Kiwibank cost unrest

"Kiwibank can't stand on its own two feet. Jim Anderton has already robbed the taxpayer of $80 million to set it up and, in order to make it pay, is robbing the franchise holders."

Stuff Business Magazine
December 31, 2001

Kiwibank cost unrest
Rachel Walsh

Kiwibank faces yet more unrest as some franchise holders rebel against set-up costs.

South Island businesses say they are upset at the considerable costs involved in setting up Kiwibank branches in their stores – and some are believed to be taking legal advice.

Deputy Prime Minister and Kiwibank champion Jim Anderton has been criticised for offering franchise holders a raw deal.

ACT MP and Kiwibank opponent Rodney Hide said it was a "bad deal". Mr Anderton was promoting small businesses yet was prepared to put crippling set-up costs on them, he said.

"Kiwibank can't stand on its own two feet. Jim Anderton has already robbed the taxpayer of $80 million to set it up and, in order to make it pay, is robbing the franchise holders."

Mr Hide said a revolt by some South Island franchisees proved what Treasury and independent reports had already found – that Kiwibank was not viable.

Franchise holders were being told to remove retail space to make room for banking counters, set up offices to provide space for interviewing people and counting money, and train staff, Mr Hide said.

In a letter sent to all 90 South Island franchise operators, by some of the franchisees, they warned that operators would bear most of Kiwibank's costs. With the set-up costs, shops stood to lose money by providing the banking service.

The franchisees are shops such as bookstores, chemists, and hardware stores that now provide New Zealand Post services.

"These businesses are going to lose a considerable amount of money by becoming Kiwibank branches," Mr Hide said. "My understanding is that these franchise holders feel they have been bullied by New Zealand Post and a number of them are taking legal advice."

Franchisees were being offered only a 53c transaction fee by Kiwibank, compared with the $1.02 paid by the Taranaki Savings Bank for the same service.

"The trouble is that New Zealand Post is trying to fund Kiwibank by making the taxpayer and now the franchise holder carry the cost," Mr Hide said.

A spokesman for Mr Anderton said Mr Hide had no credibility after making a series of claims in the past six months that had all been disproved or rejected.

He said the investment in Kiwibank would be repaid, and in 10 years it would be an asset worth $500 million.

The idea that Mr Anderton was "robbing" the taxpayer to set up the bank was "ACT party accounting".

Kiwibank spokesman Bruce Thompson said the bank was aware of the letter which was believed to have been penned by only a couple of franchise holders.

Despite that, he said there was high interest from franchise holders and plenty of support for the State-owned bank.

Mr Thompson said contracts were still being negotiated but South Island branches were vital to the bank's operation, and that was why matters such as transaction fees and other costs had been discussed and endorsed by the national franchise association.

"We can't bully someone into being a bank," Mr Thompson said.

Mr Thompson said most franchisees supported Kiwibank. He expected 300 of the 320 New Zealand Post outlets to become agents for Kiwibank.

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