Under the guise of the government's Retail Deposit Guarantee Scheme the New Zealand taxpayer will pay over $400 each to bailout South Canterbury Finance. That means over $1.77 billion of your taxes handed over to the rich speculators, known to the media as investors, at a time when we are constantly being told there is no extra government funding for the public services such as schools, hospitals etc, and that cuts are the order of the day.
This is the biggest government financial bailout in New Zealand history since the collapse of the Bank of New Zealand in 1990. Then the bailout was a paltry $600 million!
Up to this point the Nats government has sat idly by as business after business as been allowed to go under, in the downturn, throwing thousands of workers on the dole in the process.
However, according to the Nats government South Canterbury Finance was too big to fail. What the Nats mean by this is that their supporters in the South Island and elsewhere would lose their shirts and most likely not vote for the Nats at the next general election!
It was amazing how quick the Nats government can internvene in the market when it suits them and use tax payer dollars like there was no tomorrow.
Clearly the whole farce around the octogenarian owner Allan Hubbard that was playing out before the collapse with investigations into the accounting practises, as well as, the misplaced public demonstrations in support of the man in Timaru (as he was a good old boy that helps folks out) were an indication that the game was about up. These events were a marvel to behold. It appears that the books were an antiquated handwritten ledger! Obviously, the New Zealand finance capitalists are not a sophisticated lot if this is to go by. Your local community groups are better run!
It is becoming self evident that the Nats government knew that South Canterbury was in trouble long before the public did. In fact the Nats government could have taken South Canterbury Finance out of the Retail Deposit Guarantee Scheme. In fact by keeping it in the scheme South Canterbury Finance kept lending irresponsibly, and attracted further investor safe in the knowledge that there was a nice earner in it for them from the taxpayer when it collapsed.
David Cunliffe MP has called for a full independent enquiry over the Nat's governments handling of South Canterbury Finance. Obviously this has fallen on deaf ears as far as the Nats government is concerned.
The issue for Labour is why in the waning days of the last Labour government did they introduce such a scheme.
Even by late 2008 it was apparent that such schemes as the Retail Deposit Guarantee Scheme were to serve one purpose only. This purpose was to nationalise the debt and privatise the profits.
This is what as now happened with South Canterbury Finance with speculators walking away with our tax dollars. The Finance minister believes he can get back some of the losses. This is at best a 'hope in hells chance.' The majority of the debt will be carried by the taxpayer.
Since the Nats government came to power in 2008 the average weekly wage has now gone down by $50. On top of this is the hike in GST, effects of the Emissions Trading Scheme., as well as cuts in public services - one of the most pernicious being the attacks on the 20hrs free education for kindergartens. To top it all off the attacks on beneficiaries and workers rights. In other-words deflationary wages/ conditions and inflationary prices/taxes!
Workers need bailing out of the capitalist system with well paid jobs and social security. This can only be achieved through the nationalisation of the banks and large corporates in New Zealand not government guarantee schemes.