Jacinda Ardern has taken aim at banks in New Zealand for collecting billions in profits as the cost of living crisis deepens, saying they risked losing “social licence” to operate.
New Zealand’s 27 banking companies posted before-tax profits of NZ$9.7bn (US$5.6bn; £5bn) in the year to June, and are on track to pass a record-breaking $10bn next quarter. Those profits come as the population struggles with a cost of living crisis – food prices are up 8.3%, and overall inflation at a 13-year high of 7.2%, driving up mortgage rates, rents and household costs.
Asked if current profits accumulated by banks were “wrong” when families were struggling, the prime minister said: “Yes.”
“In this current environment where we are experiencing a significant cost of living issue for all New Zealanders, I feel a responsibility to call on all those who may have the ability to ease that pressure to consider how they may do so, and I include the banks in that,” Ardern said.
While she said the banks “are continuing to operate within the parameters and the rules that are set, but that doesn’t mean necessarily it’s giving them the social licence that you would expect from banks who claim to be operating as members of the community,” Ardern said.
But the prime minister stopped short of discussing further regulation, taxation, or an investigation into bank profits. “I’m simply being frank with you around my observations around what is occurring with bank profits,” she said. “Do I have a current solution from government on that? The answer is no.”
The Green party are calling on government to introduce an excess profits “windfall” tax that would redistribute some of the banks’ recent profits, and said the government could not rely on corporations’ self-reflection to regulate profiteering.
“Expecting banks … to put people ahead of profit would be a bit like putting the fox in charge of the hen house,” said finance spokesperson Julie Ann Genter. “When massive corporations like banks can cash in on a change in economic circumstances that they themselves did not bring about, then those benefits should be shared with everyone.”
National party finance spokesperson Nicola Willis said the prime minister should “take action” and launch an independent investigation into whether the banks had made “excessive profits” over the past two years, and whether government financial policy had contributed to this.
“I am deeply uncomfortable about commercial banks making record profits at a time New Zealanders are struggling with a record cost of living. It’s not right, but it’s not enough for the prime minister to just talk about it, she has to take action.”