Finance Minister Bill English's Mexican stand-off with the Bank of Tokyo-Mitsubishi over Solid Energy really is a matter of who blinks first. Bank officials are convinced their lending to the SOE came with more than just an implied guarantee; they also do not believe the Government would really allow Solid Energy to fall over. English says that if the High Court challenge to the major lenders taking a haircut on their loans is successful, the SOE will be liquidated. The Japanese bankers don't believe he will do it. A liquidation would be politically painful for the Government, but economically it makes sense. Profitable parts of the business could carry on, the other bits would be put out of their misery, the debts would disappear off the Government's books and the money being used to prop it up could go elsewhere. Also, English can't blink because other banks might see that as confirmation of a government guarantee on all SOE lending.
Protecting the pay
Sometimes, interesting things turn up in dull places. For example, as MPs were working their way through an overhaul of the legislation regulating their pay and expenses, they discovered some of them may have been illegally paid. It turns out there is some uncertainty about whether list MPs who replaced other list MPs between elections are, in law, allowed to be paid. This slip-up appears to have gone unnoticed for years. Just in case, amendments are being made to the bill to retrospectively validate payments made to list MPs who came to Parliament mid-term.
Red tape tangle
Glacial progress is being made in tendering out the Government's banking contract, held by Westpac for many years. The process has been caught up in the Ministry of Business, Innovation and Employment's "all of government" procurement process, which is trying to stitch together a wider panel of banks to provide services for all government agencies, and not just look at the Government's contract. People in the banking business say it has all become bogged down in masses of red tape and the exchange of very complex documents (and bankers aren't exactly allergic to complex documents). One participant notes that there is a limited number of banks and they all offer similar services with similar fees, so the whole process feels like an artificial "make work" scheme or an attempt to delay tendering out the main contract.
