New Zealand's People's Bank fever infects Australia

SYDNEY, Australia and AUCKLAND New Zealand – The term “people’s bank” isn’t used much in the U.S., but the term which refers to a government-sponsored bank that brings financial services to those that are not served by traditional financial institutions, has begun to circulate in Australia. In New Zealand it’s already closer to being a reality. Politicians, however, in both countries seem to be overlooking the role credit unions are playing in both countries to fill the same financial needs. John Bailey, chairman of Commonwealth Bank of Australia’s (CBA) the second largest bank in Australia, has called the idea of a people’s bank “unworkable” and has pointed out that with deregulation the government would need to draw funds to pay for low interest rates without sufficient assets. Bailey’s opinion has been seconded by CBA CEO David Murray. However, another bank leader, Will Bailey ex-CEO of ANZ Bank, Australia’s fourth largest bank, has recently come out in favor of the people’s bank. Australia has been undergoing major attitude changes by consumers towards banks, shiftingfrom positive feelings to outright hostility. Credit Union Times has reported on some of these manifestations over the past few months. While the Australian Banking Association (ABA) claims that profitable banks are good for the community in general, Labour Politician Kim Beazley has denounced the increase of bank fees as well as reduction in services. ABA Chief Executive David Bell strongly disagreed with Beazley saying that the banking industry had met most of Labour’s social demands. If that is the case, the message hasn’t reached the consumer. The banking industry’s Ombudsman Colin Neave reported a record 61,729 phone complaints about banks in the past year. He has threatened to start naming names of badly behaving banks. This is a 15% increase in complaints over the previous year. Complaints were up more than profits, which only increased by 10%. The Farmers Union also has come out in favor of a people’s bank. The bush was especially hard hit when bank offices closed. Australian credit unions through a government aided credit care program that CUSCAL was heavily involved in have tried to fill the gap, and in many areas have succeeded in opening credit unions in these areas. Although credit unions can offer exactly the same services as banks, are treated equally with banks including paying taxes, there has not been statements that credit unions are in one sense, “People’s Banks.” Credit unions in Australia are constantly getting high ratings for service in poll after poll. The concept of a people’s bank is still very new in Australia, but it has been around much longer in New Zealand. “The Post which is government owned is pressing ahead with its plans to launch a subsidiary company,” according to Raymond Howard, spokesperson for the New Zealand Association of Credit Union (NZACU). This people’s bank is the brainchild of Jim Anderton, leader of the Alliance party, which is part of the Labour/Alliance government currently in power. The bank was originally supposed to be called the Kiwibank, but no name has officially been decided. Although the press has dubbed it “The Peoples Bank,” the Credit Union Movement refers to it as “Jim’s Bank”. Howard said credit unions are “the real people’s bank”. Jim Bolger the previous Prime Minister for the National Party Government and currently the New Zealand ambassador to Washington, D.C., has been named chairman of the new people’s bank. His new responsibilities would become effective when he returns to New Zealand in February 2002. Bolger’s National party leaders “are opposed to the Government investing about NZ$100mil of taxpayers funds in the new Government Bank,” Howard said. “NZACU is concerned that the Government is supporting this new bank which could affect credit unions while not doing anything to address the legislative changes that credit unions need to enable them to compete on a level playing field. The current Friendly Societies and Credit Union Act is obsolete and restricts the Credit Unions in their ability to compete in the Financial Services Market,” Howard said. Neil W. McDonald, who is both on the NAZCU Board of Directors and the World Council of Credit Unions Board of Directors has said that in many cases post offices, which would be the site of the bank, are also general stores and book stores, and the personnel certainly are not trained to handle complicated financial dealings of people. He discussed the situation with Credit Union Times at WOCCU’s Leadership conference in Paris. On the European continent, many countries, such as France, Switzerland, Germany have postal systems that offer banking services, but it is mainly savings, checking and cash machines. The countries do not have credit unions as we know them, but mutual banks, often started by the same forefather that started credit unions. They are not thought of as “people’s banks” but postal accounts. The New Zealanders and Australians have many immigrant residents from Europe. Whether this is the source of the transformation of postal services into “people’s banks” is not certain. The New Zealand people’s bank is much further along in development than Australia’s which is still in the “maybe, maybe not” stage, but with the bank dissatisfaction swelling among consumer there, it might be just a matter of time before a people’s bank becomes a reality down under. – [email protected]