TLDR: After years of downplaying the need for a market study into high bank profitability, the Labour Government is finally turning towards the idea, under heavy pressure from all other parties wanting a shorter, sharper and more politically noisy select committee inquiry.
PM Chris Hipkins, Finance Minister Grant Robertson and Commerce Minister Duncan Webb all said yesterday a market study would be better than the select committee inquiry called for by National Finance Spokeswoman Nicola Willis yesterday morning and endorsed by the Green and ACT parties. I have asked Labour ministers for two years whether they would ask for a market study into banking, given studies into fuel, supermarkets and building materials have already been done. They repeatedly downplayed the idea and said nothing was planned. So what changed?
The crescendo of calls has widened from just the ‘usual suspects’ in the Green Party to National and ACT, and the Reserve Bank’s pointed criticisms last month of the banks not passing on rate hikes to term depositors has made a difference. Reserve Bank (Te Pūtea Matua) Chief Economist Paul Conway’s endorsement last week of the need for a study and more research showing the role of higher profits in inflation globally are also likely to have tipped the balance.
The questions now for the Government and National are: