Dear Treasury,

Under the Official Information Act 1982, I request:

1. Any analysis, policy advice, or precedent studies regarding Crown loan guarantee or credit enhancement programmes for infrastructure providers, including:
- Circumstances where government underwrites commercial loans rather than providing direct capital
- Cost-benefit analysis of loan guarantees versus direct infrastructure spending
- Risk assessment frameworks for determining when Crown guarantees are appropriate
- International examples where governments use loan guarantees to address infrastructure financing gaps

2. Any advice to Ministers regarding whether loan guarantee mechanisms could address capital access barriers in rural telecommunications or other infrastructure sectors, including:
- Whether such programmes would represent better value for money than direct subsidies or service payments
- Fiscal risk assessment of guarantee programmes versus other intervention types
- Whether enabling local infrastructure providers to access commercial capital serves government objectives more efficiently than alternative approaches

3. Any analysis of Crown loan guarantee programmes currently operating in New Zealand (such as housing, business lending, agriculture, or other sectors) including:
- Programme design, eligibility criteria, and risk management approaches
- Fiscal costs and default rates
- Economic outcomes and whether programmes achieved policy objectives
- Whether similar models could apply to rural infrastructure financing

4. Any assessment of whether Crown loan guarantees for rural telecommunications infrastructure providers would:
- Address identified market failures at lower fiscal cost than alternatives
- Enable competition and consumer choice without ongoing subsidy requirements
- Support regional economic development through local business growth
- Provide better long-term value than funding foreign-operated alternatives

5. Any advice on appropriate risk assessment, pricing, or eligibility frameworks for infrastructure loan guarantee programmes, including how to ensure Crown exposure is appropriately managed while achieving policy objectives.

Context: Commercial lenders appear to decline rural telecommunications infrastructure financing due to asset illiquidity concerns rather than business viability, creating systematic capital access barriers. I am seeking to understand whether Crown loan guarantee mechanisms could address this market failure efficiently, and what precedents or frameworks exist for such programmes.

Yours faithfully,

Sam Brown

Hi Sophie,

Thank you for your response. I am happy to narrow my request to examine the three Crown loan guarantee schemes you identified.

Please provide the following information regarding the Business Finance Guarantee Scheme, North Island Weather Events Loan Guarantee Scheme, and Community Housing Provider Loan Guarantee Scheme:

1. Programme Design and Frameworks:
- Eligibility criteria and assessment frameworks used to determine which borrowers/sectors qualified
- Risk assessment methodologies for determining guarantee coverage percentages
- Pricing structures (guarantee fees charged to borrowers or lenders)
- How Crown fiscal exposure was calculated and managed
- Criteria used to determine when loan guarantees are appropriate government intervention versus direct grants or other mechanisms

2. Performance and Outcomes:
- Total value of loans guaranteed under each scheme
- Actual default rates and Crown payments made on guarantees
- Fiscal cost as percentage of total loans guaranteed
- Economic outcomes assessment: jobs supported, businesses preserved, or other measured benefits
- Cost-benefit analysis comparing fiscal cost to economic benefits achieved

3. Policy Development:
Any ministerial briefings, cabinet papers, or policy advice regarding:
- Rationale for selecting loan guarantees versus alternative interventions (direct grants, subsidies, etc.)
- Assessment of market failures these schemes were designed to address
- Why guarantees were considered appropriate for these sectors/circumstances
- Whether similar mechanisms were considered or proposed for other sectors experiencing capital access barriers

4. Cross-Sector Applicability:
- Any analysis of whether loan guarantee models developed for these schemes could be applied to other sectors facing systematic capital access barriers
- Any advice regarding what types of market failures or capital access problems are suitable for loan guarantee intervention
- Framework or criteria for assessing when new loan guarantee schemes would be appropriate policy response to market failures

5. International Comparisons:
- Any analysis of international loan guarantee programmes that informed New Zealand scheme design
- Particularly any analysis of loan guarantees used for infrastructure financing in comparable jurisdictions

Purpose: I am seeking this information to understand how Crown loan guarantee schemes are designed and whether similar mechanisms could address capital access barriers in other sectors, particularly where providers face asset illiquidity concerns rather than credit risk issues.

Please confirm this narrowed request is acceptable.

Yours sincerely,

Sam Brown

Kia ora Sophie,

Thank you for the clarification request.

I am seeking both:
1. Actual fiscal cost to Crown (the substantive cost):
- Total value of guarantee payments actually made by Crown when borrowers defaulted
- This expressed as percentage of total loans guaranteed
- For example: if $100M was guaranteed and Crown paid out $3M in defaults = 3% fiscal cost

2. Programme administration costs:
- Operational and administrative costs of running each scheme
- This helps assess total Crown cost of the intervention

The key metric I'm interested in is actual default cost - understanding what percentage of guaranteed loans resulted in Crown having to make payments. This demonstrates the real fiscal risk and cost of loan guarantee programmes.

Administrative costs are secondary but useful for understanding total programme cost.

Please let me know if this clarification is sufficient.

Yours sincerely,

Sam Brown