Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Treasury rejects review on South Canterbury Finance collapse

Treasury rejects autopsy on South Canterbury Finance collapse

By Paul McBeth

March 12 (BusinessDesk) - The Treasury hasn’t analysed its dealings with South Canterbury Finance or formally reviewed the lessons learned from the retail deposit guarantee, which is expected to cost the taxpayer as much as $1.1 billion, despite the Auditor-General recommending that course of action.

The government’s financial adviser chose not to document its analysis and thinking around its dealings with South Canterbury Finance or carry out a formal post-project review of the scheme, according to an Auditor-General’s progress update on the Treasury’s response to the 2011 report.

The Treasury took that path because it considered many of the risks when the guarantee was extended in 2009, there are fewer non-bank deposit takers of the same size, the unique nature of the scheme limited the extent lessons could be applied in future, and specific lessons were covered by its trans-Tasman banking council and financial stability initiatives.

The Treasury did respond to the Auditor-General’s recommendations to set up project planning and monitoring frameworks when approaching crisis management planning, citing the response to AMI Insurance after the Christchurch earthquakes as an example of how it had lifted its game.

“The Treasury has seriously considered the lessons learned in various ways from both the global financial crisis in general and the scheme in particular,” the Auditor-General update said. “Applying these lessons should help the Treasury to manage future situations involving distressed institutions.”

The scheme, which was set up in the dying days of the previous administration in response to the global financial crisis in 2008, offered depositors a government guarantee that they would be repaid. Nine finance companies called on the scheme with total payments of about $2 billion, the biggest of which was South Canterbury Finance.

The Auditor-General’s 2011 report deemed the deposit guarantee scheme was successful in staving off bank failure, but criticised the Treasury for not being more proactive to minimise the cost to the taxpayer.

When the report was released, Treasury Secretary Gabriel Makhlouf rejected the assertion the department was too hands-off, saying they couldn’t find a case where intervention was more likely to achieve a better outcome.

The progress update found the Treasury has put in place arrangements with the Reserve Bank, is working with its Australian counterpart and improved project management to protect national financial stability.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Lower Levy For Safer Cars: ACC Backtracks On Safety Assessments

Dog and Lemon: “The ACC has based the entire levy system on a set of badly flawed data from Monash University. This Monash data is riddled with errors and false assumptions; that’s the real reason for the multiple mistakes in setting ACC levies.” More>>

ALSO:

Fast Track: TPP Negotiations Set To Accelerate, Groser Says

Negotiations for the Trans-Pacific Partnership will accelerate in July, with New Zealand officials working to stitch up a deal by the month's end, according to Trade Minister Tim Groser. More>>

ALSO:

Floods: Initial Assessment Of Economic Impact

Authorities around the region have compiled an initial impact assessment for the Ministry of Civil Defence, putting the estimated cost of flood recovery at around $120 million... this early estimate includes social, built, and economic costs to business, but doesn’t include costs to the rural sector. More>>

ALSO:

Food: Govt Obesity Plan - No Tax Or Legislation

Speaking to Q+A’s Corin Dann this morning, health minister Jonathan Coleman said tackling obesity was at the top of the Government’s priority list, but there was “no evidence” a sugar tax worked, and further regulation was unnecessary. More>>

ALSO:

Treasury Docs On LVR Policy: Government Inaction Leads To Blurring Of Roles

The Treasury wouldn’t have had to warn the Reserve Bank to stick to its core functions if the Government had taken prompt and substantial measures to rein in skyrocketing Auckland house prices, Labour’s Finance spokesperson Grant Robertson says. More>>

ALSO:

Final EPA Decision: Tough Bar Set For Ruataniwha Dam

Today’s final decision by the Tukituki Catchment Board of Inquiry is good news for the river and the environment, says Labour’s Water spokesperson Meka Whaitiri. “Setting a strict level of dissolved nitrogen in the catchment’s waters will ensure that the dam has far less of an impact on the Tukituki river." More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news