The Government’s master banking contract held by Westpac costs taxpayers approximately NZ$4 million a year, according to Treasury.
Treasury Deputy CEO Andrew Kibblewhite made the comment at Wednesday’s Finance and Expenditure Select Committee hearing in response to questions from Green Party co-leader Russel Norman on whether the Government was looking to put the contract out for a competitive tender after not doing so for 21 years.
Finance Minister Bill English confirmed at the select committee that the Ministry of Economic Development’s procurement team was moving to put the contract out to tender.
During the discussion, Kibblewhite, who was accompanying English at the select committee, mentioned the contract was "worth in the order of NZ$4 million". A spokesman for the Treasury confirmed to interest.co.nz this was the approximate annual cost of the contract.
The issue of the master banking contract, thought to be the single biggest banking contract in the country, arose after the Green Party asked English in December last year whether the contract had been put up for a competitive tender like other government contracts with the private sector.
The contract covers the banking requirements of government departments, but not State Owned Enterprises or Crown Entities.
Norman raised the idea of Kiwibank taking over the Government’s banking, although a spokesman for Kiwibank at the time told interest.co.nz the state owned bank was not big enough, and it would take 10 years for it to be able to bid for the contract.
In December English’s office told interest.co.nz that the Government was committed to a future procurement process for the contract, which had been re-signed in 2004 and, since 2005, the Crown had negotiated price reductions for the contract with Westpac.
At the time a spokesman for English said the contract had not been put out for a competitive tender to date because the costs of doing so outweighed the expected benefits, "given the complexity of arrangements with departments and the price reductions negotiated under the existing contract".
Last week, the Green Party released a list of Parliamentary Written Questions where it had asked government ministers whether they had accepted corporate hospitality from Westpac - with the findings showing various ministers and their staff had accepted corporate hospitality from Westpac in the last year at its Westpac Stadium box and at the exclusive White House restaurant in Wellington.
After releasing the answers to the written questions, the Green Party again demanded the Government put the contract out for a competitive tender, and questioned whether the process would be fair given the corporate hospitality offered to ministers and their staff.
Kibblewhite told the Finance and Expenditure Committee that the process of tendering the contract began with the Ministry of Economic Development's procurement team, which would give Treasury its information on the bids. Treasury would review the risks of the respective bids then give the Finance Minister its unambiguous opinion as to who the contract should be awarded to.
English said the final decision of who would be awarded the contract would be a Cabinet decision.
"It's not something I would deal with on my own," he said.
It is still uncertain as to the time-line of the tender process.
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