Rejected Sth Canterbury bids cost taxpayers, says Cunliffe

Opposition finance spokesman David Cunliffe. Photo / Paul Estcourt

Labour finance spokesman David Cunliffe says decisions made to reject bids for South Canterbury Finance (SCF) means the cost to taxpayers has been between $300 million and $500 million too much.

SCF went into receivership at the end of August, leading to a $1.7 billion government payout to investors, of which $1.6 billion was under the retail deposit guarantee scheme.

Cunliffe told Radio New Zealand today that a consortium called Permanent Investments, backed by Sydney-based businessman Duncan Saville, had made a bid on August 31 with a net present value of $1.3 billion.

A September 13 bid for slightly less, but with additional security, was made by a Permanent Investments consortium that included Ngai Tahu and the New Zealand Superannuation Fund as blue chip participants.

He understood the decision to reject the bids was effectively made by ministers, through a chain from the receiver through the Treasury to ministers, including Finance Minister Bill English, Cunliffe said.

"The ministers appear to have made a decision that's cost the taxpayers between $300m and $500m too much, and the burden of proof is on them to explain why. I cannot explain it."

He agreed with the Government's stated objectives to protect taxpayer value, to protect the South Island economy and honour the retail deposit guarantee scheme, but the numbers did not add up, Cunliffe said.

"They have burnt a truckload of taxpayers' dollars and I cannot see why. It may be ideology. It maybe that they have another bidder in mind, but by goodness the burden of proof is on them to explain this loss."

Cunliffe brought the matter up in Parliament yesterday. At that time English said he did not intend to comment on commercial details of bids or transactions that may still be under negotiation.

The Government had the obligation to recover the value of the SCF assets, and it would not work if anyone who made some kind of offer to the Crown found that the offer was discussed in detail in Parliament, when it was made in the context of commercial confidentiality, English said.

- NZPA