I am kicking myself that we at the Initiative had not read Federated Farmers’ submission to the Banking inquiry before drafting our own. 

Their submission exhibits a creativity that I had thought New Zealand had lost decades ago – sometime around 1987, if we had to pin a date on it. 

Before 1987, the government provided subsidised loans to farmers. That support ended, along with a host of other subsidies.  

Federated Farmers wants to bring subsidised loans back. 

Of course, they don’t quite put it that way. But it is what they are asking for. 

I’d have missed it but for Gareth Vaughan’s story at Interest.co.nz. 

Vaughan reports that Kiwibank is not keen on entering the rural market. Kiwibank’s Chief Executive, who has a rural banking background, noted that the sector is already served by the other banks and a specialist, Rabobank.  

Federated Farmers’ submission urged the government to strengthen Kiwibank’s capitalisation while directing the state-owned bank to “actively enter the agricultural lending market.” 

The case for a state-owned bank was always pretty iffy.  

The case against one, if it has access to subsidised capital from the government to lend out to sectors that the government prefers, seems reasonably strong.  

But the government has already decided to set up a different programme to subsidise borrowing for property development. So, it’s possible that this kind of thinking could sway the Finance and Expenditure Committee.  

If the government’s job is to tell Kiwibank where to direct subsidised loans, I have a few ideas! 

My column in this week’s Post noted the lack of food carts on Wellington’s waterfront. A better-capitalised Kiwibank could be directed to lend to new food carts serving up tasty waterfront morsels.  

In 2009, Prime Minister John Key claimed on David Letterman’s show that Auckland Airport finally had a Cinnabon. It wasn’t true then, but Cinnabon is now coming! Kiwibank could be forced to lend to their franchisees to speed up their expansion – and Costco’s.  

If Kiwibank were directed to lend for carbon forestry conversions, could we plant trees fast enough to make up for never pricing agricultural emissions? 
Really, any nice-sounding thing could be supported in this way. And Members of Parliament are surely far better placed than mere bankers in assessing sector-by-sector credit risk anyway.  

Just be sure never to look up the term malinvestment and it will all be fine. 

At least for a while.