Hon Jim Anderton

Member of Parliament for Wigram
Progressive Leader
Opposition spokesperson on agriculture

1 July 2009 Media Statement

Banks repatriating ‘enormous amounts’

New Zealand bank branches paid their overseas owners $11.7 billion in interest and profit last year.

Progressive Wigram MP Jim Anderton told a Federated Farmers conference today that the situation poses a risk for the agriculture sector, which is facing a ‘perfect storm’ of input price rises, threats to demand and now finance risks.

Total bank lending to agriculture in April this year was $43.7 billion, or 13.8 per cent of the total lent to New Zealand.

“Two thirds of that is lending to the dairy industry - at a time when one estimate says Fonterra could be forced to cut its payout from the current $4.55 if our dollar stays over sixty US cents. This would be very hard on some farming businesses that thought the last couple of years’ high prices would last longer. If interest rates came down just one per cent, farmers would save $450 million,” Jim Anderton said.

“The banking system has begun repatriating enormous amounts of New Zealand money.”

Remittances by banks in New Zealand to their overseas owners climbed from $3.8 billion in 2000, to 4.6 billion in 2004, and then began climbing steeply: $6 billion in 2005; $7.8 billion in 2006; $9.1 billion in 2007 and $11.7 billion last year.

“That’s more than the entire GST revenue of New Zealand. It is more than the entire education budget. And in a single year it is far more than the entire proceeds of the asset sales programme that caused so much pain through the eighties and nineties.”

“The huge remittances to banks are the result of the Australian banks funding our balance of payments deficit, now at sixteen billion dollars a year. They are taking an enormous clip of the ticket for doing it. We need to rely more on our own savings, instead of spending the savings of others.

“Interest rates are too high at a time when banks should be reducing them. In a recession, while banks around the world have been under pressure, the big banks here have been smirking. In the current environment, a lot of farms are facing a squeeze and they will struggle to meet the payments on their debt.”

ENDS

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