Banks and big corporates accused of 'death by a thousand cuts'
New Zealand’s economy is being slowly “strangled” by monopolies in key sectors, according to Monopoly Watch founder Tex Edwards (pictured), who says weak regulation and political capture have allowed dominant players – including banks – to entrench their market power.
“When we look at why the economy is underperforming, it’s almost death by a thousand cuts, or in this case death by 10 or 20 cuts, because there are 10 or 20 monopolies that are extracting monopoly rents,” Edwards told RNZ.
He pointed to supermarkets, electricity companies, airports, insurance companies, and banks as examples of industries where structural reform has stalled. “What we’re seeing is a continued amount of tinkering and pampering instead of structural reform,” Edwards said.
Over the past week, ANZ, BNZ, and Westpac have each reported their full-year results – collectively recording profits of around $5.2 billion – which Edwards said reflected “the vice-like grip” of a small number of powerful institutions on the New Zealand economy.
The comments come as global ratings agency Morningstar DBRS awarded New Zealand a AAA sovereign credit rating with a stable outlook – its highest grade – citing prudent fiscal management, credible monetary policy, and a resilient financial system. The firm said the rating reflects confidence that the economy is “rebalancing following tight monetary policy” and is well-placed for gradual recovery.
Call for stronger regulation and structural reform
Edwards said further regulatory intervention is needed to deliver benefits to consumers, arguing that select committee inquiries, Commerce Commission studies, and regulatory scrutiny have achieved little.
He claimed large banks had been successful in promoting a narrative that they bring in foreign capital, pay substantial taxes, and support competition, despite holding more than 80% of the market.
“They’ve used this to confuse politicians and policy makers as to how competition would evolve,” he said.
According to Edwards, the banks’ influence extends deep into the policymaking process.
“They’ve surrounded themselves with PR and policy lobbyists, who have effectively captured policy makers, politicians, and regulators,” he said.
Edwards described recent political calls for big banks to pass on Reserve Bank rate cuts more quickly as “naive”, arguing that real reform must go beyond public appeals.
Open banking delays ‘protecting profits’
Edwards said New Zealand’s major banks have delayed the rollout of open banking, which would allow third-party financial providers to compete more directly by integrating services through secure digital connections.
“New Zealand banks have delayed open banking, because it would lower margins and lower profitability,” he said.
He added that Payments NZ, the organisation managing interbank payments and owned by the country’s eight major banks, should be removed from bank control to ensure a level playing field.
Competition advocate urges breakup of major institutions
Monopoly Watch has long pushed for stronger structural action, including calls for ANZ to be forced to divest the National Bank of New Zealand, which it acquired in 2003 and fully merged in 2012.
Edwards said these types of moves are essential to restore fair competition and improve outcomes for consumers, RNZ reported.
“More competition means better prices and innovation,” he said. “But until policy makers stand up to these entrenched interests, we’ll keep watching the same cycle of dominance and decay.”
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