NZ wants all-of-govt banking proposals in first shakeup since 2004

The New Zealand government is seeking proposals to handle all the state sector's banking needs, replacing a core transactional services contract held by Westpac Banking Corp since 2004.

A discussion paper from the Ministry of Business, Innovation and Employment, and Treasury, says the so-called master contract with Westpac "is no longer sufficient to meet the current and future banking needs of government".

It wants an integrated banking service contract of at least five years that provides economies of scale, better value for money, processing efficiencies and better financial payment interactions between government, business, taxpayers and ratepayers, according to the paper posted on the gets.govt.nz website.

There were 91.5 million transactions in the year ended June 30, 2012, under the master contract, down from 92.5 million in 2011. Of that, 52.5 million were from the Ministry of Social Development. The state sector also has 18,433 credit cards on issue, based on 2011 figures.

The document comes two and a half years after Finance Minister Bill English flagged an intention to open up the banking contract to fresh bids.

Under Economic Development Minister Steven Joyce, the government has been pushing for all-of-government contracts for everything from legal services to advertising, travel costs, office consumables, computers and vehicles in an effort to wring out cost savings.

The government has already targeted savings of $178 million on travel and external legal services contracts cover all public sector agencies, councils and up to 2500 schools by signing up 39 law firms and up to five airlines.

It also trimmed spending on recruitment, telecommunications and even bulk-purchased wallboard for rebuilding work in Christchurch.

MoBIE's preferred option would be for core transactional banking services currently under the master contract to be ring-fenced, and as many as seven other sub-categories including school banking, trust accounts, international payments and credit/purchasing cards.

The paper calls for submissions to be made by 10am on July 4 and the eventual contract to be awarded in May or June 2014.

(BusinessDesk)