High interest rates harming farmers MP Hayes

Wairarapa MP John Hayes claims banks are "gouging" customers with high interest rates, and it is hitting farmers particularly hard.

According to the New Zealand Herald, Mr Hayes questioned Finance Minister Bill English about the impact of high interest rates on the local economy during a meeting of Parliament's finance and expenditure committee yesterday.

Mr Hayes said his own electorate would benefit from greater consumption or spending which would result in more jobs, but high interest rates - particularly for farmers - were hampering that.

"It seems to me in my electorate banks are gouging, particularly on their overdraft rates, charging about 2 per cent more than they need to," the New Zealand Herald reported.

Mr English told Mr Hayes that he thought the banking system in New Zealand is sufficiently competitive, referring to Europe's recent financial crisis.

"The one thing that's worse than profitable banks is unprofitable banks, so all these countries are finding out what happens when your banks fall over."

Three out of New Zealand's Australian-owned big four banks recently reported record results and between them generated net profits of $3.5 billion for the year, up from $3.2 billion on the previous year.

Mr Hayes told the Wairarapa Times-Age his question was prompted by complaints from constituents that overdraft rates were too high.

"There's reasonable competition. You always have collusion, I'm not accusing banks of that but the accountants I'm talking to, people I respect and respect their judgement, are telling me there's a problem, at least a problem in our part of the world."

Mr Hayes said farmers could be saving $20,000 a year in interest if banks dropped overdraft rates on the million-dollar debts many farmers had.

Federated Farmers Wairarapa president Jamie Falloon could could not be reached for comment.