Labour are pushing for an enquiry into how Treasury oversight of the Retail Deposit Guarantee Scheme was so poor that it has cost us hundreds of millions of dollars.
And fair enough. The Auditor-General and her Deputy have had separate reports, agreeing that it’s cost us probably hundreds of millions. Although without an enquiry figures are a stab in the dark, the latest figure out yesterday was $400 million of unnecessary expense if Treasury oversight had started earlier, and been more rigorous.
Treasury’s excuses – that the scheme was complicated and that’s why they took half a year to have any oversight; and that they didn’t want to interfere in the markets even when they were overseeing it – don’t add up. The scheme in itself was interference in the market – interference that many took advantage of as South Canterbury Finance, for instance, upped their retail deposits by a quarter – adding $300 million to what we had to pay out.
The ODT has an excellent editorial on the need for an enquiry. $2 billion was paid out as 9 of the 30 finance companies covered by the scheme failed. Less than half of that is expected to be recovered.
Oversight of the scheme was so lax that money ended up in the hands of the likes of:
Gavin Arthur Bennett, former managing director of IT company DataSouth, [who] was sentenced to eight years’ jail. His crime? Committing frauds totalling $103 million, including $23 million from South Canterbury Finance (SCF).
Now losing $400 million unnecessarily is no small change:
The great IT disaster that was INCIS cost $110 million – and got a full enquiry.
$400 million would pay for us to host another whole Rugby World Cup.
Hekia Parata’s cutting a teacher from each school around the country is hoping to save us $170 million. So we could keep that teacher and get ourselves another one with cash to spare.
Bill English can’t be allowed to hide this under the plus Treasury carpet, so his lack of oversight of Treasury isn’t shown up.
We need an enquiry to make sure this doesn’t happen again.
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