John Key is adept at being economical with the truth. Read his latest spin where he attempts to blame Labour for National’s continuing to shovel our money into South Canterbury Finance:
The reason we’re in this position is Labour signed up to a deposit guarantee scheme. South Canterbury Finance had massive loans. Those loans went broke. There were inter-party and related-party loans.
The receivers have now discovered they’re worth a lot less than they were and every bid we had from any consortium that came to the Government always had a provision that said because they were unable to quantify the losses, then the Government had to underwrite all of those losses.
So, frankly, David Cunliffe doesn’t know what he’s talking about. (The Press 5 April 2011)
At the time Labour established the Retail Deposit Guarantee Scheme the Government had little option. Australia had offered a similar scheme for some time and the government had to do something to staunch a serious fiscal bleed. Further the recession had not hit and it is always easy to talk having been informed with the wisdom of hindsight. But embarrassingly for Key the Crown approved SCF’s participation in the scheme on 1 April 2010. I quote from SCF’s press release issued on 1 April 2010:
“Thursday, 1 April 2010, 5:31 pm
Press Release: South Canterbury Finance
1 April 2010
Crown approves South Canterbury Finance for Extended Retail Deposit Guarantee Scheme
South Canterbury Finance Limited has today been approved to participate in the Crown’s Extended Retail Deposit Guarantee Scheme.
The scheme will provide all eligible investors with the benefit of the Crown guarantee until 31 December 2011.
Welcoming the Crown’s decision, South Canterbury Finance Chairman Allan Hubbard says a major milestone has been achieved.”
Worse Key also fails to tell taxpayers that while NZ was in the middle of the first recession and again under Key’s leadership, National extended the retail deposit guarantee. I quote from Bill English’s Press Release from 25 August 2009:
“Government to extend retail deposit guarantee
The Government will extend the Retail Deposit Guarantee Scheme and change some of its terms and conditions, Finance Minister Bill English says.
The current scheme ends on October 12, 2010. The new scheme will start on October 13, 2010 and end on December 31, 2011.
The Retail Deposit Guarantee Scheme was introduced as a direct response to international financial market turbulence. Immediate concerns about the stability of the financial system are now abating,” Mr English says. …”
When Labour established the retail deposit scheme they were responding to an immediate need to keep NZ internationally competitive and prevent an investment bleed. National however announced that they would extend the scheme in 2009. Worse SCF was admitted to the scheme under National’s watch and worse still by that stage it was obvious that SCF was a lemon. This raises questions as to why? There were a lot of big money people who had loans to SCF that the taxpayer paid out with interest. It is time for Kiwis to look behind the spin and see Key for what he really is a slick fertiliser salesman with a mouth full of free samples.
– Michael Bott