Sunday, 19 September 2010

John Minto: A simple question from a taxpayer

By John Minto
from Frontline

The Christchurch earthquake has (quite rightly) knocked several important issues from the front pages and off the TV news. Now that the worst appears to be over, it's time to revisit those issues - the most pressing of which is the biggest corporate bailout in New Zealand history.

There are many questions demanding answers after taxpayers forked out $1.7 billion to buy debt-laden South Canterbury Finance. For example, last week I was sent information suggesting one individual bought $17 million in SCF bonds at 20 per cent of their face value as the company, in its dying days, desperately tried to raise funds to stay afloat. It seems this money was invested in the names of various entities rather than in one person's name and because SCF went into receivership the government deposit guarantee scheme means this individual will be paid out at the full 100 per cent value of the bonds. A bit of arithmetic shows a payout at $85 million - or $68 million profit, courtesy of taxpayers, after just a few weeks.

My question to Finance Minister Bill English is simple. Is this just water cooler gossip or is it true?

Given the government now has full control of the company's books, it will be an easy exercise for officials to work out and report back to us. Media reports suggest $125 million was paid out to bondholders and we taxpayers deserve to know where it's gone. A list of the bond payouts, to whom and how much, along with the dates and values of the initial investments would give the transparency we should expect.

SCF chief executive Sandy Maier told TVNZ on August 31 that "there will be a lot of money made in the listed bonds with prices up to 20, 30 and 40 per cent, which was all paid today".

He went on to make the chilling assessment that "a lot of bets in the casino paid off big-time today."
Did one of those bets net a greedy speculator $68 million in taxpayer funds?

I'm tired of bailing out the greedies. Especially when John Key says people who weren't insured in Christchurch can't expect government help. He said something about moral hazard and teaching poor people lessons about the importance of insurance.

It would be good to hear Key explain why the government can richly reward slimeball speculators but can't find 4 per cent to increase teachers' salaries or give enough to health boards to pay our radiographers decently, not to mention the paltry $350 for four weeks to those who've lost employment income through the Christchurch quake.

And while the government is passing legislation to curb workers' rights, how about some legislation to curb speculator greed and strip SCF bondholders of their immoral earnings at our expense? It might even teach them a lesson.

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