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

 

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Scoop Business: Productivity Commission To Look At Housing Land Supply

The Productivity Commission is to expand on its housing affordability report with an investigation into improving land supply and development capacity, particularly in areas with strong population growth. More>>

ALSO:

Forestry: Man Charged After 2013 Death

Levin Police have arrested and charged a man with manslaughter in relation to the death of Lincoln Kidd who was killed during a tree felling operation on 19 December 2013. More>>

ALSO:

Smells Like Justice: Dairy Company Fined Over Odour

Dairy company fined over odour Dairy supply company Open Country Dairy Limited has been convicted and fined more than $35,000 for discharging objectionable odour from its Waharoa factory at the time of last year’s ”spring flush” when milk supply was high. More>>

Scoop Business: Dairy Product Prices Decline To Lowest Since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder. More>>

ALSO:

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news