Governor misled Parliament - Greens

Last updated 09:34 04/12/2012
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Reserve Bank Governor Graeme Wheeler.

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The Green Party has accused new Reserve Bank Governor Graeme Wheeler of misleading Parliament by telling the finance select committee that bank profits were ''about average or below'' most other OECD economies.

The Greens say data they have obtained from the Reserve Bank under the Official Information Act shows New Zealand banks' pre-tax returns on assets from 2009 to 2011 make them the fifth most profitable banks in the OECD.

Only Iceland, the Czech Republic, Singapore, and Australian banks were more profitable, the party said.
''The Governor was wrong to tell Parliament that our foreign-owned banks are only making average, or below average profits,'' said party Co-leader Dr Russel Norman.

''Our new Governor's complacency about bank profitability is concerning. His job is to regulate our banks, not be their champion.''

Earlier in the year, the independent Bank for International Settlements found that Australasia's big four banks were the most profitable in the developed world for 2010 and 2011. In 2011, Australian banks made a pre-tax return of 1.19 per cent on assets compared with a global average of 0.36 per cent, the Greens said.

''The Governor's mistake demonstrates one of the limitations of having one person solely responsible for the decisions of the Reserve Bank,'' said Dr Norman.

''Boards make better decisions than individuals and are less prone to capture by the industry they regulate. This is why no other OECD country vests this much power in one person.

''The simple fix is to make the Reserve Bank Board accountable for significant Reserve Bank decisions - like setting the Official Cash Rate - and ensure the board includes representatives from the wider economy, like the export and manufacturing sectors,'' Norman said.

The Reserve Bank said it was not immediately able to comment on Dr Norman's claims.

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- The Dominion Post

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