NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / New Zealand

Finance Minister Grant Robertson on why he needs more powers to restrict bank lending

Derek Cheng
By Derek Cheng
Senior Writer·NZ Herald·
26 Apr, 2021 05:00 PM4 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Finance Minister Grant Robertson says a greater role in setting lending restrictions would enable more influence on "distributional trade-offs and societal preferences". Photo / Mark Mitchell

Finance Minister Grant Robertson says a greater role in setting lending restrictions would enable more influence on "distributional trade-offs and societal preferences". Photo / Mark Mitchell

Greater powers for the Finance Minister to restrict lending could reduce confidence in the Reserve Bank, blur lines of accountability, and lead to inconsistent decision-making, Grant Robertson concedes.

But he says it is justifiable because the Government needs more tools in order to deliver electoral promises and impact "distributional trade-offs or societal preferences" - such as in the housing market.

The pros and cons of the Finance Minister determining the types of lending the Reserve Bank can restrict are outlined in a series of Cabinet papers about a proposed framework - which Robertson unveiled on Thursday - for regulating deposit-takers.

The framework would see the Reserve Bank regulate licenced deposit-takers - including banks, credit unions and finance companies - and introduce a deposit insurance scheme for up to $100,000 if a deposit-taker collapsed.

Advertisement
Advertise with NZME.

The reforms aim to protect society from damage to the financial system and wider economy, which could be caused by the failure of individual deposit takers or excessive risk-taking by the sector.

Robertson would also be able to restrict certain types of lending, though the Reserve Bank would continue to have full discretion over which tools to use to apply the restrictions.

It would enable Robertson and the Government to impact an area - via lending restrictions - which the Reserve Bank wouldn't necessarily have to have regard for.

"We, as a Government, may have a different 'risk appetite' to that of the prudential regulator [the Reserve Bank] for financial system outcomes," Robertson said in his Cabinet paper.

Advertisement
Advertise with NZME.

The proposals have in part been informed by last year's soaring house prices - despite initial predictions they would fall - which were driven by low interest rates and the multi-billion dollar economic stimulus in response to the Covid-19 pandemic.

If the framework had been in place last year, for instance, the Finance Minister could have decided to restrict how much borrowing was available to housing speculators - and the Reserve Bank would have then been tasked with how to achieve that.

Discover more

Business

Treasury pushed for greater lending powers to be moved to Finance Minister

26 Apr 04:00 AM
Business

Grant Robertson's 'overt move' on Reserve Bank independence

22 Apr 06:00 AM
Business

Government could give Finance Minister new role in restricting bank lending

21 Apr 10:00 PM

The Minister, in setting the lending standards, has to consult with the Reserve Bank - which Treasury recommended.

A regulatory impact statement shows that the Reserve Bank wanted the Minister to be able to restrict lending - but only in line with its own recommendations. Cabinet rejected this.

Cabinet also rejected Treasury's other recommendations for Robertson to have even more lending powers.

It's currently up to the Reserve Bank to decide what types of lending can be restricted, in accordance to its remit. A Government proposal would make the Finance Minister responsible. Photo / File
It's currently up to the Reserve Bank to decide what types of lending can be restricted, in accordance to its remit. A Government proposal would make the Finance Minister responsible. Photo / File

The framework would also strengthen the Government's hand in dealing with the fallout of any failing bank or financial institute.

"As Minister of Finance, I have a legitimate interest in how the Reserve Bank undertakes its crisis management and resolution functions, given the wider economic and social impact of deposit takers' failure and the potential for public funds to be put at risk in managing such failure," Robertson's Cabinet paper said.

He said a stronger hand promoted "democratic legitimacy", better management of "broader distributional trade-offs and societal preferences", and reduced the risk of ad hoc changes to the legislative framework "arising from political frustration".

Advertisement
Advertise with NZME.

"On the other hand, this greater role needs to be balanced against the risk of short-termism and inaction bias which can undermine financial stability, reduced confidence in the Reserve Bank and its ability to successfully achieve its statutory mandate, blurred accountability for financial policy outcomes - and financial stability in particular - and inconsistency of decision-making and a reduced role for technical expertise.

"The recommendations I am putting forward here strike the appropriate balance between this interest and the operational independence of the Reserve Bank."

The reforms will be implemented through a new Deposit Takers Act, which is expected to be introduced towards the end of this year.

Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Latest from Business

Premium
Media Insider

TVNZ news in the spotlight: Independent review will check for balance, bias

07 Jul 06:02 PM
Premium
Opinion

Property Insider: Mansons begins Graham St project; free car with Westgate home; how’s Resido going?

07 Jul 05:00 PM
New Zealand

'Long-term strategy': How iwi are outpacing major NZ companies

07 Jul 05:00 PM

Audi offers a sporty spin on city driving with the A3 Sportback and S3 Sportback

sponsored
Advertisement
Advertise with NZME.

Latest from Business

Premium
TVNZ news in the spotlight: Independent review will check for balance, bias

TVNZ news in the spotlight: Independent review will check for balance, bias

07 Jul 06:02 PM

Former Australian news boss will lead trust review; TVNZ forecasts $48.5m loss in 2026.

Premium
Property Insider: Mansons begins Graham St project; free car with Westgate home; how’s Resido going?

Property Insider: Mansons begins Graham St project; free car with Westgate home; how’s Resido going?

07 Jul 05:00 PM
'Long-term strategy': How iwi are outpacing major NZ companies

'Long-term strategy': How iwi are outpacing major NZ companies

07 Jul 05:00 PM
Qantas cyberattack: Potential criminal makes contact with airline

Qantas cyberattack: Potential criminal makes contact with airline

07 Jul 11:00 AM
Gold demand soars amid global turmoil
sponsored

Gold demand soars amid global turmoil

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP