I’ve seen some extraordinary manouvers in Select Committees – but few as brazen as the Government’s moves today to block the proposed Banking Inquiry in the Finance and Expenditure Committee.
Here’s the sequence of events, which until today were under privilege and could not be told.
On 12 March the Reserve Bank cut the Official Cash Rate, but the major banks didn’t. Governor Bollard was clearly concerned and said so. I questioned him at the time at FEC and publicly called on the major banks to pass through the full cuts.
The Finance & Expenditure Committee issued a strongly critical report on 9 June which gave rise to wide public debate – not only on short term rates but also on trans-Tasman equivilence of lending terms and the overall $4.5 billion banking profits at a time when businesses are failing and ordinary hard working Kiwi households are struggling.
At his next appearance at FEC the Reserve Bank Governor supported the proposal of FEC conducting an inquiry into these issues.
The Chairman, Craig Foss MP, proposed that the possible inquiry be into “The Relationships Between the Official Cash Rate and Short Term Interest Rates”.
On behalf of Labour members I proposed a somewhat broader topic – An Inquiry Into Recent Banking Practices, Including a Particular Focus on Retail Interest Rate Margins. In doing so, our aim was to ensure an holistic view was taken of banking practices, margins and profits.
Interestingly several major banks publicly expressed support for the inquiry, and on its broader terms.
The FEC then called in the Reserve Bank again to get further advice on the issues. While its detailed reports remain confidential to the Committee the Reserve Bank has also publicly stated:
1. OCR cuts have not been fully passed through to short term variable interest rates – either to businesses or households.
2. Medium term loan costs may reflect the higher costs of domestic and offshore borrowing.
In order to progress the inquiry, Labour and Green members expressed willingness to work in a bi-partisan way and proceed on the basis of National’s narrow inquiry topic.
National tried to delay further, but I proposed that a vote be held on the National Chair’s narrower topic.
National voted against their own topic. ACT and their new best friends in the Maori Party followed suit.
I then sought to adopt National’s inquiry topic by amendment into my own motion.
National and friends blocked that.
National, ACT and Maori (NAM) then blocked the original Labour inquiry topic.
In other words, despite all their public posturing National did a back flip and blocked its own inquiry as well as Labour’s.
The Prime Minister and the Minister of Finance roared like lions in public.
English confirmed he then had meetings with various senior bankers.
National then killed the inquiry dead.
Can they really continue to profess they have the interests of ordinary Kiwis at heart?