Kiwibank's real point is the cost to you

The real point about kiwibank is not Richard Prebble’s grandstanding defence of a liberty that was never seriously threatened. National’s Tony Ryall had it right: the real point is the bank’s opportunity cost to taxpayers.

If $80 million is invested in a bank, that $80 million is not available for the government’s capital programme to build roads, schools, hospitals and suchlike.

Sure, taxpayers hate banks — who doesn’t? They’re large, impersonal, distant and expensive and infuriatingly indispensable.

But would taxpayers vote for a bank in their Postshop ahead of roads, schools and hospitals? Unlikely.

They would be even less likely if they examined the muddle of motivations that have spawned this little enterprise.

Let’s leave aside the Greens, who want cuddly little cooperative credit-union-type operations and had to struggle with their consciences to sign up to a national up-and-at-’em state bank. The Greens are bit players.

Motivation No 1: New Zealand Post wants to diversify to offset the relentless erosion of its core business, the mail, by new communication technologies.

Post has in fact impressively expanded its range of businesses, safely and profitably. It has done that even though greedy governments have all the while gouged its profits, leaving little capital for expansion. Surely, Post says, it is entitled, in the interests of its taxpayer-owners, to some of its retained earnings to grow the company.

There is a tinge of sentiment for the old Post Office Savings Bank mixed up in this but the determining factor is purely commercial.

Motivation No 2: The Labour party has — belatedly — recognised the general validity of Post’s develop-or-decay argument: that if a government is to hang on to state-owned enterprises, as this government declares it will, it has make sure they can adapt and grow so they don’t decay into a charge on the public purse.

But that is a slender thread in a skein of distaste for the bank in top Labour ranks. Labour is much more driven by�

�motivation No 3: keeping the Alliance sweet. As one leading minister said: “If it keeps Laila [Harré] quiet for a year, it is worth it.”

Then there are Mr Anderton’s three motivations.

Motivation No 4 is a classic bit of Alliance positioning: to alleviate the woes of the weak, the frail, the powerless and the computer-illiterate.

Motivation No 5, Mr Anderton’s second and, judging from his public comments, much more powerful motivation, is populist: giving practical vent to the hatred of banks.

Some opponents are also motivated by populism. They are stirring up fears savings will be lost or honest workers attacked by thugs.

Motivation No 6, Mr Anderton’s third, is the obverse of Labour’s Harré line. He gets a large and badly needed political feather for his fedora.

For Post that is a side-effect it could do without. For its chair, Ross Armstrong, the political fallout has been estrangement from the National party, in which he once held high office, and rottweiler attention from Mr Prebble.

So kiwibank is not a meeting of minds. It is a convenience. A muddled, multidirectional convenience.

That is an unsound basis for spending $80 million of your money on a risk business which might otherwise go on roads, schools and hospitals with provable benefits.

Having different motivations, the different players will apply different standards of judgment of success or failure and different criteria as to if, when and how the plug should be pulled if things don’t turn out as Post is projecting.

The only arguable motivation is the commercial one. (Helping the weak is a matter for subsidy from the current account, not a business investment from the capital account.)

Is that motivation sound? There are myriad reasons to be sceptical that a new bank will succeed in a crowded, competitive and changing market. Against them there is ranged Post CEO Elmar Toime’s first-class track record. If he says it will work, maybe it will.

And what if it does? Imagine National returns to office, ACT in tow. And imagine ACT demanding (in a reverse of Mr Anderton’s demand and with the same leverage applied) that Post be sold.

Applying Tony Ryall’s criterion in reverse, how could National refuse? It’s the opportunity cost, stupid.