3. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
Will he agree to a full public and independent commission of inquiry into the collapse of South Canterbury Finance?
Hon BILL ENGLISH (Minister of Finance) Link to this
No. We do not see anything to be gained by such an inquiry at this time. In the first place, the Government needs to focus what is actually a very small resource of people and expertise on getting value for the taxpayer, who has paid out $1.6 billion, and now we need to recover somewhere between $1 billion and $1.2 billion, which is a high priority for us. Secondly, should any issues arise around fault, or cause, or responsibility for what has gone on with South Canterbury Finance, there are any number of regulatory agencies that could investigate those questions. Finally, the Government will be shortly releasing proactively all the relevant papers that can be released, subject to commercial confidentiality, which will allow the member to scrutinise in detail all judgments and processes followed by the Government.
Hon David Cunliffe Link to this
Was the process used to place Allan Hubbard and Aorangi Securities into statutory management fully sound and transparent, including in respect of all potential conflicts of interest?
Hon David Cunliffe Link to this
What reports from KordaMentha did Treasury receive on South Canterbury Finance using its acceptance into the guarantee scheme to attract more investment and to increase its loans, and when were those reports received?
I cannot answer the question in detail, but I can point out to the member, as I stated yesterday in the House, that the evidence shows that most of the concerning lending activity of South Canterbury Finance occurred before October 2008. There was some small growth in lending after that. Finance companies had to pay a fee for any growth in lending, and both the previous Labour Government, which put the guarantee in place, and the National Party, which supported it, did so partly with the intent that lending could continue, because if lending stopped the whole country would have stopped.
Hon David Cunliffe Link to this
Can the Minister confirm that, in fact, it was he and his Cabinet that decided to admit South Canterbury Finance to the scheme; if so, did his Government ever consider using its powers to appoint a statutory manager in respect of South Canterbury Finance, either prior to April 2010 or before placing it into receivership?
The member will know that the way that the delegation of the guarantee worked meant that, in fact, Cabinet did not make decisions about what went into it. As set up by Dr Cullen, the delegation was given to Treasury, and Treasury made the decision. We supported that process of making decisions.
Hon David Cunliffe Link to this
Why was the eventual recapitalisation deal for South Canterbury Finance not agreed, given reports that a multi-hundred-million-dollar private equity injection was available to reduce taxpayer liabilities?
The member is simply reporting, as he did yesterday, on some market speculation. There have been many versions of market speculation. I advised the House yesterday that no proposition was put before the Government that Treasury and its advisers would have supported that allowed the recapitalisation of South Canterbury Finance prior to its receivership.
Peseta Sam Lotu-Iiga Link to this
What lessons can usefully be learnt from the crisis and the use of the Crown guarantee in response?
I think the lesson that can be learnt is that the guarantee was effective, as it was in a number of other countries, such as Australia and Canada—that is, the guarantee was put in place in order to ensure that the financial system did not tip over, with the very substantial costs that would go with that. As I pointed out yesterday, New Zealand may get through the guarantee with a net cost of somewhere between $200 million and $400 million; in other countries where such guarantees were put in place—for instance, Ireland—the costs have been tens of billions of dollars. In New Zealand’s case, we should be pleased that there has been a relatively low cost so far, enabling us to maintain a financial system through the global financial crisis.
Hon David Cunliffe Link to this
If the Minister was quoting from an official document in citing the numbers of $200 million to $400 million, I seek that he table it.
Mr SPEAKERI will check with the Minister. Was the Minister quoting from any official document? No, he was not.
Hon David Cunliffe Link to this
I seek leave to table a Treasury estimate that indicates that the residual cost to the taxpayer is $800 million, not $200 million.