Local government reaping benefits from new funding agency
Wednesday 10 October 2012, 1:56PM
By Greater Wellington Regional Council
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The cost of borrowing by local authorities has reduced as the result of a highly successful first seven months by the Local Government Funding Agency (LGFA) says Greater Wellington Regional Council Chair Fran Wilde.
Local government reaping benefits from new funding agencyThe cost of borrowing by local authorities has reduced as the result of a highly successful first seven months by the Local Government Funding Agency (LGFA) says Greater Wellington Regional Council Chair Fran Wilde.
“Greater Wellington Regional Council was one of nine councils on the steering group that worked to establish LGFA, and we were a foundation shareholder,” said Fran Wilde.
“LGFA was only set up in December last year and started borrowing in February this year, so its recently released annual report actually covers only seven months of operation. "In that short time it has been a stunning success, gaining an AA+ credit rating from both Standard and Poor’s and Fitch, and borrowing more than $1 billion for local government bodies around the country at more favourable rates than councils could achieve on their own. LGFA estimates that this has already saved the local government sector between $3 million and $4 million in annual borrowing costs.
“Greater Wellington itself has borrowed $50 million through LGFA this year to fund critical infrastructure such as the new Matangi trains.”
Fran Wilde praised the contribution of LGFA Chief Executive Phil Combes and his team for delivering such significant benefits so quickly.
“We knew there would be gains for the whole of local government when we put our hands up to work to establish the agency, and it’s pleasing to see these expectations being realised.
“And Greater Wellington will not just benefit as a borrower – as a foundation shareholder in the LGFA we will also receive dividends when the agency begins to make sufficient profits. On the basis of the first seven months’ performance, this is also likely to happen more quickly than most investors would expect when setting up a business.”
Fran Wilde also thanked Greater Wellington’s representative on the LGFA Shareholder Council, GWRC Treasurer Mike Timmer.