Crown Guarantee Schemes
Scope of Appropriation
This appropriation is limited to the implementation and operation of the Crown's Deposit Guarantee Scheme and the Crown's Wholesale Guarantee Facility excluding expenses incurred in connection with administering claims under a guarantee or indemnity given under the Scheme.
Significant Work Completed During 2009/10
- Delivered the Deed of Guarantee for the extended Crown Deposit Guarantee Scheme.
- Developed and delivered a revised Deed of Guarantee applying within the current guarantee period including the ability to issue non-guaranteed securities in order to facilitate transition off the guarantee. The revised deed took effect on 1 January 2010.
- Completed delivery of the payout solution using CIS.
- Completed a guidance manual for complex claims that cannot be resolved via CIS as they require expert (legal) involvement.
| Performance Dimensions | Target | Performance for 2009/10 | ||||
|---|---|---|---|---|---|---|
| Development and implementation of an overall plan for managing the Crown interests including default events. | Achieved |
Achieved. This work is ongoing, with particular attention being paid on the entities considered more likely than not to default and, in the run-up to expiry of the current scheme on 12 October 2010, medium- to high- risk entities that are not eligible for the extended guarantee scheme. |
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| Active monitoring of guaranteed institutions is undertaken to minimise Crown exposure. | Achieved |
Achieved. Ongoing via regular reporting from the Reserve Bank and supplemented by engagement with the entities themselves, requests for information under the Guarantee Deeds or inspections if necessary. |
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| The Treasury actively manages the Crown interests in the event of a specific default. | Within seven days of default |
Achieved. A structured plan has been developed to ensure the Crown's key requirements are met. |
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| 2009/10 Actual $000 |
Supp. Estimates - Voted $000 |
Main Estimates $000 |
2008/09 Actual $000 |
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|---|---|---|---|---|---|---|
| Expenses | 2,520 | 5,471 | - | |||
| Funded by: | ||||||
| Revenue Crown | 2,520 | 5,428 | - | |||
| Other Revenue | - | 43 | - | |||
This output class appropriation was established on 1 September 2009 to consolidate the two separate output classes for the Crown Deposit Guarantee Scheme and the Crown Wholesale Guarantee Facility previously included under the Economic Performance MCOA.
Actual 2009/10 output class expenditure was $2,951,000 or 54% under the Supplementary Estimates budget primarily owing to budgeted legal expenditure not required this financial year. Some costs of the scheme are difficult to forecast, particularly potential litigation costs. An in-principle expense transfer to 2010/11 has been sought for up to $2,233,000 to ensure the Scheme has sufficient funding available to meet potential litigation costs.
