Finance Minister Bill English's ministerial statement today on the South Canterbury Finance (SCF) affair is revealing.He tracked the history of the company's involvement in the retail deposit guarantee scheme – and hinted that the government kn
Finance Minister Bill English’s ministerial statement today on the South Canterbury Finance (SCF) affair is revealing.
He tracked the history of the company’s involvement in the retail deposit guarantee scheme – and hinted that the government knew SCF was in trouble as far back as June 2009.
When SCF joined the scheme, Mr English said, the company appeared sound.
Later, as SCF’s assets nearly doubled to $2.16 billion over the next four and half years, the government became aware that much additional lending was “not high quality” – and is now aware that the majority of problem lending occurred before entry to the scheme.
In June 2009, the Crown set $831 million aside to cover the deposit guarantee scheme.
“The majority of this related to South Canterbury Finance,” Mr English said today.
He went on to confirm that the Treasury was in close contact with the company throughout its participation in the guarantee scheme.
Treasury was instructed to work co-operatively with any proposals to acquire parts of the firm or to recapitalise once it was clear that it was in trouble.
“However, all effectively amounted to a bailout by the Crown, with extra cost and risk to taxpayers,” he said.
“At no stage would the Treasury have recommended accepting any of these proposals.”
Mr English stuck by the government’s estimate that the total net cost of the deposit guarantee scheme to the taxpayer, once fees from the retail deposit guarantee scheme and wholesale guarantee scheme are collected, is likely to be between $300-400m.
But opposition parties want to know a whole lot more – with Labour and the Greens both calling today for a full parliamentary inquiry into the affair.
‘Racism’ comments not a problem
Land Information Minister Maurice Williamson’s reported comments that opposition to land sales to foreigners is sometimes driven by racism cropped up again today.
Prime Minister John Key repeated his belief that Mr Williamson’s comments were an attempt at humour that may have backfired – and brushed off hints that his ability to decide on the future of the Crafar farms could potentially be biased.
“The minister in due course will be presented by an Overseas Investment Act recommendation ... he’s an intelligent minister and I believe he’ll follow that recommendation through and consider all the merits of the case.”
