5. JOHN KEY (National—Helensville) Link to this
to the Minister of Finance
Is he concerned about domestic inflation demand; if so, what actions does he support to curb this?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
Yes. The primary contribution I can make is to maintain a strong fiscal stance, contrary to the fiscal profligacy advocated by National, and to ensure my messages are consistent with those of the Governor of the Reserve Bank.
If intervening in bank lending rules are to be so successful, will he start with the Government-owned Kiwibank, which has led the mortgage wars in both fixed and floating loans with brochures like the one I have here that reads: “No matter what home-loan option you prefer, Kiwibank is lower.”?
Hon Dr MICHAEL CULLEN Link to this
It is certainly true that the New Zealand - owned Kiwibank, where all profits stay in this country, has provided cheaper services than the foreign-owned banks, which that party continued to support throughout the election campaign and continues to support today.
If the House is to believe that the Government’s earlier claims that one of the key benefits of Kiwibank is that it forced the other Australian banks into providing more competitive services, is it not a little ironic that the Minister now wants to regulate those very banks for following the course he has prescribed; if not, why not?
Hon Dr MICHAEL CULLEN Link to this
I will try to spell it out for the member again: I am simply asking for a report from Treasury and the Reserve Bank on what other instruments might be helpful in supporting the interest rate instrument, both on the upturn and the downturn. Unlike the member, I do not know what that report—which has not even started to be written—will say, and, unlike that member, I have an open mind about what needs to be done. What I do know is that promising $4 billion a year of tax cuts in an overheated economy is a level of adolescent silliness beyond even most of his fellow front-bench members. [ Interruption]
Madam SPEAKER
Hon Bill EnglishQuite right, Mr English. Will housing programmes established by his Government and implemented by Kiwibank, such as the Kiwibank In Reach homeownership programme that allows first home buyers to access a 100-percent mortgage, be affected by the proposals that the Reserve Bank is suggesting, which would limit the amount banks could lend their customers; if they will, why did the Government bother fostering those programmes in the first place?
Hon Dr MICHAEL CULLEN Link to this
Unlike Dr Brash, whom Mr Key is subtly attacking with his questions, this Government supports ordinary Kiwi families buying their own home. Unlike Dr Brash, we do not believe in a class of capitalist rentiers and New Zealanders being peasants in their own country.
Does he agree with the Reserve Bank governor when he recently said that banks are putting homeowners at risk with loans they cannot afford; if so, does this include Kiwibank; if not, why not?
Hon Dr MICHAEL CULLEN Link to this
The regulation of the banking sector is neutral on which bank it is. I note that the National Party is proposing that the rules for Kiwibank should be tougher than for foreign-owned banks. That is not the Government’s policy.