Possibly this will be the day the Government produces the "people's bank." Every Monday for months now the meeting of the cabinet has brought expectations that the Alliance's pet project might be about to materialise. And every Monday the story has been the same: it is not quite ready, there are still some details to resolve.
The time the cabinet has taken in trying to iron out the wrinkles can only be commended. But a proposition that sounded like a disaster from the beginning is becoming more suspect the longer the Government struggles to put it into presentable form.
Last week, the National Party came by a business plan which noted that the bank will not be able to offer services as cheaply as originally envisaged if its customers are predominantly people on low incomes and benefits. That penny should have dropped at the beginning.
The plan also warns of costly automatic banking charges if "MyBank," as it evidently will be called, hopes to plug into the machines of established banks. And it outlines the physical security requirements and the need to counter the likelihood that it will be seen as a "poor bank."
All this is exposing too much to public gaze, according to the chairman of New Zealand Post, which will run the bank as an addition to its counter services. Ross Armstrong accuses National leader Jenny Shipley of "fiscal treason" no less, and demands the return of the document.
New Zealand Post stands to receive $75 million from the public purse to set up this dubious addition to its business. Dr Armstrong had better get used to the fact that the public is going to watch what happens to that money and will not allow commercial secrecy to shroud the kind of information that has come into Mrs Shipley's hands. It is her job to expose poorly conceived public policy and financial waste.
When the Government finally produces this rabbit from its hat, it had better produce much more besides. The public has a right to see all the business assessments and advice the Government has received. Since the bank is claimed to fill a need that the private sector will not meet, it need not worry about competition and commercial confidentiality. Presumably, the Government would readily publish commercial information that might entice more banks to serve small depositors at lower cost.
If this bank is established in a haze of "commercial secrecy," there will be only one reason: because by any commercial assessment it is a dog. It will attract mainly small accounts that are costly to service. No wonder its charges are likely to be higher than was hoped.
Even so, says Alliance leader Jim Anderton, the charges overall will not reach those of existing banks. He should acknowledge that as the difference between charges diminishes, the case for setting up a state bank diminishes too.
At one time it was going to be a simple cash service, now it seems to envisage a full retail banking business, including mortgage lending. And once it was not going to cost the taxpayer a cent. There must be a hundred more worthy uses for the $75 million that the Government will outlay on a service that increasingly sounds little different from the personal banking services that already exist.
Certainly some of the services of existing banks carry a prohibitive charge. Deliberately so. They are operations the banks are trying to discourage or replace with electronic and telephone transactions. If the Alliance bank manages to bring about a general reduction in bank charges, the reason might be that the party has relieved the banks of their most costly work.
But if the Alliance's bank is going to keep fees low for a clientele of small savers and frequent users, it is hard to see how it can do so without continual calls on the taxpayers. Quite likely the privately owned retail banks have been cross-subsiding the service to those people from charges to their more economic customers. The Government is in danger of simply nationalising the subsidy.
This is a political project, nothing more. We are going to get a state bank, viable or not, because the Alliance needs something to show for its spell in power. It is disgraceful that public projects should be developed this way, an indictment of coalition government.
<i>Editorial :</i> Bank's difficulties suggest it's a dog
AdvertisementAdvertise with NZME.