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Finance, Minister—Confidence

Wednesday 5 October 2011 (advance copy) Hansard source (external site)

Goff2. Hon PHIL GOFF (Leader of the Opposition) Link to this
to the Prime Minister

Does he have confidence in his Minister of Finance?

KeyRt Hon JOHN KEY (Prime Minister) Link to this

Yes, because despite the global financial crisis, the Canterbury earthquakes, and a very uncertain global environment he has done a great job to put New Zealand on a credible path back to surplus.

GoffHon Phil Goff Link to this

Why did the Minister of Finance do nothing when he became aware that hundreds of millions of dollars in taxpayers’ money was being put at risk as depositors poured money into risky finance companies as a result of the Government guarantee?

KeyRt Hon JOHN KEY Link to this

The Minister of Finance took the steps he could, but, of course, he was dealing with a deposit guarantee scheme that was put in place in a rush. You see, it had to be a rush, because Labour had to have it ready for Helen Clark’s campaign launch in 2008.

GoffHon Phil Goff Link to this

Is the Auditor-General wrong in her conclusion that there was a capacity through 2009 to manage that risk, but the Government did not take it, causing the loss of hundreds of millions of dollars to the New Zealand taxpayer?

KeyRt Hon JOHN KEY Link to this

She did not say that.

GoffHon Phil Goff Link to this

Is the Prime Minister telling the House that the Auditor-General did not conclude that there was the capacity to manage the risk, but the Government, through its agency Treasury, did not take it?

KeyRt Hon JOHN KEY Link to this

No; she did not say that.

GoffHon Phil Goff Link to this

I seek the leave of the House to table the report of the Auditor-General, where it is very clear that she did say that.

SmithMr SPEAKER Link to this

All members have that report, and it has already been tabled in the House, so we are not going to do that.

GoffHon Phil Goff Link to this

I raise a point of order, Mr Speaker. We have another dilemma. The Auditor-General said that in the report, and was reported to say that—

SmithMr SPEAKER Link to this

The member will resume his seat. There are plenty of opportunities for these matters to be examined by anyone whom the member wants to examine them, but the rules of this House during question time do not permit them to be examined in that way. The Prime Minister is on record with what he has just said, and the report is available to all members. People are perfectly at liberty to see it, but we do not waste the time of the House by tabling it when it is already tabled. The honourable Leader of the Opposition, supplementary question.

GoffHon Phil Goff Link to this

Then the Prime Minister should have read it.

GoffHon Phil Goff Link to this

Was the Minister aware of the growing liability to the taxpayer, with some finance companies increasing their deposits by 1,000 percent because they had the Government guarantee to fall back on, and why did the Minister not do anything about that?

KeyRt Hon JOHN KEY Link to this

Of course the Minister was aware of that, and that is because of the way the scheme was set up by Labour in order to rush it through for Helen Clark’s campaign launch—

MallardHon Trevor Mallard Link to this

No, no, it was renewed twice.

KeyRt Hon JOHN KEY Link to this

Actually, I remember it really well, I say to Trevor, because John Armstrong wrote it up in the paper the day after the launch; he said how clever Labour was. Well, Labour was not as clever as that, because it cost the country a lot of money.

TremainChris Tremain Link to this

I raise a point of order, Mr Speaker. I rise to point out that the comments that former Minister Mallard is repeatedly shouting across the House are unacceptable, and I take issue with those comments.

SmithMr SPEAKER Link to this

What he actually interjected, if I heard rightly, was: “What a lie.” I am not sure that is—

MallardHon Trevor Mallard Link to this

I raise a point of order, Mr Speaker. I did call the Prime Minister a liar, and I withdraw and apologise.

SmithMr SPEAKER Link to this

I thank the member.

GoffHon Phil Goff Link to this

If the situation was as the Prime Minister pretended it was, why did he renew the scheme twice without changing it?

KeyRt Hon JOHN KEY Link to this

We did change it. If the member wants to give me some time I will pop upstairs and I will get the John Armstrong column about how clever Labour was, how it rushed it in, and how smart it was to outfox National at the campaign launch.

GoffHon Phil Goff Link to this

Mr Speaker—[ Interruption]

SmithMr SPEAKER Link to this

The interjections started on my left here when I called the members’ leader to ask a further supplementary question. I ask both front benches, please, to be reasonable.

GoffHon Phil Goff Link to this

Why did the Prime Minister claim that the net cost to the taxpayer of the collapse of South Canterbury Finance would be $400 million, when the man sitting alongside him, the finance Minister, admitted that it would be three times that amount—$1.2 billion?

KeyRt Hon JOHN KEY Link to this

Because at the time I made that statement, that was the belief of the officials who were advising me. Obviously, at the time they were very concerned that Labour had ensured that the New Zealand taxpayer had to wear such a large amount, but, as they said, it was all rushed and put together for the campaign launch of Helen Clark in the election of 2008.

