Government's banking contract with Westpac a closed shop for 21 years

The Green Party revealed today that the Government has failed to run an open tender process for the Government’s banking contract with Westpac for over 21 years.

“The Government’s master banking contract with Westpac covers all Government departments but successive governments have run this contract as a comfortable closed shop,” said Green Party co-leader Dr Russel Norman today.

“There hasn’t been an open tender process since David Lange was Prime Minister.

“How do we know that we are getting value for money from the Government’s favourite banker without a competitive tender process?”

The Government’s banking requirements were contracted to Westpac in 1989 under a master banking agreement. Parliamentary Written Questions by the Green Party revealed that the Government has not run another tender process for the contract for 21 years.

“It’s time the Government ran an open tender process for its extensive banking needs,” said Dr Norman.

“National tells us that competition is important to efficiency, yet it continues with this comfortable closed shop that stifles competition in the provision of core banking services to the public sector.

“The Government can hardly tell us that Westpac is a public spirited company that would never provide anything less than the most efficient service to the Government when Westpac was found by the High Court last year to be illegally avoiding nearly a billion dollars in tax.

“Westpac’s Chief Executive is getting paid $107,500 per week so the bank doesn’t need government welfare. It should be made to compete for the Government master banking contract like any other company.

“New Zealand small businesses and NGOs would give an arm and leg for a 21 year contract with the Government. Most of them have to tender for government business annually.

“Ideally, the Government’s banker should be New Zealand owned, given the additional positive impact this would have on our balance of payments. Westpac is a foreign-owned bank that sends its profits offshore adding to our current account deficit.

“Greater investment in Kiwibank is needed to bring it up to the level where it can compete on a level footing with the likes of Westpac and could become our Government’s banker. This is a smart way to develop our economy.

“Until then, banking contracts with smaller Government entities should be opened up to competition from Kiwibank and others banks,” Dr Norman said.

The Government declined to reveal under Written Questions the value of current banking contract with Westpac citing commercial sensitivity.