Local government carrying ‘relatively low’ debt levels: English

Finance Minister Bill English (Photos: 3news.co.nz)
Local Government Minister David Carter

BUSINESSDESK: New Zealand's 78 local authorities are carrying a relatively low level of debt, Finance Minister Bill English has conceded when asked how councils could contribute to the nation’s spending on infrastructure.

The local authorities manage some $100 billion of assets while carrying debt of some $5 billion.

The Local Government Funding Agency, which was created to borrow on behalf of councils and achieve lower interest costs, estimates the debt will rise to about $11 billion in the next decade.

Mr English was asked by New Zealand First MP Andrew Williams at the finance and expenditure select committee today why councils weren’t being prodded to take a bigger role in infrastructure spending rather than being criticised for taking on debt.

“Primarily, that’s a matter for ratepayers,” Mr English said. “Local councils do have relatively low levels of debt and that’s rising quickly.”

Legislative restrictions on local government spending, which runs at about $7.5 billion a year, moved a step closer this week as the Local Government Act 2002 Amendment Bill passed its first reading by 61 votes to 59.

Local Government Minister David Carter says the amendments “introduce financial prudence requirements for local authorities, strengthen council governance provisions and streamline council reorganisation procedures”. 

Labour has said the law change would limit the ability of councils to spend and erode Kiwis’ democratic rights.

Mr Carter this month announced an eight-member independent taskforce, comprising council executives and elected members, to target greater efficiency in local government.

Prime Minister John Key has suggested councils sell assets to help fund spending plans, singling out the rebuilding demands of Christchurch, whose city council's investments include the airport and a stake in Lyttelton Port.

The government has been forced to step in this year to bail out a debt-ridden local authority.

Kaipara District Council in Northland sought help with debt that had spiralled to more than $80 million after ratepayers threatened to revolt at rate hikes averaging 31%.
 

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Dunedin City Council and its CCOs and CCTOs is carrying around $700 million of debt just on its own.

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Sounds like the public debt is about to try and catch up with our high private debt levels - IMF estimstes NZ net debt will rise and looks like they are correct. This is how Greece, Ireland, Spain etc became insolvent.

Further Councils struggle with discipline to spend wisely, 2.5million on a walk bridge in Milford (AK) to save a small handful of residents an extra 10 minute walk to access the beach, Auckland Transport 100,000 of thousands of dollars placing talking bus timetables at selected bus stops that not longer work and no one seemed to use when they did ( I understand around 40k per unit, not actioning known stormwater time bombs until they fail, costing millions rather than a fraction of the cost of lining poor quality pipes when notified by residents often years in advance of failure events, leaking buildings, - to name a few.

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what a silly silly comment mr english - you cant put a value on most local body assets because they cant be brought; it is this way of thinking that puts our country in unrecoverable debt - further, the so called 5 billion debt needs to be repaid by about the 1,2 million workers !!

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Auckland has just moved up sixty places in the most expensive cities to live rankings: if debt is not out of control, no one will be able to afford to live there when it is (which will happen under Len Brown).

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In Dunedin we are pretty much up to our eyebrows or over our head in debt.
Labour are nuts in opposing any restriction. Councils have been spending in areas they shouldn't for ages.

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Ridiculous statements like these do your credibility no good whatsoever, Mr English.

Makes the amendments to the LG Act to be totally meaningless."...introduce financial prudence requirements for local authorities, strengthen council governance provisions..."

Your stupid comments play into the hands of profligate Chief Executives, egotistical Mayors and Councillors.

Anon at 5.09am is absolutely correct.

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English is dreaming. Local council debt and rates should be seen in the context of household affordability.

English and Carter should put a cap on average household rates relative to household disposable income.

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The 78 Local Bodies may between them, be carrying relatively low levels of Debt; but some, particularly Auckland, are hell bent on exceeding the average level of debt, as quickly as possible.

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