GoffHon Phil Goff Link to this

If Treasury and the Minister of Finance had acted as the Auditor-General suggested, how many hundreds of millions of dollars of taxpayers’ money could have been saved?

KeyRt Hon JOHN KEY Link to this

None, and the reason for that, of course, is that the scheme was put together—[ Interruption] You see, Labour members want to reinvent history, but unfortunately we all have the newspapers; we have the story from John Armstrong about how clever Labour was. I remember picking up the paper on the Monday morning and reading all about how clever Labour was and how it had outfoxed National—

MallardHon Trevor Mallard Link to this

No one believes you.

KeyRt Hon JOHN KEY Link to this

Well, I did not believe John Armstrong at the time, but that is where it was: in the paper. You see, Trevor, you rushed it through for political reasons—

KeyRt Hon JOHN KEY Link to this

—and taxpayers—

SmithMr SPEAKER Link to this

I just ask both front benches to take a deep breath—[ Interruption] Both members will cease immediately. The right honourable Prime Minister should be reminded that the Speaker did not rush anything through prior to the last election, because “you” is referring to the Speaker. Both members will please take a deep breath and bring the House back to order.

ParkerHon David Parker Link to this

Does the Prime Minister understand that if a bank offers a guarantee, the bank does not have to agree to an extension of lending and liability under that guarantee, and if the Prime Minister understands that, why can he not explain to the House why the Crown could not stop additional lending via the likes of South Canterbury Finance in order to stop that liability growing—where the Crown was the guarantor rather than the bank being a guarantor?

KeyRt Hon JOHN KEY Link to this

Because that was the way the scheme was set up by Labour as it rushed it through for its campaign launch in 2008, because the photo op counted for more than the quality of the scheme.

ParkerHon David Parker Link to this

I raise a point of order, Mr Speaker—[ Interruption]

SmithMr SPEAKER Link to this

The member will resume his seat for the moment, please. I say to the National backbench on this occasion that they heard a point of order called and made a lot of noise. Those members know that is out of order, and I ask them, please, to treat the House with a little more respect. I understand that the Hon David Parker has a point of order.

ParkerHon David Parker Link to this

My point of order is that the Prime Minister did not address the germane point of that question, which was whether the liability could have been stopped growing—

SmithMr SPEAKER Link to this

The Leader of the House knows he should not interject on a point of order. The Prime Minister answered the question. The Prime Minister answered, rightly or wrongly—and it is not my job to judge—that the design of the scheme prevented the Government from taking that course of action.

MallardHon Trevor Mallard Link to this

Did the design of the scheme provide two opportunities for the Government to cease the liability to South Canterbury Finance; if so, why did the Government not take them?

KeyRt Hon JOHN KEY Link to this

Yes, at the time it would have been always possible to toss someone out of the scheme. That would have caused their immediate collapse.

GoffHon Phil Goff Link to this

Mr Speaker—[ Interruption]

SmithMr SPEAKER Link to this

I want to hear this question.

GoffHon Phil Goff Link to this

Given the Prime Minister’s earlier denial that the Auditor-General had said there was capacity to manage the risk, does he deny this direct quote from the Auditor-General: “There was still some capacity to manage risk within the Government’s policy settings.”, and that the Minister’s Government failed to use that capacity?

KeyRt Hon JOHN KEY Link to this

I agree with that, but that is not what the member said. The member should check his Hansard. He got up and said that our actions had cost hundreds of millions of dollars. That is not right.

SmithMr SPEAKER Link to this

I say to members that I cannot hear. Is this a supplementary question?

CunliffeHon David Cunliffe Link to this

Yes. Does the Prime Minister disagree that the following is a quote from the Auditor-General’s report; if he does disagree, can he tell us why he thinks this might be the fault of the previous Government? “The Crisis Response Plan that was written in late 2009 should have been prepared before the first financial institution failed.”—in March 2009. “We found no evidence of formal senior management oversight, such as a steering committee, to provide senior strategic direction and to ensure that all aspects of the Scheme’s implementation were addressed.”—all matters that were the responsibility of his Government. There was no reaction, no crisis response plan over a year after the scheme was introduced. Can he deny those quotes?

KeyRt Hon JOHN KEY Link to this

No. Of the four, he is doing the best so far, but I am sure there will be more to come by the time we are finished. It is a little bit like the All Black backline: there are lots of options with Dan Carter, but there is no Dan Carter right at the moment. The answer is that the Minister of Finance has said that Treasury could have done one or two things better. But let us go back and understand the history. Labour put together the scheme. Labour rushed the scheme for Helen Clark’s speech. Labour told the finance companies they were in, and that if they were not in, they would have gone broke if Labour had not done all that. We had to go and backfill everything. The facts of life are that for political reasons Labour decided to do something at its campaign launch, and it is now trying to rewrite history. I suggest that when Trevor Mallard leaves the House he gets a copy of the New Zealand Herald, reads what John Armstrong said, and realises that he is starring front and centre stage.