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Study Being Done To Look At Joint Borrowing For Local Councils

Contributor:
Fuseworks Media
Fuseworks Media
Bill English. Pic: NZPA
Bill English. Pic: NZPA

Wellington, July 8 NZPA - A study is to probe setting up a bond bank for local councils to fund $30 billion of planned infrastructure over the next decade.

Finance Minister Bill English said the idea -- in which councils could collectively borrow to reduce costs -- was one of the Jobs' Summit's Top Twenty initiatives. It was also recommended by the Financial Markets Development Task Force.

Borrowing together would mean councils would pay lower interest rates and transaction costs.

The study, to be done by Cameron Partners and Asia-Pacific Risk Management, would also look at how the bank would be run.

"The Government recognises that councils face a big spike in costs over the next decade to provide adequate sewerage, water and roads. Some of this will be appropriately financed by debt," Mr English said.

"We are sympathetic to any arrangement that can lower the cost of local authority borrowing and we are keen to help councils work together to see if they can do this. Any arrangement that comes out of this process will be entirely voluntary."

A joint Government and Local Government New Zealand steering group would consider the study -- expected to be completed in a month.

Local Government New Zealand president Lawrence Yule said the organisation looked forward to working with the Government on the idea.

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