Labour leader Helen Clark has officially launched her party's bid for a fourth term in power, making economic management the campaign's centrepiece and announcing the Government will introduce a bank deposit guarantee scheme.
Miss Clark unveiled plans for the Government to guarantee the deposits to a crowd of about 1,000 at Auckland's Town Hall, saying this election is about who voters trust with the future of the economy and public services.
She says Labour will not stand by and see the international financial crisis lead to depression and widespread unemployment.
Miss Clark says Labour is developing an economic stimulus package, in case conditions do not improve.
She says it would bring forward planned infrastructure spending and fund new building and construction projects.
Miss Clark says Labour offers vision and substance, backed by nine years of experience, and is well equipped to face the current global crisis.
The launch featured the slogan "It's about trust" displayed prominently on banners around the auditorium.
Deposit guarantees
Miss Clark says the bank deposit guarantee scheme will help keep the New Zealand financial system secure.
After the launch, Finance Minister Michael Cullen gave more details on it.
Dr Cullen says banks here are financially strong, but with other countries offering bank deposit schemes New Zealand has to follow suit.
He says the guarantee will cover all deposits, with no cap, and will be available to those banks which wish to take it up.
Dr Cullen says banks with deposits of more than $5 billion will be charged to have the guarantee.
If all banks do take it up it would leave the Government with a contingent liability of about $150 billion.
He says if the Government did not offer a deposit guarantee scheme there was a risk savings would be diverted to countries which did.
Dr Cullen says there is no concern about the stability of New Zealand's banks, but given that other countries have moved to guarantee deposits it makes sense for New Zealand to do the same.
Extra controls
The Reserve Bank later toughened the rules for financial firms wanting to apply for the scheme.
Reserve Bank Governor Dr Allan Bollard says implementing the scheme has brought to light policy issues that need addressing.
Finance firms with a credit rating below Double B, or which do not have a credit rating, will have to pay a fee of 3%.
Newly-established financial institutions that wish to enter the scheme will have to be rated Triple B or better.
Australian move
Australia will guarantee all bank deposits for three years and will also guarantee wholesale funding to Australian banks in an attempt to combat the global credit crisis,
Prime Minister Kevin Rudd said on Sunday Australia would also make $A4 billion available for mortgage-backed securities to help maintain liquidity for non-bank lenders.
