The Finance Minister has confirmed the Government has no work underway to address banks' large profits in a similar way to how it directed Commerce Commission to undertake market studies into fuel companies and supermarkets.
"There isn't work underway around that," Grant Robertson said. "The Commerce Commission's job is obviously to look at a competition and competition policy. It's very clear, for example, in the supermarkets where you've got a duopoly where the issues lie."
"What we do have is a Reserve Bank that plays a regulatory and supervisory role with our banks. As I said before, their job there is to both make sure that it's a fair, level playing field and that they are stable. That's the focus of the work that we've done."
Prime Minister Jacinda Ardern on Monday afternoon took aim at banks after Westpac posted annual profit of more than $1 billion, up 12 percent. Westpac, however, has said that was bolstered by the sale of its life insurance business. Other banks have recorded record profit.
"The question I would pose to them is: they may be operating as other banks are, but are they demonstrating social licence? Are they demonstrating a commitment to the communities that they’re serving by taking profits such as those in these current times?"
She went on to say she doesn't believe the current situation is justifiable during the current cost of living crisis but said she didn't have any policy on it to share.
"I’m simply being frank with you around my observations around what is occurring with bank profits," Ardern said. "Do I have a current solution from Government on that? The answer is no."
She said Robertson would be better to answer questions on whether any policy was being developed ahead of next year's election.
The Government's previously directed the Commerce Commission to undertake market studies into competition in the supply of retail petrol and diesel in New Zealand as well as the grocery sector. Both market studies have led to action being taken by the Government to increase competition and therefore bring prices down.
Robertson said on Tuesday that the Government's not looking at making banks the next market study, and if it were to go down that route, "we would need to make sure it was within the mandate of the Commerce Commission
"The Commerce Commission's mandate wouldn't necessarily fit the issue people have around bank profits."
National has been calling for an independent review into the Reserve Bank's monetary policy and actions over the last two years.
Leader Christopher Luxon said the Reserve Bank's policy has led to "rapidly rising levels of house inflation" and interest rates which have "contributed to large bank profits". The Government's spending has also led to increased inflation - the Government mostly blames international factors - so it's to blame as well, he said.
"The Government has to take accountability for this," he said. "The Prime Minister can't just talk about it. She can do something about it, which is do that review, understand whether her actions and those of the Reserve Bank actually created the situation where the banks can make large profits."
The remarks come just after Robertson announced Reserve Bank Governor Adrian Orr has been reappointed for another five-year term. He said it was important to "stability and continuity" during a volatile global economic time.
"Adrian has demonstrated the skills, knowledge and experience to help steer the financial system through the 1-in-100 year economic shock of the pandemic," the Finance Minister said.
"I am happy to endorse the recommendation of the Board. I have full confidence that he will continue to display the same integrity and leadership in performing his duties as Governor in what is still a challenging environment."
Ardern on Tuesday said Orr himself has raised the issue of banks' social license and profitability.
"I don't think anything we're saying here is vastly different to what you're even hearing the Reserve Bank say this time."
National's finance spokesperson Nicola Willis said the party was appalled by the reappointment without first completing an independent review of the bank's actions. ACT's David Seymour has also said it follows a term of "poor leadership, poor focus and poor outcomes".