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 First Time Voting (Centre Right)

For the next two days, I’m turning my column over to two guest columnists who are first time voters. I’ve asked them to explain why they were voting, for whom and what role they thought their parental upbringing had played in shaping their political beliefs ; and at the end, to choose a piece of music.

One guest columnist will be from the centre right, one from the centre left. Today’s column is from the centre right – by James Penn:

As someone who likes to consider himself, in admittedly vainglorious fashion, a considered and rational actor, the act of voting for the first time is a somewhat confusing one. I know that my vote has a close to zero chance of actually influencing the outcome of Parliament. The chance I will cast the marginal vote that adds to National or Act’s number of seats in Parliament is miniscule. The chance, even if I did, that doing so would affect the government makes voting on a strictly practical level even more spurious as a worthwhile exercise.

But somehow I have spent a large amount of time (perhaps detrimentally so, depending on the outcome of my upcoming exams) agonising over how to cast my first vote in a national election. More>>

 

Parliament Today:

SURVEILLANCE:

Election Ad Soundtrack: Rapper Eminem Sues National Party Over Copyright Breach

US rapper Eminem is suing the New Zealand National Party for alleged copyright infringement over unauthorised use of the rapper’s ‘Lose Yourself’ song in an election campaign advertisement. More>>

ALSO:

Pre-Election Chartering: Four New Partnership Schools To Open

Education Minister Hekia Parata today announced the Government has signed contracts to open four new Partnership Schools in 2015. More>>

ALSO:

Werewolf 50 Out Now - The Election Issue: Loss Leaders

Gordon Campbell: A third term requires a mature decision, with eyes wide open. It calls for a conscious vote of confidence… Without trying hard here are about 19 reasons, in no particular order, for not ticking ‘party vote’ National. More>>

ALSO:

Not-Especially New Plans: All Prisons To Become Working Prisons Under National

All public prisons in New Zealand will become full working prisons by 2017, and ex-prisoners will receive post-release drug addiction treatment if National is returned to government, says Corrections Spokesperson Anne Tolley. More>>

ALSO:

Māngere: "False Claim Of Matai Title" - Labour

National must explain why its candidate for Māngere Misa Fia Turner appears to be using a Matai title she is not entitled to, Labour’s MP for Māngere and Pacific Islands Affairs spokesperson Su’a William Sio says. A Matai title is a legally-recognised ... More>>

ALSO:

CPAG Report: No New Zealand Child Should Grow Up In Poverty

Child Poverty Action Group's flagship policy publication Our Children, Our Choice: Priorities for Policy calls for cross party political agreement to underpin an action plan to eliminate child poverty in New Zealand. More>>

ALSO:

Gordon Campbell:
On National’s Phantom Tax Cut Package

Hmmm. So National’s tax cuts package turns out to be one of those television advertisements that screams a headline promise – perfect skin! a youth tonic that works! – while in very small print there’s an out clause: special conditions may apply. More>>

ALSO:

Water: New Marine Reserves On West Coast Opened

Five new marine reserves were officially opened by Conservation Minister Dr Nick Smith on the West Coast of the South Island to protect a range of marine ecosystems for conservation, science and recreation. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news