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The Labour-led Government has taken a significant step towards reducing the cost of remitting money from New Zealand to Pacific countries.
Prime Minister Helen Clark and Pacific Island Affairs Minister Luamanuvao Winnie Laban today announced Cabinet’s approval of a new regulation under the Financial Transactions Reporting Act to reduce the high costs of sending money between New Zealand and the Pacific.
“The connection between Pacific peoples living in New Zealand and those living in the Pacific nations is very strong. Studies show that about 75 per cent of Pacific people in New Zealand send money home to family members in the Pacific,” Helen Clark said.
“In many cases the total cost of remittances can be anywhere from 15 to 25 per cent of the value of the transaction.
“The Ministry of Pacific Island Affairs has led work with the Reserve Bank and the Ministry of Justice with the goal of reducing transaction costs to between five and seven per cent by next year.
“We want a more competitive remittance market between New Zealand and the Pacific region, greater transparency, wider use of formal channels, and better informed consumers.
“The new regulation will enable mainstream financial institutions to provide a two-card remittance transfer facility using the banking system’s international ATM and EFTPOS networks. This will allow funds to be loaded on to a special remittance account by a New Zealand-based remitter, while a second card can be used to withdraw money in the Pacific,” Helen Clark said.
Winnie Laban said today’s announcement would be welcomed by Pasifika communities.
“Our Pasifika peoples often remit small amounts frequently to the Pacific, contributing to the wellbeing and quality of life of family living in the Pacific. A transparent, lower cost and efficient system will ensure greater value for money, benefitting Pacific peoples in New Zealand and the region,” Winnie Laban said.
The new regulation exempts a financial institution from the requirement to identify the second (overseas-based) card holder. A number of constraints have been placed on the facility to mitigate the possibility of money laundering or terrorist financing activities.
Remittances to the Pacific region tripled over the past decade to reach US$425 million, according to the World Bank, with New Zealand listed in the top ten source countries. The World Bank says unofficial or unrecorded remittances could add at least another fifty per cent to the official estimate.