Norman's numbers aren't stacking up
Green Party co-leader Russel Norman is having a great week towards the end of a great year.
First, polling published over the weekend showed just how important the Greens could be in a Labour-Greens coalition Government. Dr Norman put his hand up for the powerful finance role.
Labour leader David Shearer gave that scenario an immediate raspberry, but if Labour's polling doesn't improve dramatically, its mandate would be weak, and the Greens would have a strong hand.
Then, on Monday, Norman was judged among the strongest performing politicians of 2012 by a panel of political junkies at the TransTasman newsletter, a bastion of conservative views.
On Tuesday, Brazilian oil giant Petrobras gifted him its decision to hand back deep-sea exploration licences. There are still concrete plans by Shell, Anadarko and others for deep-sea drilling off Taranaki, Canterbury and in the Great South Basin next summer, but that didn't stop claims the Government's oil and gas strategy is now "in tatters".
But perhaps Norman's most significant political achievement this week is to have succeeded in rattling Reserve Bank Governor Graeme Wheeler.
Recently appointed after a career at the highest levels of the World Bank and a Treasury official at the height of the mid-1980s Rogernomics reforms, Wheeler is emerging as something of a hate figure for the political left.
With the Greens suggesting New Zealand needs to print money to drop the value of the kiwi dollar, Wheeler's predictably conservative views about the conduct of monetary policy were always going to be a red rag to a bull.
Following today's monetary policy statement, which is expected to contain no surprises, Norman will probably take another swing at Wheeler.
However, Norman's most potentially damaging blow was to claim that the governor is biased in favour of the Australian-owned banks.
The Australian-born MP is well aware that bank-hating is near the top of the list of pastimes across the Ditch, equivalent to New Zealanders' traditional loathing of power companies and Telecom.
Those traditional whipping boys are fading here at the same time as the global banking system is in the dogbox for precipitating the global financial crisis, and debate around the world centres on the future role and shape of banks. There's clearly political capital in whipping up anti-bank sentiment here.
The fact that the Australasian banking system came through that crisis comparatively unscathed is easily forgotten, while tax avoidance cases involving $2.3 billion by our foreign-owned banks are not.
Yet if the Reserve Bank is playing favourites, you'd have to ask why the Aussie banks are livid at our central bank's insistence on a radically different, more conservative and expensive system approach to bank rescue provisions.
The RBNZ's "open bank resolution" proposals have been vigorously resisted to little avail.
Norman's claim that Wheeler misled Parliament on the profits made by Australian-owned banks is also shaky.
Wheeler conceded analysis on bank profits was incomplete when he commented at a select committee hearing, but the final figures bear out his view that New Zealand banks' earnings are "within the range of those of other advanced economies".
The same figures show Australian banks are more profitable than their New Zealand subsidiaries, while Norman's alternative figures, sourced from the Bank of International Settlements, don't include figures for New Zealand at all.
The most authoritative local analysis of local banks' performance, KPMG's annual Financial Institutions Performance Survey, suggests banking conditions are competitive. Net interest margins fell steeply through the mid-2000s, flatlined from 2008 to 2010 and only slightly improved last year. At 2.2 per cent, average net interest margins - the difference between what the banks pay investors depositing money and what it loans that money out for - remain below the levels of a decade ago.
Meanwhile, households have been paying off debt and companies have been reluctant to borrow. Quite simply, Norman's charge of economic "strip-mining" lacks credibility when put against the conditions in the economy.
However, his stance is important for policy-watchers to note. The bipartisan consensus that has supported central bank autonomy since the late 1980s is starting to break down. Both Labour and the Greens are proposing changes to the governance and mandate of future Reserve Bank governors.
Their arguments are rooted in the inescapable conclusion that global banking, if not our own banking system, was given far too long a leash, and that more active regulation is both inevitable and desirable if the useful social and economic function banks play is to outweigh the destruction they've unleashed.
However, in seeking to undermine the credibility of the Reserve Bank governor, Norman also gives a dangerous signal if he's serious about wanting to be Finance Minister. Claims of the kind he made this week need to be mounted on the firmest of foundations or he risks doing real economic damage for what is likely to be only transitory political gain.
- Business Desk