Mr Speaker, how many businesses do you know that have no debt? The Department of Statistics in 2022 said that the average New Zealand business, for every $100 in its own equity, owed $202. So what that says is the ability to better borrow is essential to running a business.
Look, it’s right and proper—indeed, it’s fair and reasonable—that banks are able to decline to do business with people or organisations for legitimate commercial reasons. It’s right and proper that they’re able to charge interest rates reflective of the risk that a client represents. But the question that this bill is all about is whether it’s right for banks and other financial institutions to make decisions on non-commercial grounds, when it’s environmental, moral, or cultural.
Now, some people have suggested that banks could simply argue that they’re withdrawing lending from a business or even a whole sector, a whole industry, for commercial reasons, because they see an industry going out of business, because it is a sunset industry and they see it going into the sunset within a short period of time. But that, of course, is a self-fulfilling prophecy. If you remove banking services, you, essentially, remove the ability for those businesses to do business, and of course they’re going to go out of business.
My bill puts the onus on banks that plan to withdraw or withhold a banking service to be very sure that there is a real—and the bill says this—valid and verifiable reason based on financial risk, to withdraw or withhold services. I’ve been asked about the penalty regime and the penalty process. My bill backs that obligation with penalties, and the regime is already in the existing Act.
The Financial Markets Authority (FMA) website says, “The FMA is New Zealand’s financial markets conduct regulator. We’re responsible for promoting and facilitating fair, efficient, and transparent financial markets in New Zealand. … We are dedicated to promoting and facilitating fair, efficient, and transparent financial markets, characterised by”—here is a key word—“fair access”—fair access—“suitable products, quality advice, transparent actions”—that’s important, too—“and integrity.” They go on to say, “Our goal is to ensure New Zealand businesses, consumers and investors”—and here again is critical—“believe the financial services sector works well for them.” Of course, if you withdraw those banking services, it’s not going to work very well.
What is not right and proper is for banks to make those decisions for non-commercial reasons because they do not like the industry or even they do not like the people—as we’ve seen in the UK in one instance. Some—possibly some in this House—will say, “Well, those businesses are bad”—particularly around climate emissions—“so good riddance, and well done to the banks.” But that is a very dangerous pathway, because who is next? Who is next?
The question I put to you, though, is: is that the role of a bank to make that judgment or is that the role for an elected Parliament? Of course, this Parliament has made a decision this year about terminating an industry—that is, the greyhound industry. But we’ve done that transparently, fairly, and democratically. It is very different than the banks making those sorts of decisions, that lawfully established and legitimate businesses should be, effectively, shut down.
Indeed, banking doesn’t just affect the targeted business or sector but all of those around it—their suppliers and services, their communities, in many cases. It affects our economic performance.
One other thing is that we have been struggling as a nation for decades, in terms of productivity. The last thing we need to do is to have our banks, or our Australian banks, hamstringing us any further.
So let’s look at some of the industries who have already been targeted or have expressed deep concern about being targeted, because those industries, by and large, contribute to our economy, they provide vital services, they contribute to New Zealand’s export revenue, and, by doing this, they underpin the living standards of every New Zealander and the tax revenue that pays for the public services we all enjoy.
Well, first of all, there’s the mining industry—and I can hear some nervousness across the other side of the House. Some would wish that the mining industry did not exist, but they still happily, even if unknowingly, consume products made from mined materials.
But let’s say it’s the coal industry that they’re particularly concerned about. Well, the Finance and Expenditure Committee heard from Minerals West Coast and Straterra that some banks prevent New Zealand coalmining companies from accessing some or all of their services for climate change reasons already. We heard from Kiwibank, who said they don’t lend to the coal, oil, and gas sectors. Well, Kiwibank, sorry, that is not going to keep the lights on and it’s not going to keep energy prices down, as we saw last winter, and, hopefully, we don’t see again this winter. Westpac said that they had ceased lending to the coalmining sector, following losses incurred when Solid Energy collapsed. Look, that’s fair enough to say, “Risky business”, but one miner’s failure in a poor market does not mean that other better-capitalised and better-run miners in a good market are the same risk. I have found that some of our Australian banks actually invest heavily in mining in Australia, but they are thinking about that and whether they continue doing that—some of them are thinking about that.
But if your beef is specifically with coal, can I give you a few numbers? It’s worth thinking about global coal production being at an all-time high. In the West, it’s going down, but for the rest of the world, it’s going up faster than the West is going down. New Zealand produces 2.6 million tonnes, approximately, of coal a year. It sounds like a lot, but when you put that in context, China, which is the biggest coalminer in the world, by a long distance, produces 46 percent of all the world’s coal, and that is 4,382 million tonnes or 1,677 times more than New Zealand. Even if you put population, that’s 6.2 times as much. Do you know what? That number is going up all the time. Their growth, since 2007, has been 701 times our entire production. So what difference do we really make in that context?
Perhaps climate-concerned Kiwis would rather that those mined minerals and coal come from other countries—other countries that do not have the same environmental standards as New Zealand does. What about the labour standards? What about the jobs that we export? What about our balance of payments? It’s really, really good that in New Zealand, we shut our own industries down and we buy those products and those minerals from overseas. Because do you know what? We’ve got a balance of payment—oh, deficit, isn’t it? We haven’t run a balance of payment surplus since, what, about 1970? So we need to be firing on all cylinders and not hamstrung.
What about our primary sector, which produces 80 percent of our goods exports? The ANZ told the FEC—the Finance and Expenditure Committee—that they don’t currently apply restrictions to businesses with significant agricultural emissions, and they seemed to put a “yet” warning in there. Let’s be very clear: if we damage or destroy our agriculture sector, we damage or destroy the living standards of every single Kiwi, urban and rural. We cannot afford to do that. According to the Federated Farmers May 2025 survey, which will be released next week—so this is in advance, but they have told me that I can use that—roughly 20 percent of farmers report being asked about their emissions profile by their lending banks, and an overwhelming 70 percent said that they would support—