PMNZ May Newsletter Good profile, growing the team and responding to the Commerce Commission draft report on banking
Welcome to the May 2024 newsletter. Here is a link to previous newsletters.
Commerce Commission report
The Commerce Commission’s draft Personal banking services market study report, released in March 2024, provided a good opportunity for us to give feedback and gain profile. Our opinion piece titled, Why we need more banks, not bigger ones, was picked up by the New Zealand Herald on 9 April 2024.
In our opinion piece, we supported the Commerce Commission’s suggestion that Kiwibank could become a challenger bank to the ‘oligopoly’ of the big four Aussie banks. There was, however, a much better (and cheaper) way to do this than increasing Kiwibank’s capital. The solution also meshes with one of the Commission’s other recommendations – to promote open banking. This will make transferring from one bank to another a lot easier and encourage new entrants and services.
We also said we needed more banks, not bigger banks. Setting Kiwibank on an expansion path to join the ‘oligopoly’ won’t change the underlying problem – it simply means that five banks will share 90 per cent of the market instead of four.
Our submission to the Commerce Commission provided more detail and a summary of the submission can be found on our website.
Funding model for water infrastructure for councils
We did a presentation to the Whakatane District Council on their ten-year plan where we provided our alternative funding model for water infrastructure. We said that the availability of finance has dogged meaningful water reform and this continues with the current Government’s replacement for Three Waters, Local Water Done Well.
Our solution is to have the Local Government Funding Authority issue low interest bonds and have the bonds purchased by the Reserve Bank. This will provide low interest funding for water infrastructure at a time when councils are struggling to provide services to their community. We will provide our solution, called Local Water Financing Done Well, to other councils, Water New Zealand, the Infrastructure Commission and Local Government New Zealand to gain industry support for our funding model. Watch this space.
Reserve Bank webinar – What is digital cash
The Reserve Bank hosted a good webinar titled, What is Digital Cash? There was a ten-minute introduction and then questions for 50 minutes, some of them toughish. The two main concerns relating to Digital Cash were the potential loss of sovereignty if foreign companies, like Google and Facebook, start issuing their own digital money; and a prominent concern around the security and privacy aspects. We will post a link to the recording, once it becomes available.
New team member
We have a new member on our team, Peter Judd from Mangere Bridge in Auckland, who joined us earlier this month. Peter is committed to a more balanced society and wants to grow in understanding around the challenging money system we find ourselves in. If you wish to join our team, please contact me on 0274 778 147.
During April we also posted:
a BBC article titled, “First-time buyers face toughest test for 70 years”, according to a report by the British Building Societies Association (BSA). Unfortunately, this sounds very familiar.
In an article from the Guardian titled, Outdated and misleading: is it time to reassess the very concept of money. It is great to see a major newspaper talking about money being created out of thin air.
Nga mihi
Don Richards