Government banking up for tender

Last updated 17:46 20/06/2013

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The Government is putting its lucrative banking contract with Westpac up for tender, with the new contract likely to be awarded within a year.

Australian-owned Westpac has handled the Government's core transactions for more than 20 years through what is known as a master contract.

But a discussion document published by Treasury and the Ministry of Business, Innovation and Employment (MBIE) said the arrangement was no longer enough to meet the Government's current and future banking needs.

Instead it proposes creating an "All-of-Government" solution which would use the entire state sector's purchasing power to get better value for money.

The agencies which could be involved include public service departments, state service agencies, about 2500 schools and the wider public sector.

The review comes more than two years after Finance Minister Bill English indicated he would run a procurement process for government banking.

The Green Party has frequently agitated toward tendering the contract.

Co-leader Russel Norman has previously called into question the "cosy" relationship between Westpac and the government, and suggested the state-owned Kiwibank should take over instead.

In a written statement, Westpac said it "welcomes the opportunity to participate in any process that allows us to further demonstrate our capability and the value we deliver to Government".

Other major banks could not be reached for comment by press time.

The tender document will be released in September or October this year.

Bank responses will be evaluated towards the end of the year, and the contract awarded in May or June 2014.

The contract is understood to be lucrative, with Westpac processing more than 91 million transactions for the Government in the year to June 30.

In 2011, there were also more than 18,400 credit cards in use across the wider public sector, including state-owned enterprises and local government.

MBIE and Treasury have called for submissions on the document to be made by July 4.

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