29 Mar 2012

Information delays hindered deposit scheme monitoring

4:01 pm on 29 March 2012

A select committee has been told the slow supply of financial information from struggling finance firms to Treasury did not help the department's monitoring of the Crown's Retail Deposit Guarantee scheme.

Last year, an Auditor-General report found the scheme achieved its aim of shoring up confidence among depositors and the public, but the Treasury did not do enough to minimise the $1.9 billion cost to the taxpayer of finance company failures.

An adviser to the Auditor-General, KPMG's Godfrey Boyce, told MPs on Wednesday the information about the state of the finance companies in 2008 was slow to be collected by trustees and went through the Reserve Bank before being passed on to the Treasury.

He says there were delays in getting that information and there was the desire for it to be as comprehensive as possible.

Mr Boyce says in June 2009, the Treasury started appointing inspectors to go directly into these companies to circumvent the chain that was leading to non-timely information.

Meanwhile, Deputy Auditor-General Philippa Smith says the Treasury failed to obtain sufficient information on the mounting risk to the Crown's balance sheet as cash flooded into guaranteed companies which later failed.