Source: New Zealand Government
The Government is welcoming the decision by the Local Government Funding Agency to increase access to financing tools for fast growing councils to support greater investment in critical infrastructure, Local Government Minister Simeon Brown says.
“Communities across the country are facing an infrastructure deficit and significant population growth is projected in the coming years. With a growing population, it’s critically important we are delivering the long-term infrastructure we need to support this growth in our cities and regions.
“The Local Government Funding Agency (LGFA) has now confirmed it can immediately begin lending to high growth councils with leverage up to 350 per cent of their total revenue. This is a significant increase in the standard leverage available to councils at 280 per cent.
“Using debt to spread the costs of long-term assets means that councils can invest for long-term growth and pay back their debts across the lifetime of new assets. This ensures the costs of those assets are paid for by those who use them, rather than simply pushing up rates today.
“The LGFA is the lowest cost provider of financing available to councils, and this arrangement means that councils have additional financial capability to fund infrastructure, roads, and other core infrastructure in their cities and regions.”
The LGFA’s announcement comes on top of the Local Water Done Well deal which allows council owned water organisations to borrow up to a level equivalent to 500 per cent of operating revenues through the LGFA – around twice that of what existing councils can borrow – meaning the cost of increased investment in water infrastructure can be spread across the lifetime of these assets.
“The Government is a 20 per cent shareholder in the LGFA and has clear expectations that councils will use this additional borrowing capacity to deliver the must-have infrastructure and services that our communities need, such as roading, water, wastewater, and stormwater to unlock land for housing, and invest in the critical infrastructure growing communities need.”
