3 Nov 2015

Australian-owned banks must pay tax - govt

6:15 pm on 3 November 2015

The government won't rein in the record high profits made by the country's main Australian-owned banks as long as they pay their tax, it says.

New Zealand money.

The four Australian banks operating in New Zealand took home record profits this year. Photo: RNZ / Alexander Robertson

BNZ, ANZ, Westpac and ASB made a combined $4.5 billion in the 2015 financial year, sparking claims of excessive profits.

During question time in Parliament this afternoon, Greens co-leader James Shaw asked the government what steps it had taken to keep record bank profits in New Zealand.

Finance Minister Bill English said they planned to do very little.

"Where profits are legally made by overseas banks, then we don't take specific action to take their profits off them, other than to tax them.

"Reserve Bank data shows the banks paid almost $2 billion in income tax in the year to June, 2015."

That failed to satisfy Mr Shaw.

"When farmers are struggling to meet their loan repayments and families in Auckland are being saddled with huge mortgages just to buy their first home, does he think it appropriate that the major foreign-owned banks are all making record profits?"

Firms and households appeared able to meet their commitments, Mr English replied.

Profitable banks were in the country's best interests, and people were always free to vote with their feet if they felt they were being ripped off, he said.

"It's better to have strong banks. You can't have a strong bank that doesn't make any money.

"These ones make profits under competitive conditions and, as I said, New Zealanders who think those profits are excessive can take their business elsewhere."

Mr English also ruled out further support for Kiwibank, saying the best way for it and other New Zealand-owned banks like TSB and SBS to grow was to lure customers away from their Australian-owned rivals.

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