Multi-party Banking Inquiry appoints experts

new-zealand-labour-party

Wed Aug 19 2009 12:00:00 GMT+1200 (New Zealand Standard Time)

Multi-party Banking Inquiry appoints experts

Wednesday, 19 August 2009, 2:41 pm
Press Release: New Zealand Labour Party

19 August 2009 Media Statement

The multi-party parliamentary banking inquiry has appointed three experts to act either as advisers or peer reviewers, Labour Finance spokesperson David Cunliffe says.

David Cunliffe said the inquiry will be assisted by dedicated staff and leading experts, funded from within the existing parliamentary resources of Labour, the Greens and the Progressives.

“We have appointed the expert advisers and peer reviewers to help the Inquiry work through the arguments and evidence presented in submissions, to undertake any related research and to prepare and review a high-quality draft report,” David Cunliffe said. The experts (more details in attachment) are:

• David Preston, Advisor, an independent consultant with a background in finance and economics who has previously served in the Treasury and at the International Monetary Fund. He has consulted widely in New Zealand and around the Pacific on economic and social policy issues.

• Professor John Quiggin, Peer Reviewer, Director of the Risk and Sustainable Management Group, University of Queensland. He is one of Australia's leading research and policy economists, and is the only Australian economist to have twice been appointed as a Federation Fellow, the nation's most prestigious research position. He is an international research leader in the economics of risk and uncertainty, with applications to public and private investment and financial regulation. His work on this topic has been published in leading international journals including the American Economic Review, Journal of Economic Theory and Journal of Risk and Uncertainty

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• Professor Tim Hazledine, Peer Reviewer, head of the Economics Department, Auckland University. His fields of expertise include macro and micro economics, international trade and finance and completion economics. He has taught at Auckland, Warwick and Oxford, and at Queens and UBC in Canada. He is a widely published author and multiple award winner in economics.

David Cunliffe said the primary focus of the Inquiry was on the pass-through of recent cuts to the Reserve Bank’s Official Cash rate to short-term variable interest rates, but a number of other issues have been identified as relevant to the context of the Inquiry. They include:

• Lending margins, including the cost of wholesale funding from various sources;
• Banking profitability, and how that has changed over time;
• Bad debt and risk provisioning by banks;
• Lending terms and practices;
• Other matters considered relevant by submitters.

David Cunliffe will chair the Inquiry. Other MPs participating will be Greens Co-Leader Dr Russel Norman, Progressives Leader Jim Anderton, Labour Associate Finance spokespersons David Parker and Clayton Cosgrove, and Labour Economic Development spokesperson Shane Jones. All other parties in Parliament have also been invited to attend.

Public submissions close on 31 August, with public hearings scheduled for the following week (details of how to make submissions and other details of the Inquiry are in the attached document, and can also be seen at: http://www.bankinquiry.org.nz

Parliamentary Banking Inquiry Q&A

Q1. Why is the banking inquiry being held?

Because many thousands of New Zealanders may be paying too much interest for their short term variable rate loans. The Reserve Bank of New Zealand has said interest margins are at ‘historically high levels’ due in part to an alleged failure by the banks to pass through all of the recent cuts to the Official Cash Rate into short term loan and variable interest rates.

Q2. What do you hope the Inquiry will achieve?

Public participation to get the facts and issues on the record in an open and transparent way; considered analysis by independent experts; and actionable recommendations for consideration by Treasury, the Reserve Bank, Ministers and the banks themselves. Members of the public, banks, businesses and organisations can put their views and evidence into submissions. The Inquiry will provide a fair and transparent venue for hearing these submissions in open session. Independent experts will analyse the evidence and prepare and review a high quality report.

Q3. Who is involved in the Parliamentary Inquiry?

Labour, the Greens and the Progressives are working together to facilitate a Parliamentary Inquiry outside the Select Committee. All parties have been invited. National, ACT and the Maori Party have not yet formally responded to their invitations.

The Inquiry will be chaired by Labour Finance Spokesperson Hon David Cunliffe. Other MPs sitting on it include Greens Co-leader Dr Russel Norman, Progressives Leader Hon Jim Anderton, Labour Associate Finance Spokespeople Hon David Parker and Hon Clayton Cosgrove and Economic Development Spokesperson Hon Shane Jones. (other MPs may substitute or join the Inquiry – a detailed schedule will be available on the Inquiry website www.bankinquiry.org.nz)

Q4. Why isn’t the Inquiry being held by a Select Committee?

