Bank was recently under fire for "colloquial" lines that "missed the mark"
The Social Credit Party (Social Credit) is calling on Kiwibank to drop its lending rates, particularly for first-home buyers (FHBs) and small and medium businesses, as the COVID-19 pandemic persists this year.
In a recent report by Interest.co.nz, Kiwibank was considered one of the most aggressive setters in New Zealand last year, offering one of the lowest rates among the main banks for the fixed one, two, and three-year terms for 27 of 52 weeks.
However, under Kiwibank’s current operating mode, its shareholders – the New Zealand Superfund (Superfund), the Accident Compensation Corporation (ACC), and NZ Post – are taxing the bank’s customers to pay for their superannuation, accident compensation, and government services through dividends from NZ Post.
Social Credit noted that most Kiwibank customers are individuals, and small businesses that have been hit hardest by the pandemic and other factors. Therefore, it suggests, Kiwibank has a responsibility to consider social factors rather than only commercial ones.
Additionally, unlike the four Australian banks that extracted six billion dollars from Kiwis last year and then exported most of it to overseas shareholders, Kiwibank’s shareholders should not expect similar profit returns, Social Credit claimed.
“While the Superfund and ACC should be looking for good returns on the money they have to invest, that investment should be in shares of productive New Zealand enterprises, allowing them access to lower-cost finance for development than is available by bank borrowing,” the party said in a statement.
“In the same way that other commercial banks do, Kiwibank creates the money it lends to borrowers out of thin air by simply entering digits on a computer keyboard. It does not lend money that people here deposited with it, so it could easily lower its lending rates.”
Social Credit advises the government to reverse the 2016 decision pushing the Superfund and ACC to buy 45% of Kiwibank.
The party suggested that the shareholding should instead be taken up by the Reserve Bank of New Zealand (RBNZ), and Kiwibank should assist in the country’s development “rather than acting as just another profit-oriented commercial bank.”
Social Credit’s calls on Kiwibank to drop its rates follow the bank’s recent issue revolving around its “avocado on toast” references on its website.
According to RNZ, the bank’s opening line on its page about low-deposit options for FHBs said: “Have you given up takeaway coffees and avocados on toast and still think you’re years away from getting a big enough house deposit? A low-deposit home loan could help you get into your first home sooner than you think.”
The bank has already scrapped the first sentence. Still, the damage has been done – with Lesley Harris, media relations and commercial director at First Home Buyers Club, stating that “colloquial” lines about takeaway coffee and avocado on toast did not stack up against the state of the housing market.
She added that even if people were buying both foods “every single day of the week, that still wouldn’t make a huge impact” on saving for a home deposit.
“It’s dangerous to throw those [kinds] of fly-away comments around because I think it can be misconstrued as, I suppose, minimising just how challenging it really is,” Harris said, as reported by RNZ.
In response, Kiwibank said on Twitter that it knew “it can be really challenging to save for a house deposit, and we recognise this narrative misses the mark.”