Govt MPs blocked interest rates inquiry, says Labour

Bank interest rates have been attracting criticism from politicians.

Government MPs blocked a parliamentary inquiry into the interest rates banks are charging, the Labour Party said today.

The finance and expenditure committee had been considering holding an inquiry but has decided, on a majority vote, not to go ahead with it.

Labour finance spokesman David Cunliffe said New Zealanders were looking to Parliament to answer questions about why interest rates, especially floating rates, seemed to lag behind cuts to the official cash rate.

National, ACT and the Maori Party MPs on the committee voted against holding the inquiry after giving "every indication" they would support it, he said.

Labour and the Greens wanted the inquiry.

"Thousands of New Zealand homeowners, businesses, farmers and exporters have every reason to ask why Parliament's watchdog on the economy is, by a majority vote, choosing to stay muzzled," said Cunliffe.

"They are paying too much for their mortgages and business loans and they've now been denied the opportunity to find out why in a parliamentary forum."

Labour MP Brendon Burns, a committee member, said he attended a public meeting in Christchurch last month when Prime Minister John Key said the banks could cut their interest rates if they "tried a bit harder".

"So there was implicit support at the highest level for some scrutiny of the banks," said Burns.

In Parliament, Cunliffe questioned Finance Minister Bill English about the committee's decision.

English said it was up to the committee - of which he was not a member - to decide whether to hold an inquiry.

"If anyone thought an inquiry by backbenchers would change the direction of the economy, then we would have done it months ago," he said.

Committee chairman Craig Foss, a National MP, announced the decision not to hold the inquiry.

He said the vote was taken after a briefing from the Reserve Bank.

The committee has 12 members - five National, four Labour, and one each from ACT, the Maori Party and the Greens.

- NZPA