South Canterbury Finance bailout on Cabinet agenda

As well as grappling with financial issues presented by the Canterbury earthquake, Cabinet is also today likely to come up with a clearer picture of how much the bailout of South Canterbury Finance will cost taxpayers.

South Canterbury was put into receivership last week and the Government immediately paid out $1.7 billion to investors and in a loan to the receivers under the deposit guarantee scheme.

The company has significant assets and Prime Minister John Key said today there was already interest in them from buyers.

"Numbers get bandied around that the taxpayer is going to end up paying for $1.6 billion or $1.7 billion -- that isn't right," he told TVNZ's Breakfast programme.

"There are a lot of assets in South Canterbury that can and will be sold, and there has already been a lot of expressions of interest to buy those assets. So the final number that will cost the taxpayer is considerably less than $1.6 billion."

Mr Key said $900 million was put away for the deposit guarantee scheme, and it needed to be noted that companies had paid "hundreds of millions of dollars" to be part of the scheme.

"So the net cost to the taxpayer will be quite small and we will probably quantify that this afternoon. But it's a lot less than people think..."

He said the situation also needed to put in the context that without the scheme, the collapse of finance companies would have happened on a much larger scale.