Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 


Local government in strong financial position

Local government in strong financial position

Local Government New Zealand (LGNZ) advised at its April Quarterly Media Briefing today that the local government sector has the strongest balance sheet in New Zealand, outperforming central government and the private sector.

As at 30 June 2012 local government collectively owned $121 billion of infrastructure, investments and other assets against $11 billion debt with a 9 percent debt to assets ratio. Central government has $241 billion of assets under management with $181 billion debt, while the business sector has assets of about $1,233 billion with liabilities in excess of $800 billion, based on a Government report ‘Building Capital Markets’.

The local government sector is responsible for managing infrastructure and delivering a range of services that are vital to communities including almost 90 per cent of New Zealand’s total road network length, the bulk of the country’s water and waste water networks, libraries, recreation and a range of other services and facilities.

LGNZ President Lawrence Yule says that consistent with best practice for financing in the public and private sector, council debt is used as a tool to fund infrastructure to support long-term growth that will have intergenerational benefits servicing a community for years to come. He gave the example of waste water plants with an operational lifespan of at least 50 years.

Except in very rare occasions, debt is not used to fund operations and must be spent in accordance with a council’s revenue and financing policy which is set in consultation with citizens. These policies are subject to review by Office of the Auditor General.

“When assessing any council’s financial health or whole balance sheet, both assets and liabilities need to be taken into account. Viewed in this way, local government is in sound financial health with assets far exceeding debt. Debt is the appropriate funding tool for intergenerational assets and against standard measures it is being prudently used and managed throughout local government in New Zealand,” Mr Yule says.

Indicators show that local government’s financial position continues to be sound. Local Government Funding Agency (LGFA) Chairman Craig Stobo, who also spoke at the LGNZ April Quarterly Media Briefing, said its credit margins over government bonds have been improving since its establishment in February 2012. LGFA borrowers represent more than 90 percent of total local government sector debt. LGFA has a stable long term outlook as a lender, classed as AA+ by international rating agency Standard & Poors. Many councils have similarly strong ratings. Mr Stobo provided comparisons with the private sector where companies with heavy infrastructure investment rated by Standard & Poors include Transpower at AA-, Meridian Energy at BBB+, Contact Energy’s recent proposed $250 million fixed-rate bonds were rated BBB, while banks Westpac, Rabobank and ANZ are all rated AA-.

“Since the LGFA was launched in 2012, it has reduced the cost of debt to its council borrowers by at least 30 basis points. Continued strong support from local authorities has contributed greatly to our success, giving councils a reliable source of funding,” LGFA Chairman Craig Stobo says.

As the Office of the Auditor General (OAG) stated in its most recent result of local government audits, the indicators of long term sustainability are all within a reasonable range.

“Operationally, the local government sector remains strong in this aspect. Debt levels have remained within a reasonable range. Local authorities’ ability to service that debt is also strong and consistent throughout the sector,” the OAG report stated.

*Ends*

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell:
On The Eleanor Catton Rumpus

If anyone was in doubt about the accuracy of the comments made in India by Eleanor Catton, the reaction from some quarters here at home has gone a long way to proving her point.

By ‘some quarters’, I mean (a) RadioLive host Sean Plunket who called Catton a “traitor” and (b) Prime Minister John Key who dismissed her views as being those of a typical Green Party supporter, which is apparently almost as bad.

In context, Catton seemed to be talking about the mixed feelings she felt after what she had created suddenly becoming a kind of public property claimed by the entire country and its leaders. That must feel weird at any time, in any place. Catton evidently finds it particularly alienating when the government of the day has shown little interest in the arts beyond their promotional/economic value. More>>

 

More Rent Assistance, Less State-Owned Housing: John Key Speech - Next Steps In Social Housing

"We are going to ensure that more people get into social housing over the next three years, whether that is run by Housing New Zealand or a community provider. The social housing budget provides for around 62,000 income-related rent subsidies a year. We are committed to increasing that to around 65,000 subsidies by 2017/18, which will cost an extra $40 million a year." More>>

ALSO:

The Future Of Work: Andrew Little - State Of The Nation 2015

In 2005 when I led the EPMU we worked together with Air New Zealand to find a way to keep engineering jobs that were heading overseas. A lot of these workers were people I’d known for years and they were facing not just losing their jobs but not being able to find the kind of work they do without going overseas. A lot of people were facing personal and financial upheaval.... More>>

ALSO:

Gordon Campbell: On The Sabin Case, The Pressures On Greece And (Songs About) Coyotes

Mike Sabin is a National MP, and the current chairman of Parliament’s law and order committee. Yet reportedly, he is being investigated by the Police over an assault complaint... However, the PM will not comment on any aspect of the story. More>>

ALSO:

Houses, ISIS, King (& Catton): PM Post-Cabinet Press Conference

The Prime Minister met with reporters to discuss: • Social housing, the Auckland housing market • The prospect of joining international forces to combat ISIS • David Bain’s compensation • The lowering of the flag for the King of Saudi Arabia's death ... More>>

ALSO:

Gordon Campbell: On Tomorrow’s Speeches By John Key And Andrew Little

The Key government has already kicked off the political year on a stridently ideological note, with Environment Minister Nick Smith choosing to lay all manner of sins at the door of the RMA. Tomorrow, the government will wheeling out its best salesman – Prime Minister John Key – to sell its plans for state housing… . More>>

ALSO:

Transport: Auckland Looks To Light Rail

The Board of Auckland Transport has called for an investigation into a light rail network, which could relieve traffic congestion on some of the region’s busiest roads. This stems from work in 2012 (the City Centre Future Access study) which responded to a government request to develop a robust and achievable solution for access to the CBD. More>>

ALSO:

RMA: Smith's Claims Don't Match Evidence - Greens

The Motu group’s research into the impacts of planning rules looked at the costs related to housing development but not the benefits of environmental protections and does not recommend significant changes to the RMA to reduce the cost of new house builds. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news