Changes for Kiwi Bank on the way - Peters

ONE NEWS: The economy is one of the big election issues and less than three weeks to polling day New Zealand First has unveiled a bold new plan for Kiwibank.

New Zealand First leader Winston Peters announced bold plans to change Kiwibank, at a campaign speech in Tauranga on Monday night.

"If you want to expand in a time of huge international uncertainty in terms of funds then the way to go about it is to share it with the people," Peters says.

He wants Kiwibank to separate from New Zealand Post and become a stand alone commercial bank. He is also wants to float Kiwibank shares and only allow New Zealanders to buy them.

Peters says in tough economic times we shouldn't be feeding Australian banks.

He is also calling for the government's $55 billion a year business to be channelled through Kiwibank rather than Westpac.

Peters said Australian-owned New Zealand banks made more than $4 billion a year in profits and all of it went across the Tasman.

Along with it was the profit that came from the government doing all its business through one of the Australian-owned banks.

"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 says.

Some are warming to the idea.

"This is an idea that has merit and there wouldn't be too many ideas that Winston has that the financial markets would tend to agree with," says Paul Glass, Brooks Asset Management.

Others are not so sure. Experts ONE News contacted say Kiwibank has $5 billion in deposits and to increase that to $55 billion for government spending short term is simply not possible.

"I think the only way you could do that is to put off the tender and say that if the Kiwibank had a comparable quote to the other banks, then the government would look upon it favourably," says Brian Gaynor, business commentator.

But Peters says his plan is viable.

"Most banks are dealing with banking arrangements that have a high degree of risk and uncertainty about them. The governments account is not in any way uncertain, it's sure fire."

And the other sure fire thing is that this kind of controversial plan will get plenty of attention for New Zealand first and possibly edge the party closer to the magic 5% mark.