New Zealand First leader Winston Peters has put forward a radical proposal to float shares in Kiwibank and channel all the Government's $55 billion a year business through it.
He said tonight it was his party's plan to counter the fact that New Zealand's big commercial banks were owned by Australian banks.
"Over $4 billion of profits disappears from our economy each year," he said in a speech to a public meeting in Tauranga.
"Adding to the profit is the fact that $55 billion worth of government business each year is transacted through an Australian bank."
Mr Peters said in troubled economic times Australian shareholders, not New Zealand depositors and borrowers, were priorities for those banks.
"That means when push comes to shove, we come off second best," he said.
Mr Peters wants Kiwibank to be a stand-alone commercial bank.
It shares should be floated and owned by New Zealanders, who could not sell them to foreigners.
"The next step is to put all the Government's $55 billion worth of business through Kiwibank, ensuring all the profits stay here in New Zealand and forcing interest rates down," he said.
Mr Peters again raised his demand for a rewrite of the Reserve Bank Act, which he has said will be a bottom line issue in any post-election negotiations.
"Unless we have the courage to rewrite the Reserve Bank Act, high interest rates and a volatile dollar will continue to cripple our economy," he said.
"High interest rates have destroyed business and consumer confidence.
"Interest rates, almost the highest in the OECD, have sliced billions from New Zealanders' savings in their homes."
Mr Peters said the head of the Stock Exchange, Mark Weldon, had also said the Act should be rewritten.
And the Berl research group had suggested four steps which he said were "extremely well thought-out".
They were:
* To include the balance of payments and full employment, along with inflation, as equally important objectives for the Reserve Bank;
* To formally empower the Reserve Bank to manage the liquidity of the financial system;
* to facilitate open market operations long-term, as well as short-term securities; and
* To facilitate a transparent "sterilised float" of the New Zealand dollar.
