The National Party wants to know whether the banking sector is competitive enough, citing its incredible profits, as interest rate hikes put pressure on households.

Finance spokeswoman Nicola Willis has written to the chair of Parliament’s finance and expenditure committee, Rachel Brooking, calling for a “short, sharp inquiry into any potential competition issues in New Zealand’s retail banking sector”.

The Reserve Bank, the banks’ main regulator, has also suggested it might be time for a competition inquiry into banks. Chief economist Paul Conway told Newsroom last week he believed a Commerce Commission market study into banks might be appropriate.

“New Zealanders enduring a prolonged cost of living crisis will have been concerned to hear the Reserve Bank join a chorus of voices casting doubt on the competitiveness of the retail banking market,” Willis said.

 “This comes at a time when bank profitability is high, even as access to credit has become harder to obtain for some borrowers and many mortgage holders are feeling crushed by rapidly rising interest rates.

“National believes New Zealand bank customers deserve answers to questions about the adequacy of competition in our retail banking sector, why increases in interest rate rises for deposits have lagged rate rises for lending, and the impact of new regulations imposed by the Government.”

Willis said any inquiry should be “narrow in scope and the hearing of evidence should be limited to a narrow group of stakeholders”.

The committee could then recommend to the Government any steps that might be warranted, including whether to launch a Commerce Commission market study.

“A formal Commerce Commission market study would take a long time and be extremely resource-intensive, creating a lucrative opportunity for lawyers and consultants, but highly unlikely to give New Zealanders any immediate answers to what are urgent questions,” Willis said.

Bank profitability, measured by net interest margin, hit an eight-year high in the December quarter.

According to data collected by the Reserve Bank, banks’ net interest margin rose by 6 basis points, to 2.37 per cent, in the final three months of 2022.

The margin last reached this level in December 2014. The last time it was higher was in June 2006, when it hit 2.50 per cent.

The Green Party said it would support a select committee inquiry, but the party’s revenue spokeswoman, Chlöe Swarbrick said there was already sufficient evidence for an excess profits tax.

“Four Australian banks made $180 a second in the past year while lower income New Zealanders spent ever more of their income on essentials,” Swarbrick said.

“There’s a clear and immediate solution and that’s an excess profits tax. A 10 per cent tax on those excess billions would raise more than half a billion and go a very long way to supporting flood and cyclone impacted New Zealanders.

“When the Reserve Bank and Monopoly Watch argue there’s something far more sinister under the hood of these banks, politicians of course should take a deeper look. That’s why we also support an inquiry, of whatever form we can get across the line, to look at far more fundamental problems.”

National and the Greens have tried to launch select committee inquiries repeatedly this term, arguing that the Government has not done an adequate job of looking into the economic response to the pandemic.

Swarbrick and Willis had repeatedly tried to get economic response inquiries over the line - often with the support of all parties bar Labour.

But Labour’s majority blocked those inquiries.