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Deposit Takers Act 2023

Repeals and amendments to other Acts - Amendments to Public Finance Act 1989

491: New sections 25B and 25C inserted

You could also call this:

"Minister can spend money to help a financial institution in serious trouble, with some rules."

Illustration for Deposit Takers Act 2023

If a financial institution in New Zealand is in serious financial trouble, the Minister can take certain actions. The Minister can only do this if the Reserve Bank of New Zealand says the institution is insolvent or in serious financial difficulties, and the Minister is satisfied it's necessary. You can read more about the rules for the Minister's actions in section 25A.

The Minister must be satisfied that spending money is necessary to keep the financial system stable or to keep important activities going. The Minister must also think there's no other way to fix the problem quickly and in an orderly way. In this situation, the Minister can approve spending money even if Parliament hasn't already allowed it.

If the Minister spends money without Parliament's approval, they must include a statement about it in the Government's annual financial statements and in a bill to confirm the spending. This rule doesn't affect the validity of the spending, though. A regulated entity is an organisation that is supervised by the Reserve Bank of New Zealand, as defined in the Reserve Bank of New Zealand Act 2021.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS706889.

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Part 9Repeals and amendments to other Acts
Amendments to Public Finance Act 1989

491New sections 25B and 25C inserted

  1. After section 25A, insert:

    25BWhen Minister may exercise certain powers in connection with financial institution in serious financial difficulties

    1. The Minister may exercise a power under section 25C only if—

    2. the Reserve Bank of New Zealand has advised the Minister that 1 or more regulated entities are, or are likely to be, insolvent or otherwise in serious financial difficulties (the situation); and
      1. the Minister is satisfied of the matters set out in subsection (2) on reasonable grounds.

        1. The matters that the Minister must be satisfied of are as follows:

        2. that incurring expenses or capital expenditure under section 25C in relation to the situation is necessary or desirable to do either or both of the following:
          1. maintain the stability of the financial system:
            1. maintain the continuity of systemically important activities undertaken by 1 or more regulated entities; and
            2. that there is no reasonable prospect of the situation being adequately dealt with to the Minister’s satisfaction in a timely and orderly way other than through exercising the power under section 25C.

              1. In this section, regulated entity has the same meaning as in section 5(1) of the Reserve Bank of New Zealand Act 2021.

              25CExpenses or capital expenditure in connection with financial institution in serious financial difficulties

              1. The Minister may approve the incurring of expenses or capital expenditure in relation to the situation referred to in section 25B(1)(a) and, whether or not there is an appropriation by Parliament available for the purpose and despite sections 4, 8, and 9, the expenses or capital expenditure may be incurred accordingly.

              2. Public money may be spent, without further authority than this section, for the purpose of meeting expenses or capital expenditure incurred in accordance with subsection (1) that have not been appropriated.

              3. A statement about any expenses and capital expenditure incurred under this section in any financial year that have not been appropriated must be included in—

              4. the annual financial statements of the Government; and
                1. an Appropriation Bill for confirmation by Parliament.

                  1. Subsection (3) does not limit the validity of any expenses or capital expenditure incurred under this section.