English Bill: Ministerial Statements — South Canterbury Finance—Receivership and Retail Deposit Guarantee Scheme 
English Bill: Ministerial Statements — South Canterbury Finance—Receivership and Retail Deposit Guarantee Scheme 
[Volume:666;Page:13761] 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I thank the various party leaders who have spoken on this matter. Taxpayers will of course want a lot of questions answered and I am sure that in due course they all will be one way or another. 
Firstly it is timely to remind ourselves that the original objective of the Crown Retail Deposit Guarantee Scheme was financial stability at a time when there was real concern right around the developed world about the meltdown of financial systems. Secondly compared with almost every other jurisdiction except for Canada and Australia our position coming through that threat to financial stability is remarkably good. In Australia and Canada as far as I am aware there have been a few payouts on the guarantees; in every other country billions of dollars have been paid out. I draw attention to Ireland which is an economy of somewhat similar size to ours. While we are debating a cost somewhere between $300 million and $600 million on this deposit guarantee Ireland is debating the recent injection of €26 billion into its main bank which it has now decided it will wind down. 
We should remind ourselves that the deposit guarantee covered depositors not the company. South Canterbury Finance has not been bailed out; the company has failed. Shareholders have lost all their money and preference shareholders have lost all their money. South Canterbury Finance is in receivership; it has not been bailed out. The depositors will be paid out in line with the intentions of this Parliament back in 2008. 
Another point to re-emphasise is simply that South Canterbury Finance depositors have been paid out under the original 2008 deposit guarantee not the extended deposit guarantee. The extended guarantee comes into place on 13 October. Under the original guarantee there were some 70 institutions; under the extended guarantee there are likely to be seven institutions. So the scope of the guarantee has narrowed quite significantly. 
Another point that was raised was the connection between decisions on statutory management of South Canterbury Finance. Those decisions were made by the Government quite separately from one another as they should be. Some have suggested that the Crown should have used its statutory powers to favour itself ahead of other investors. That of course would be unacceptable. It would be unacceptable for the Crown to make decisions using its statutory powers to minimise the deposit guarantee exposure at a cost to other investors who were involved under the Crown statutory management. In that respect the Crown has conducted itself with integrity as it should have done. 
This guarantee has fulfilled the original objectives set for it of financial stability. In working through the receivership the Government is fulfilling its objectives of ensuring firstly that depositors are paid out; secondly that they are paid out at minimal cost to the taxpayer; and thirdly that they are paid out with minimal disruption to the wider economy. 
Of course we hope that this will never happen again; we hope that a global financial crisis will never happen again. In many respects we should be grateful that by and large our financial system remained stable and that Parliament is pressing ahead on a pretty much bipartisan basis with reregulating our financial sector to ensure that the chances of this happening again are minimal.