Source: Radio New Zealand
Three of the big four Australian-owned banks have reported large profits in the past week. RNZ / Dom Thomas
The New Zealand economy is dying a death of a thousand cuts from the vice-like grip of monopolies in key sectors, according to a leading competition campaigner.
Monopoly Watch leader Tex Edwards said the large profits reported by three of the big four Australian-owned banks in the past week highlighted the power of a handful of companies, and the inability of policy markers to bring them to heel.
“When we look at why the economy is underperforming, it’s almost death by a thousand cuts, or in this case death by 10 or 20 cuts, because there 10 or 20 monopolies that are extracting monopoly rents.
“Supermarkets, electricity companies, airports, insurance companies, and banks are under scrutiny and what we’re seeing is a continued amount of tinkering and pampering instead of structural reform.”
Over the past week ANZ, BNZ, and Westpac reported full year results, with collective profits for the three of them of about $5.2 billion.
More regulation needed
Edwards said the banking sector needed further regulatory intervention to bring benefits for consumers, but he said various select committee inquiries, a Commerce Commission banking study, and regulator scrutiny had achieved little.
He said the large banks had been adept in selling the message that they were bringing capital into the country, paying significant taxes, supporting economic activity, and supporting increased competition in a sector that they had more than 80 percent of.
“They’ve used this to confuse politicians and policy makers as to how competition would evolve.”
Edwards said the banks had surrounded themselves with PR and policy lobbyists, who had effectively “captured” policy makers, politicians, and regulators.
He said comments by politicians that they hoped the big banks would pass on Reserve Bank rate cuts more quickly were “naive”.
He said the big four had also slowed the introduction of open banking, which would allow third party financial businesses to offer competing financial services, by taking time to modernise their technical systems.
“New Zealand banks have delayed open banking, because it would lower margins and lower profitability.”
He advocated that Payments NZ, which managed the payments system that settled transactions between banks, should be taken out of the control of the eight banks which own it.
Previously, Monopoly Watch has also called for ANZ to be forced to divest the National Bank of NZ, which it was allowed to take over in 2003, and was fully merged in 2012.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
