?
Yeah but BikerKiwi although interest rates may be better under National as you dubiously claim, the economic situation people were facing was a hell of alot better the majority of time Labour were in power.
With unemployment mounting and pay caps occurring on employees it is very unlikely that people have more money in their pockets if any what so ever.
Although an inquiry maybe toothless at least it’s a push in the right direction to make life easier for struggling kiwis.
The current government are just bumbling and slashing away and coming up with hair brain ideas like the cycle way, which isn’t enough to improve the lot of average NZers.
Hi Raymond
I live in Hong Kong and get .5% on my HKD deposit rate (being pegged of course to the US), most savers get nothing as their balances are not high enough and they have charges etc. Funds are lent at 4%-5% from what I have seen so the margin is huge.
The locals have a simple technique for dealing with this as opposed to the NZ way which is to whinge.
They buy shares in HSBC. Religiously.
Which is probably why Hong Kong is a major financial centre with huge amounts of wealth. And New Zealand is……..
James 99 – its not dubious – its fact.
Farrar did the figures:
The floating mortgage rate averaged 6.44% in June 2009. In June 2008 when Labour were in office it was 10.9%. So they were not concerned about 10.9% but are concerned about 6.4%?
That reduction means a $250,000 mortgage homeowner is paying $11,250 a year less interest or has an extra $215 a week in the hand.
Just how many people were expecting a pay rise of over $11,000 this year?
Thus my comment about people being better off.
Ok NZers may well be better off mortgage rate wise, but what does that matter when they don’t have a job to pay the mortgagee off in the first place. This is happening to people as we speak, as the dole cue grows each week.
I concede that the government can’t just wave a magic wound and make things better. But they can at least come up with some solid if not skeleton concepts.
National were in opposition for nine years and the major idea we have coming out of the PM’s mouth is a watered down footpath for cyclists.
Their other big idea, the nine has now floated off into oblivion. Oh well at least we have Don Brash on the case, he will solve all our problems…
[...] More: Asian community is banking on an inquiry from National « Red Alert [...]
Why have an enquiry into how the OCR and interest rates are related?
Just ask an economist or Banker.
Why should the tax payer fork out just to enlighten financially illiterate MPs.
You can lower the OCR to 0% but it still wouldnt change interest rates as the lenders who lend money to Banks , you me , the Japanese housewives , American Banks etc want a good return on their money.
We have such poor savings that Banks simply have to pay what depositors ask for and the OCR becomes irrelevant.
Banks margins are less now than they have been at times over the last decade.
All this information is publicly available and dosent need the granstanding of an enquiry
This really is a nonsense post. There are two sides to the interest debate. Those that borrow and those that lend. Asians are known to be better savers than your average Kiwi, soooo, I would 10 bucks to a wonton that Asians would prefer higher interest rates. D’oh.
What we need is for the banks to have higher rates for deposits than mortgages. Then we would be happy.
In the meantime, we should be grateful the bastards are solvent.
johnbt – Asians aren’t your average kiwi?
What about us savers ? 30% of the population have mortgages the rest of us saved and did the right thing and now you want to punish us ?
I have to question your strategy, the people who want lower interest rates are never going to vote labour anyway (business owners). Homeowners are delighted with the drops compared to what they suffered when Labour were in power and this grandstanding just reminds them of what you did.
You are just annoying us hard working blue collar workers who have put a little bit aside for our twilight years.
As I posted in a previous blog article on here, the two, interest rates and the OCR are some what related, but not strictly. NZ Banks get much of their lending capital from offshore sources unaffected by an OCR change, so lowering the OCR would lead to a small decrease in Interest rates, but not strictly the same. Your ignorance of basic economic theory astounds me, and is essentially misleading the public. You are trying to vilify the Banks for something they have little control over.
Thanks for your postings. Here is what I heard from ordinary KiwiAsians:
When OCR was raised (trust Dr Alan Bolland was very much justified when doing so last year) those banks raised their floating mortgage rates, accordingly! But when OCR was cut, the cuts have not been passed in the rates. Hence the public demand for an inquiry. You don’t need to be a rocket scientist to question as to why the banks chose to do one thing but refuse to do another, taking into consideration of their (offshore) funding costs etc.
Privatising profit but socialising loss?
Why ordinary Kiwis are left holding the bag, eh?