Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.

The Finance and Expenditure Committee has now delivered its "Final Report on Banking Competition". It follows last year’s Commerce Commission market study into personal banking, but this time the net was cast wider — rural banking, business lending, and Māori access to capital were all explicitly included.

At NZAB, we’ve been deeply engaged in this process. We made a formal submission to the Committee, we wrote openly about why we thought the inquiry was asking the wrong questions, and we’ve published widely on the reality of farm lending margins in New Zealand. So when the report landed, we asked the obvious question: did it deliver?

The answer is a mixed one. There’s some progress — in fact, several of the recommendations mirror what we called for. But there are also gaps, missed opportunities, and the lingering sense that, once again, farmers may not see any real change. At the end of this article we also discuss the most important takeaway for farmers.

Nicola Willis announced in June that the Finance and Expenditure Committee would be adding Rural banking to the inquiry into banking competition in New Zealand. In particular she noted that: "growing the rural economy is critical to rebuilding New Zealand's economy and with farmers satisfaction with banking services dropping in recent years, its critical we better understand the role of bank competition in that sector".

This followed an earlier process run by the Primary Production Select Committee to which NZAB was asked, among others, to provide a submission and subsequently present in person.

As part of this new inquiry, the New Zealand Government wants to delve deeper into the reasons why the cost of banking is much higher for business and rural borrowers and examine the effects it's having on the New Zealand economy.

NZAB recently made the below submission to the Finance and Expenditure Committee.  As this is a public process, we thought it would be useful to share our submission with our wider farming and farm professionals’ audience.

It covers a brief summary of some of the issues as we see them, but also offers some practical solutions that the committee might consider to improve farmers access to capital and have a positive impact on New Zealand’s ability to increase exports, close the current account deficit and continue to maintain New Zealand’s relative GDP vs its peers.  

If you have any questions on any part of our submission, please feel free to contact us.