Labour’s banking claims challenged by credit union leader - Rob Collins

THREE KEY FACTS

• Arena Williams claims Labour aimed to make banking more accessible, but Rob Collins disputes this.
• Collins argues the 2020-23 Labour Government favoured banks and ignored non-bank financial institutions.
• Non-banks were excluded from the Funding for Lending Programme, benefiting Aussie-owned banks.

I guess one of the strategies some political parties adopt when they lose power is to try to rewrite history. To re-curry favour with the electorate and get themselves re-elected, they resile from previous policies and/or views to sometimes claim the opposite.

This certainly seems to be the case in Arena Williams’ opinion piece in the Herald this week. As a Labour MP in the 2020-23 Government, she should know better. To say that “For years, Labour has argued banking should be more accessible and affordable for all Kiwis” verges on the point of confirming Te Pāti Māori MP Tākuta Ferris’ description that “many members of the House are masters of obfuscation”.

As the founding executive director of Cubs NZ — representing credit unions and building societies (and in many submissions, all non-bank deposit takers (NBTD’s) we frequently ran into the brick wall that was the 2020-23 Labour Cabinet that held the view that “banks were good and everyone else was bad”.

In the lead-up to the Deposit Takers Bill, we submitted to Finance Minister Grant Robertson and the RBNZ that they should study the policies and actions of so many other countries, such as Britain, Ireland, Australia, the United States and throughout Europe, where co-operative financial services institutions were given recognition and support legislatively and practically. For example, Britain’s Conservative Prime Minister David Cameron, gave The Association of British Credit Unions £39 million ($85.5m) for a new computer system. In 2023, the Welsh Government gave £600,000 of funding for credit unions to support ethical and affordable lending during the cost of living crisis.

Back here in Aotearoa New Zealand, all NBDTs urged Robertson to amend his draft bill so Parliament took the lead and legislated issues such as “proportionality”, access to the payments system and abolition of some proscribed words rather than leave it to the RBNZ to regulate. We continually argued that Parliament had the right and the obligation to legislate and that governing by regulation was undemocratic. Unfortunately, it continued to fall on deaf ears. Even when we wrote directly to Robertson, if memory serves me correctly, we never even got a reply.

It wasn’t just Robertson. During the debate over the Conduct of Financial Institutions Bill, we argued that as credit unions and building societies already had a statutory obligation to treat their members fairly and equitably, there was little to be gained by adding them into the new legislation. In any case, the bill had arisen from the Royal Commission into Banking and Insurance in Australia. At that time (and since) there had never been an enquiry into the conduct of Cubs and no concerns about their behaviour had ever arisen. But again, the Labour Government wouldn’t listen.

Mbie, under David Clark and Duncan Webb, wrote that NBDTs (including Cubs) were included in the regime “to align with policy decisions to bring banks and NBDTs under one system of prudential supervision”. In other words, no matter how fair and equitable your behaviour, you were still going to be lumped in with those that had demonstrated poor processes.

During the Covid pandemic and subsequent lockdowns, the Governments of many countries turned to their co-operative financial services sector to help. With their stronger community connections and demonstrated “fair play” they were seen as partners in easing the difficulties of the pandemic and subsequent cost of living crisis.

The Funding for Lending Programme gave the Aussie-owned banks $19b at exceptionally cheap interest rates. As a result, their net interest margins grew markedly, which went straight to their bottom lines. Again, despite repeated pleas to be included in the scheme, non-banks were completely shut out.

For Arena Williams to claim that “We called out the banking industry’s record profits” defies the fact the Labour Government put in place an environment where these “record profits” could be achieved.

The article also claims the Labour Government “pushed for competition in the banking sector to ensure better services for customers”. In light of the experiences many of us in the non-banking financial services area suffered, that is a difficult view to sustain. Despite what should have been a strong philosophical connection between the Labour Party and the co-operative financial services movement, we were continually ignored, frustrated and with many policies, disadvantaged.

• This story has been amended to correct the amount of bank lending under the Funding for Lending Programme, which was $19b not $61b as originally stated.