Windfall tax for banks to solve Budget squeeze

Everyone knows we have a problem with tax. We need more of it to fund our schools and nurses and essential infrastructure, yet practically every family in the country is struggling with the high cost of living and needs a break. The upcoming Budget of Finance Minister Nicola Willis is being squeezed between these two realities.

So let’s do the sensible thing, and empty the accounts of the Australian banks.

The Commerce Commission’s ongoing market study into personal banking makes sobering reading. The four Australian-owned banks – ANZ, ASB, BNZ and Westpac – are amongst the most profitable in the OECD. Their profits are around twice as high as they should be. And over the last three years, during a brutal cost of living crisis, they raised their margins by about 25%.

As a result, they’re making eye-watering levels of profit: $7.21 billion after tax in the last 12 months alone. That’s around $20 million a day being siphoned out of our wallets and our economy, and exported across the Tasman for the benefit of fatcat Australian bankers.

This isn’t banking: it’s looting.

And it’s not like we’re getting anything much for the money. As the Commerce Commission reports, most of the systems used by our banks are archaic and out of date, and their services lack innovation. So we still don’t have real-time transactions, a vibrant fintech sector, or any of the aggressive competition or clever ideas that are taken for granted overseas.

Instead, we have rampant fraud. Because of those ancient and insecure systems, and because of the persistent refusal of the Australian banks to reinvest, regular Kiwis are being defrauded of hundreds of millions of dollars every year through fake investments, via New Zealand bank accounts.

So we’re paying premium prices for inefficient banks, negligible innovation, poor services, insecure systems, and the privilege of being ripped off by fraudsters and Australian bank shareholders alike.

It’s time for this to end. So let’s start with the most straightforward step of taking back our hard-earned cash.

Minister Willis can act quickly and decisively to implement a windfall tax on the Australian banks, and reclaim $3.5 billion – just half of the excessive and un-earned profits they intend sending offshore. It will immediately fill the holes in the Budget, and bring genuine relief to hard-pressed families across the country.

This Government has shown it’s prepared to act decisively, so the necessary legislation can be passed under urgency within a few weeks, and billions of dollars of our money can be reclaimed by the start of the new financial year, to the benefit of us all.

Of course, the banks will complain. But given their profiteering behaviour towards New Zealand families over the last decade, why would we care? After all, that $3.5 billion is our money.

Kent Duston is the principal of Habilis New Zealand, a wellbeing and social investment consultancy based in Tāmaki Makaurau