By SIMON COLLINS
Branch closures and fee rises by overseas-owned banks have propelled what was once mocked as a nostalgic Alliance pipedream into political respectability.
Public support for a Government-owned "Kiwi Bank" has taken off since Alliance leader and Deputy Prime Minister Jim Anderton suggested it early last year.
With opinion polls running
almost two to one in favour, Labour ministers are also warming to the idea, while stressing that it does not imply any heavy commitment of tax dollars.
Labour initially derided the notion of resurrecting Government involvement in banking, once the order of the day before pillars such as the Bank of New Zealand and Postbank were sold abroad.
Associate Finance Minister Trevor Mallard, cooling off after condemning other Alliance planks as anti-business, is one who acknowledges "a very clear message from a large number of New Zealanders that they want a Kiwi Bank."
"I don't think there is a political risk. I actually think there is a gap in the market," he told the Weekend Herald. "Many banks have indicated small savings are not their market."
He had heard no complaints from businesses - vociferous in opposing other Government policies such as labour reforms - about "the idea of Jim's bank."
But a dearth of detail, apart from New Zealand Post's likely lead role in running the bank through its extensive network, has left many with reservations.
Polling company UMR-Insight found opinion split 39 per cent each way when the Alliance first commissioned it to test the proposal 15 months ago. Its latest survey of 750 people, taken in February but only now released by Mr Anderton, found 47 per cent in support with 26 per cent opposed and 27 per cent unsure.
The poll question has become somewhat outdated, asking if people support or oppose "the Alliance proposal to establish a publicly owned bank using branches of NZ Post and Public Trust."
Mr Anderton has dropped the trust from the equation, even raising the possibility of a minority overseas partner such as WestpacTrust to help Post if the state-owned enterprise cannot find the right banking expertise here.
That might be politically untenable, given that 67.3 per cent of Kiwi Bank supporters cited a desire for local ownership as their main reason, trailed by 28.5 per cent whose priorities were lower fees and better service.
Said Mr Mallard, when asked about possible overseas involvement: "It would be inappropriate to go into that detail, but it is likely if it is to be a Kiwi Bank for there to be an onshore partner."
An obvious possibility is the successful TSB, the only publicly owned bank left in the country, but that institution would be loath to extend its supply lines too far out of Taranaki at the expense of core customers.
Mr Anderton is cool about community banks, which are taking off like bushfire in Australia, where the Bendigo Bank has established partnerships with 22 small towns and a Melbourne suburb abandoned by the main banks.
He says there is an unacceptable risk in asking small communities unlikely to be rolling in clover to raise local stakes of $NZ375,000 before Bendigo will go into a town.
Bendigo, founded during the 19th century goldrush in the Victorian city of that name, acknowledges that it was a big call two years ago when it formed its first joint venture with two small towns with 1100 people between them.
But there are now dozens of towns queuing to join the scheme, often over-subscribing through fund-raisers such as sausage sizzles while undergoing rigorous feasibility studies.
Early branches are making monthly profits of more than $10,000 to be injected into community projects as once-threatened businesses expand, while discount interest offers by retreating banks are routinely rebuffed.
Kaikoura-born supermarket owner Jim Liddell says he has already notched up $6.6 million in business for Bendigo's 23rd community branch since it opened a fortnight ago in his northern Victorian hometown of Nathalia.
More than 500 subscribers ranging from schoolchildren to octogenarians raised $488,000 in what was seen as the only way to fight the big banks - through commercial competition.
Mr Liddell says the community bank's strength is its breadth of ownership, building confidence in towns otherwise facing bleak futures as business bleeds away to bigger centres.
In New Zealand, the Green Party wants to build a national network from institutions such as the TSB, PSIS and credit unions while looking at filling any gaps along Bendigo lines.
"Anderton's Kiwi Bank is not only unnecessary but it could seriously undermine existing New Zealand institutions," says co-leader Rod Donald.
Northland banker turned community worker Hemi Toia says the Kiwi Bank must form community partnerships, rather than be superimposed from Wellington, to make any real difference to regional New Zealand.
Far North Development Trust chairman Chris Mathews says NZ Post could act as a guarantor of local communities crying out for development capital tied up all over New Zealand in power-company and other trusts.
NZ Post chairman Ross Armstrong does not see a development finance role for any of five bank business models his board is drawing up for shareholding ministers, but he is not ruling out community partnerships.
"If the model involves working with community banks, there are ways of doing this."
But with the Government at pains not to risk taxpayer money, he is quick to add that any model will be disregarded if it does not stack up as commercially "robust."
Mr Anderton has also long accepted a need for the bank to succeed on the basis of a low cost-structure, helped by not having to repatriate millions of dollars to an overseas owner.
It would be established "without any cost to the taxpayer," he assured credit unions in April, after their association urged him to choose them rather than NZ Post as his vehicle for national banking coverage.
The Alliance is meanwhile nervous that a call by Commerce Minister Paul Swain for a parliamentary inquiry into bank charges may sidetrack work on its leader's pet project.
Finsec, the bank workers' union, has long pressed for an inquiry ahead of any new bank, but Mr Anderton told the Herald before Mr Swain returned this week from extended sick leave that he was "not keen."
"I don't need an inquiry to know that people are sick and tired of being overcharged to put their money into a bank account, overcharged to keep it there, and overcharged to take it out."
A review of British banking found banks creaming sterling 3 billion to sterling 5 billion a year too much off the public.
But it advised against regulating any particular financial products, and opposed negotiating with the main banks to provide a fee-free service for low-income customers, for fear of entrenching their existing monopoly.
The British inquiry cited discounts by utility companies for automatic bank payments as a counterbalance to bank fees for those least able to afford them.
An Australian banking inquiry in 1997 also recommended against extensive regulation, advising instead that competition be encouraged by allowing credit unions and building societies to issue cheques and join the banking clearing system.
New Zealand is already moving to improve credit unions' competitiveness, with the Government deciding last week to raise to $250,000 a ceiling of $40,000 on deposits from individuals.
* Next week: Are you being overcharged on loan repayments?
The banks - a Herald series
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Anderton's bank - an idea whose time has come
By SIMON COLLINS
Branch closures and fee rises by overseas-owned banks have propelled what was once mocked as a nostalgic Alliance pipedream into political respectability.
Public support for a Government-owned "Kiwi Bank" has taken off since Alliance leader and Deputy Prime Minister Jim Anderton suggested it early last year.
With opinion polls running
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