Thu, 12 Nov 2009 5:41a.m.
Prime Minister John Key labelled the inquiry a "fizzer"
Prime Minister John Key has dismissed the opposition-driven parliamentary inquiry into banks' behaviour, which found they failed to fully pass official cash rate (OCR) cuts to consumers.
"Fundamentally the banking inquiry by Labour was a political stunt and it's proved to be a complete and utter fizzer, there are no strong recommendations," Mr Key said.
Mr Key said Labour had nine years in government to deal with the issue, but had not felt strongly enough about it then to do anything.
"The relationship between the OCR and what consumers pay to borrow money is a very complex relationship. If Labour were really serious they would have come up with recommendations to do something about it."
The parliamentary inquiry was led by Labour, the Progressives and the Greens, and the findings were released yesterday.
Statistical evidence produced for the inquiry showed that while most interest rates had fallen since the global financial crisis began late last year, major banks had not passed on the full impact of OCR cuts into short-term interest rates charged to customers, said Labour's finance spokesman David Cunliffe.
The report showed "considerable agreement" among submitters on a number of key banking and monetary policy issues.
Mr Cunliffe accused the Government of "failing in its responsibilities to hard-working Kiwi families and taxpayers" by refusing to take part in a bipartisan inquiry.
Bank workers' union Finsec said the cuts were not passed on despite the major banks surviving the global financial crisis comparatively well.
Finsec campaigns director Tali Williams said in one of the inquiry's peer reviews, Professor John Quiggin said "a better conclusion might be that the taxpayer is entitled to require that the banks will act as good corporate citizens".
Ms Williams said New Zealand taxpayers and consumers were underwriting the banks' business through government guarantee schemes.
"Meanwhile, the banks continue to be very profitable and are not doing everything they can to help customers through the global financial crisis. In this case, to the tune of billions of dollars."
Finance Minister Bill English said at the outset of the inquiry that nothing would come out of it and said that had been proven true.
"Reserve Bank analysis shows that banks' interest rate margins had dropped and stabilised at a relatively low level," Mr English said.
NZPA
