Opposition parties want inquiry into SCF

Photo / Sarah Ivey

Opposition parties are demanding full disclosure of South Canterbury Finance's (SCF) situation before it went into receivership and a parliamentary inquiry into the way the Government handled the crisis.

In Parliament today Finance Minister Bill English explained the $1.6 billion dollar bailout of SCF's 35,000 investors under the Retail Deposit Guarantee Scheme and said the Government had done the best it could to minimise the cost to taxpayers.

The Government is controlling the receivership process and expects to recover about $1b when SCF's assets are wound up.

English said when fees paid by companies in the scheme were taken into account, as well as the fees paid for the parallel Wholesale Deposit Guarantee Scheme, the eventual cost was likely to be between $300 million and $400m.

"This net cost is the premium our economy has paid to avoid potential catastrophic losses to the taxpayer over the last 18 months," he said.

Labour's finance spokesman, David Cunliffe, said the $1.6b payout was the biggest corporate bailout in New Zealand's history.

"What went wrong and was the cost to taxpayers really minimised?" he said.

"Serious questions need to be answered so we can ensure this doesn't happen again."

Cunliffe said those questions included how much the Government knew and when, whether SCF should have been in the scheme, whether it had been in breach of its eligibility, what deals were on the table to save it before it went into receivership and what other options had been considered and discarded.

Green Party co-leader Russel Norman said Parliament's finance and expenditure select committee should hold an open inquiry into SCF and the Government's actions.

"When taxpayers have to fork out billions of dollars they have a right to know why," he said.

Dr Norman said lax financial sector regulations were partly to blame for the company's collapse.

Maori Party MP Te Ururoa Flavell said Maori were comparing the $1.6b with the $1b cap put on Treaty of Waitangi settlements 15 years ago to cover the following 10 years.

"That was $1b to settle all claims for a Maori population at the last census of 643,977 people. It compares miserably with $1.6b paid by the Crown to settle with a few unhappy investors," he said.

Replying to the debate, Mr English said all the questions would be answered "in due course".

He said the Government had paid out investors, it had not bailed out the company and all its shareholders had lost their money.

- NZPA