Tuesday, 14 May 2024 13:25

Monopolised

Written by  Milking It

OPINION: Not everyone will agree with former 'Minister of Everything' Stephen Joyce on his summation of Fonterra when writing recently about NZ's tendency to legislate for monopolies: "We allowed Fonterra to be created, with its near-monopoly over milk collectin, and have since been on a long journey of dissatisfaction with its performance up until quite recent times."

He also mentions the building supplies industry. But Joyce definitely has a point when it comes to the big-four banks: "One of the stark revelation from the ComCom's analysis is that a large bank can hold 15 per cent less capital of its own behind each loan it makes than a small bank must. That puts small banks at an immediate disadvantage to the large ones, as the capital their shareholders provide is effectively regulated to make a lower return."

As he says, the big four are "fat and happy" and unlikely to face serious competition under current law.

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