John Armstrong: A 'roo hunt ... without 'roos

The strong suspicion they would end up being kangaroo meat in a kangaroo court was presumably the reason the country's Australian-owned banks politely declined the invitation to appear before the Opposition-instigated banking inquiry.

They will not be ruing that decision. Within the first half-hour of the first day's hearing, the inquiry's primary focus on "the pass-through of recent cuts to the Reserve Bank's official cash rate to short-term variable interest rates" had been rendered down into more basic language.

Labour MP Clayton Cosgrove cut to the chase and put things bluntly.

Were the Aussie banks "rorting" their Kiwi customers, he asked Kiwibank's chief executive, Sam Knowles.

Representing the only bank to make a submission to the informal inquiry, Knowles offered the soothing response that New Zealand was a competitive market and "we are all competing".

Cosgrove's colleague, Stuart Nash, got more satisfaction by asking essentially the same question, but more obliquely: Why was there a perception that the banks were "ripping New Zealanders off"?

Slightly contradicting his earlier answer, Mr Knowles replied that "in some situations", other banks were taking advantage of a lack of competition to push up their margins.

That statement plus other remarks by the Kiwibank chief about higher margins between savings and borrowing rates no longer being justified would have been greeted with some relief by the Labour, Green and Progressives MPs at the hearing.

Mr Knowles' comments provided justification for an inquiry which has no official status.

It was set up by the Opposition after National voted down Labour attempts to get Parliament's finance and expenditure select committee to investigate why Reserve Bank interest rate cuts were not being passed on to the trading banks' customers.

The unofficial inquiry is trying to look like an official one by doing its best to look like it is an official one. But that can only be taken so far. The space allocated by Speaker Lockwood Smith for the two days of hearings is a rarely used, nondescript functions room on the second floor of the Beehive.

The inquiry has no teeth. But it has attracted submissions from a throng of lobby groups - including Federated Farmers - trade unions, economic think tanks, financial experts and commentators. It will not be short of material for its report.

However, the no-show by the Australian-owned banks leaves a gaping hole. As does the absence of any input from the Reserve Bank, which kicked things off months ago by trying to jawbone trading banks into passing on reductions in the official cash rate.

So why did Kiwibank front? That question was put by the Progressives' Jim Anderton, who defied the sceptics by bringing Kiwibank into being when he was deputy prime minister and leader of the Alliance.

Mr Knowles diplomatically replied that MPs were "critical stakeholders" in the state-owned bank.