16 Oct 2008

ACT now supports bank deposit guarantee

4:27 pm on 16 October 2008

The ACT Party has reversed its initial opposition to a Government guarantee for savings accounts after being briefed by the Reserve Bank.

Party leader Rodney Hide said on Thursday 16 October changes made to the detail of the Government's deposit guarantee scheme remove some of ACT's concerns, such as the possible blanket coverage of the finance company sector and wholesale lending.

"There's still aspects of the scheme that we don't like and I think it's fair to say the Reserve Bank and the Treasury shared some of those concerns," Mr Hide said.

"You know what we don't like is that you get the first $5 billion free and so those are the ones that are going to be the riskiest ones, but that was a political decision that was made by the Government."

Mr Hide says the scheme is more careful and cautious than Australia's.

On Sunday, prior to the announcement of the scheme, he described the idea as not necessary, because of the strength of the Australian-owned banks which dominate the local market.

ACT's finance spokesperson Sir Roger Douglas also supports the Government's move to fall in line with similar schemes around the world.

No backing for National's Super proposal

However, Sir Douglas has not changed his stance against the National Party's plan to invest more of the New Zealand Superannuation Fund within New Zealand.

The former Labour party finance minister says it is more important to focus on long-term policy such as ACT's lower tax plan and limits on Government spending, than to embark on spending that does not boost long-term productivity.

"I do not believe that we should be making just work schemes. If we get the right climate then we will get investment and we will get growth, but if we just undertake activities just for the sake of having a bit of activity that will scare off investors."

Sir Roger says the Superannuation Fund is to help pay for future pensions and should not be put into more risky areas.