Because Parliament’s watchdog, the Finance and Expenditure Select Committee voted by government majority to muzzle itself. In a bizarre somersault National, ACT and Maori MPs voted down their own proposal for a narrow inquiry terms of reference despite opposition MPs compromising from their broader preferred terms. No one knows for sure why the government members voted against their own proposal.

Q5. What will happen once the report is issued?

The Inquiry report will add to pressure on policymakers, the Reserve Bank and the banks to ensure that justice is done and seen to be done by the New Zealand public. Policy issues arising from submissions will be clearly set out with recommendations for further action.
Q6. How do I make a submission?

It’s easy. Click on www.bankinquiry.org.nz and make a submission online.

Or write to the Inquiry freepost at:
Parliamentary Banking Inquiry
Room 3.046
Parliament Buildings
Wellington

You can ask to be heard in person by indicating on your written submission.
The closing date for submissions is 31 August 2009.

Q7. When and where will hearings be held?

Hearings will take place in the week of 1- September 2009, in Ministerial meeting rooms at 2.04/2.05 Executive Wing (“Beehive”).

A detailed schedule will be posted on www.bankinquiry.org.nz

Q8. Is the Inquiry covered by Parliamentary Privilege? What does this mean for submissions?

No. Neither the Inquiry nor submissions are covered by Parliamentary Privilege. This means that anything said in submissions or orally carries its own legal risks. The Inquiry or its MPs will not be responsible for the content of submissions. Care should be taken by submitters not to make any statements that could be perceived as defamatory. The Inquiry reserves the right to withhold submissions (in whole or in part) or to return them to submitters if they appear to contain inappropriate material or to pose legal risks.

Q9. Who is advising the Committee?

In addition to its own dedicated staff, the Inquiry will be supported by a team of international experts who will advise the MPs and prepare and peer review its draft report.

The experts are:
Mr David Preston (M Com. Hons (Econ), BA, A Prof), (Advisor)
Mr Preston is an independent consultant with a background in economics and finance, who has previously served in the New Zealand Treasury and at the International Monetary Fund. He has consulted widely in New Zealand and around the Pacific on economic and social policy issues.

Professor John Quiggin (BA Math (Hons I), B Ec (Hons I), M Ec (ANU), PhD (UNE), FASSA, FAICD), (Peer Reviewer). Professor Quiggin is the Director of the Risk and Sustainable Management Group, University of Queensland; and a distinguished Fellow of the Australian Research Council. He is a widely published author and opinion columnist, including for the Australian Financial Review. He is one of several leading Australian economists who have recently written to Prime Minister Rudd urging reform of the Australian banking sector.

Professor Tim Hazledine (BA Math/Econ, MA Econ, PhD Econ (Warwick) (Peer Reviewer) Professor Hazledine is a Professor and Head of Department, Economics, at the University of Auckland. He has taught at Auckland, Warwick and Oxford, and at Queens and UBC in Canada. He is a widely published author and multiple award winner in economics. His fields of expertise include macro and micro economics, international trade and finance and completion economics. He has consulted widely internationally and brings a broad perspective to the work of the Banking Inquiry.

Q10. What will it cost the taxpayer to hold the Inquiry?

Next to nothing. The Inquiry has a limited budget that will be funded from within the existing parliamentary resources already allocated to the three parties participating. The Speaker has agreed to provide the rooms. Submitters travelling to Wellington for the Inquiry will need to meet their own costs.

Q11. Isn’t this whole exercise just political grandstanding?

No. Great care has been taken to obtain a neutral venue and distinguished independent experts to assist the Committee. The Inquiry will seek to provide a fair, balanced and transparent process where all the relevant facts can be put on the table. The Inquiry will produce a high-quality report with actionable recommendations.

Q12. Do you expect the Government MPs to front up?

It looks unlikely, but we remain hopeful. Government MPs on the Finance and Expenditure Committee originally proposed an FEC Inquiry topic, then voted to kill their own proposal after opposition MPs said they would agree to it.

The intent of the Inquiry is not to engage in political point scoring, but to undertake a serious hearing of issues of importance to many thousands of New Zealand households and businesses.

Q13. Will the Reserve Bank participate?

That is not yet known. The RBNZ has already made some public statements on this issue and Governor Bollard earlier called for the Inquiry to take place at the Finance and Expenditure Committee.

We expect the Governor to seek the permission of the Minister of Finance to brief the Inquiry. It would be a poor precedent for the Minister to block such a move by an independent statutory entity.

ENDS

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