Decision looms on 'Kiwi Bank'

By JOHN ARMSTRONG political editor

Jim Anderton's People's Bank could open its doors to customers in nine months if the cabinet gives the go-ahead within the next week or so.

The Alliance leader said yesterday that September-October was now the projected start-up date for the New Zealand Post-operated subsidiary if the cabinet made a favourable decision quickly.

Delays would push the opening back to early next year, because NZ Post staff would be dealing with the normal Christmas mail rush through November and December.

The cabinet had been expected to discuss the proposal today, but it is not on the formal agenda.

Instead, outstanding issues surrounding the "Kiwi Bank" are being thrashed out by the Government's three most senior members - Prime Minister Helen Clark, Mr Anderton and Finance Minister Michael Cullen - before the matter is discussed by the full cabinet.

That process is complicated by Mr Anderton's trip to the Chatham Islands this week.

He leaves after cabinet today and does not return until Friday. But he believes a decision can still be made soon.

Mr Anderton, who has been pushing NZ Post's case for a bank in line with Alliance policy, admitted that some Labour ministers remained "gun-shy" about establishing a state-owned bank because of last year's falling-out between the business community and the Government.

"There isn't universal enthusiasm ... The champagne corks aren't popping yet."

While he believed that the commercial case for the bank was convincing, his task was to provide satisfactory answers to all objections raised by ministers and ensure that Labour was comfortable about promoting the bank when fronting sceptics.

The Prime Minister said yesterday that she retained an open mind and the proposal was being subjected to rigorous scrutiny. "It will stand or fall on its merits."

Various scenarios have been put forward in confidential reports on the bank's viability, including one which requires it to build up a 100,000-strong customer base within three years.

However, NZ Post was also asked to come up with an "exit strategy" if the bank struggled. Mr Anderton said that if that happened, the customer base would still be a valuable asset which could be sold and the Government could recoup most of its establishment costs.

Mr Anderton would not confirm whether the new bank would slash fees by up to a third, saying again that there were various scenarios surrounding cheaper fees in the business plan NZ Post had presented.