New Zealand First leader Winston Peters has unveiled a policy proposal to buy back the Bank of New Zealand (BNZ), arguing that the move would return control of the nation’s banking system and provide long-term economic benefits.
The plan involves acquiring BNZ and merging it with Kiwibank to establish a new state-owned entity called the National Bank of New Zealand. According to Peters, this new bank would be commercially operated and designed to compete directly with major banks owned by Australian interests.
Investment in National Wealth
Peters described the proposal as an “investment” rather than a cost, claiming that foreign ownership of major banks drains value from the local economy. He criticized previous governments for selling national assets too cheaply during the 1980s and early 1990s, specifically noting that NAB purchased BNZ in late 1992 for NZ$1.48 billion.
Commenting on the 1992 sale, Peters stated, “When it was sold, six out of 10 banking customers were with BNZ. It was flogged off by a bunch of neoliberal nitwits and twits.” He questioned why the country continues to pay an Australian bank to run parts of the economy when New Zealand “should and used to do it ourselves.”
Funding and Financial Debate
The proposal has sparked a significant debate over feasibility and cost:
- Cost Estimates: Peters dismissed estimates that the acquisition would cost between $10 billion and $20 billion as “wildly inflated,” suggesting instead that the bank could potentially be acquired for “something above $7.5 billion.”
- Funding Strategy: When asked about funding, Peters told Breakfast that New Zealand needs to “recalibrate” its approach to debt, stating, “We pay far too much costly debt everywhere… This is a world awash with money.” He added that the stability of New Zealand’s democracy makes the country more likely to attract investment.
- Government Criticism: Finance Minister Nicola Willis described the plan as “extremely reckless,” arguing it would be unaffordable without additional borrowing or significant tax increases.
In response to the criticism, Peters suggested that critics within the National party failed to properly understand the policy, advising them to “read the speech first, or better still get someone to explain it to you before you make comments.”
KiwiSaver for Newborns
Alongside the banking proposal, Peters announced a policy to automatically enrol all newborn citizens into KiwiSaver. The plan includes a $1,000 government contribution to each newborn’s account, which Peters estimates would cost approximately $50–60 million per year.
Peters characterized this as a modest investment with a long-term payoff, asserting, “This is not a debt matter, it’s an investment… People start off from day one as investors.” He cited Singapore as an example of how national savings systems can support economic growth.
Potential Paths to Acquisition
Claire Matthews, a professor at Massey Business School, identified two potential ways the government could acquire BNZ:
1. Negotiated Sale: This would involve a “willing seller” where NAB could decline the sale or negotiate a price reflecting the true market value. Professor Matthews noted that the market value of BNZ would likely be “well in excess” of its $13.7 billion book value.
2. Mandated Purchase: The government could simply inform NAB that they are buying the bank at a specific price. In this scenario, the price would likely be closer to the book value—the realistic minimum the government could pay—though Matthews warned this approach could potentially “scare off international companies.”
