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

 

Ruataniwha: DOC, Hawke's Bay Council Developer Take Supreme Court Appeal

The Department of Conservation and Hawke's Bay Regional Investment Company (HBRIC) are appealing to the Supreme Court over a conservation land swap which the Court of Appeal halted. More>>

ALSO:

With NZ's Marama Davidson: Women’s Flotilla Leaves Sicily – Heading For Gaza

Women representing 13 countries spanning five continents began their journey yesterday on Zaytouna-Oliva to the shores of Gaza, which has been under blockade since 2007. On board are a Nobel Peace Laureate, three parliamentarians, a decorated US diplomat, journalists, an Olympic athlete, and a physician. A list of the women with their background can be found here. More>>

Gordon Campbell: On The Key Style Of Crisis Management

At Monday’s post Cabinet press conference Key was in his finest wide- eyed “Problem? What problem?” mode. No, there wasn’t really a problem that top MPI officials had been at odds with each other over the meaning of the fisheries policy and how that policy should be pursued... More>>

ALSO:

Mt Roskill: Greens Will Not Stand In Likely Post-Goff By-Election

“The Green Party’s priority is changing the Government in 2017, and as part of that we’ve decided that we won’t stand a candidate in the probable Mt Roskill by-election... This decision shows the Memorandum of Understanding between Labour and the Green Party is working." More>>

ALSO:

Wellington: Predator Free Capital Plan

Wellington City Council (WCC), the Greater Wellington Regional Council (GWRC) and NEXT Foundation, today announced a joint collaboration to make Wellington the first Predator Free capital city in the world. More>>

ALSO:

Gordon Campbell: On Judith Collins’ Efforts At Self Correction

Thousands of prisoners currently in prison may be entitled to an earlier release than expected – and compensation – because Corrections has incorrectly calculated their term of imprisonment. Unless of course, the government buries its mistakes by changing the law and retro-actively getting itself off the hook… More>>

ALSO:

More Justice & Corrections

Sector Opposes Bill: Local Government Bill Timeframe Extended

The Minister of Local Government Peseta Sam Lotu-Iiga has asked the Select Committee to extend the report back date for the Local Government Act 2002 Amendment Bill (No 2). More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news