Cunliffe David: General Debate 
Cunliffe David: General Debate 
[Volume:671;Page:17759] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 How fascinating that the member who has just resumed his seat Nick Smith spent his whole time talking about the Labour Party never once defending the Government’s record on the economy when we have 180000 people unemployed. National’s mishandling of the South Canterbury Finance collapse is a disaster of epic proportions and New Zealand community assets will be flogged off to pay for it. Bill English and his mates turned down recapitalisation offers which on Treasury’s own documents would have limited the liability to around $500 million. The actual tab is $1.2 billion and rising. 
What company’s chief financial officer would have made a $700 million cock-up and kept his job? He has bet the company he has beggared a whole year’s Budget round and he is still sitting there and blaming the Labour Party. He is blaming the Labour Party despite the fact that he signed the thing in and he extended it in the Crown Retail Deposit Guarantee Scheme even though John Key says he had Treasury in his office week after week month after month since the day he was elected telling him that South Canterbury Finance was a dog. But he rolled it over again in the deposit guarantee scheme. 
We know that Fran O’Sullivan is no apologist for the Labour Party but she says it is risible that the Government did not simply pull the plug when the finance company’s auditor Ernst and Young ran the ruler over it. I refer to her article in the  
New Zealand Herald  
of 1 September. She said: “Instead South Canterbury became the beneficiary of an extended government guarantee—extraordinary given that KordaMentha had been advising the Government on South Canterbury since mid-2009.” She says that the Government could have mitigated the Crown’s overall exposure by putting South Canterbury Finance into statutory management months ago. 
And we would add that the Government could have limited it later if it had accepted one of a number of bids for recapitalisation. Now the Government may have been worried about an Australian merchant bank owning part of it—why I do not know; it is supposed to be trans-Tasman friendly—but it cannot possibly object to the New Zealand Superannuation Fund or Ngai Tahu buying a slice because they are not going anywhere. They were prepared to share the risk but Bill English wanted all the risk for the taxpayer. Now the Government is sucking on a $1.2 billion kumara because it had pride and misjudgment and it came before a big big fall. 
I want to know how bad those members’ mathematics is and why but I also want to know what pressures were brought to bear on the Government for that colossal cock-up. I suspect that there were various constituencies in members’ ears asking “What about our debt?”. Why was it that when the recapitalisation discussions were going on on 31 August the Government insisted the company be thrown into receivership to wipe out all the equity holders but was happy to extend the debt guarantee so that every deposit holder did very well—and some did extremely well especially some of the institutional senior debt holders. They made a killing at the taxpayers’ expense while mum and dad Kiwi are picking up the tab and now are faced with the prospect of privatisation to fill in the hole. 
People out there might ask: “Is this a big problem really? How big is this?”. Well the difference between what the Government thought it was going to pay and what it has ended up paying is wait for it a whole year’s Budget round of new money. Seven hundred million dollars is the amount that John Key just announced he was cutting out of the Budget to make the blackest zero Budget in decades and $700 million ironically is the amount it has lost so far over and above Treasury’s own estimates of its liability—it is a $700 million mistake. Who else survives a $700 million mistake in the real world? People get sacked for less than that. Why is Bill English still sitting there? Jami-Lee Ross would have been sacked from the council if he had made a $700 million mistake—they would not have let him near a $700 million cheque. 
David Shearer 
: Just as well. 
Hon DAVID CUNLIFFE 
: Just as well! Can members imagine Mr Quinn making a $700 million mistake? Well I can but I cannot imagine him having the cheque book. Bill English has made a $700 million mistake. Has John Key defended him? 
Hon Dr Nick Smith 
: He’s fixing up your mess! 
Hon DAVID CUNLIFFE 
: Oh our mess? Who signed it in? There was a bipartisan agreement on the deposit scheme but National signed it in.