The retail deposit guarantee scheme, which has just led to the government handing over $1.7 billion of borrowed taxpayer money to the depositors in South Canterbury Finance, was extended less than a year ago. There are now serious questions being asked why SCF was allowed to join the extended scheme in April given that its financial problems were well-known and its credit rating was downgraded just weeks later. The guarantee was instrumental in SCF taking on all the bad loans that have led to its collapse.
Corin Dann on Breakfast this morning reports that Bill English says allowing SCF in was a ‘line call’. (will have to see English’s interview when it comes online).
That’s another of National’s line calls that’s cost us a fortune. In this case, it’s expected the final bill will be at least $600 million (plus the cost of borrowing the $1.7 billion).
It follows their great call to cancel contributions to the Cullen Fund, which has cost us over a million dollars a week and rising.
And don’t forget the government’s failure to invest more than a few tens of millions in jobs when the fiscal cost of additional unemployment is over a billion a year. Of course, that mistake wasn’t a ‘line call’, it was ideology all along.
The one upside of this is that Kiwibank might be the buyer of SCF’s assets. Someone’s got to buy them. If it’s Kiwibank then the profits on those loans will stay in New Zealand, rather than going to a foreign institution. English hasn’t ruled out Kiwibank being the buyer and says he will be talking to Kiwibank. Let’s hope he makes the right call for once.