Cheap government loans for NSW councils

NSW Local Government Minister Paul Toole is touting the benefits of cheap government loans for those councils it considers financially stable, ahead of a decision on council mergers.

Mr Toole announced this week that the NSW Treasury Corporation (TCorp) was “ready to go and open for business” and encouraged councils to take up the cheaper longer-term loans on offer.

He said councils and their communities would benefit from the NSW government’s AAA credit rating and the loans would unlock investment in infrastructure.

“The borrowing facility will provide Fit for the Future councils with access to low cost loans, saving councils up to $600 million over ten years,” Mr Toole said.

“As part of the Fit for the Future reforms, the NSW Government is strengthening the financial sustainability of local councils and improving services and infrastructure through supportive initiatives like this.”

But the carrot of cheap credit can only be seized by councils considered to have “demonstrated sound financial management’ under the state government’s Fit for the Future application process, and the verdict of who has proved their case will not be known by councils for a few weeks yet – possibly longer.

The Independent Regulatory and Pricing Tribunal (IPART) is due to hand down its recommendations of which local councils should merge and which may stand alone to Mr Toole this Friday (October 16). These will then be debated by Cabinet.

Cheaper loans are an attractive prospect for councils, who have been hobbled by rate pegging and frozen financial assistance grants and dogged by cost-shifting from both levels of government for decades now.

But Mr Toole’s clarion call of “open for business” may well be seen as a bitter irony for those councils who could most do with a cheap loan to fix infrastructure and local services but who are, perhaps, the most likely to fail the government’s Fit for the Future test: rural and remote councils.

Meanwhile, councils who are doing ok financially and arguably have least need of the cheap loans are welcome to apply.

Government News spoke to Local Government NSW President Keith Rhoades about the TCorp loans and asked if they shut some councils out.

Mr Rhoades was philosophical and said it “puts another $600 million out there” and helped some councils address their infrastructure backlog and maintenance issues.

“We all want to borrow cheaper money. It’s hard to say [which councils would be eligible and which would be locked out] because we don’t know the outcome of the IPART report.”

He said it was still a loan and councils had to repay them. Answering whether it excluded some councils, Mr Rhoades said councils had to be able to service a loan, like any individual borrowing from a bank.

Mr Toole announced that the loans were available at this week’s Local Government NSW Conference in Sydney but councils do not yet know the terms and conditions of the loans or whether they can apply.

It is also not known whether the eight Far Western councils that were not asked to prepare a Fit for the Future submission will be able to take advantage of them. This group includes: Balranald, Bourke, Brewarrina, Broken Hill, Central Darling, Cobar, Walgett and Wentworth.

TCorp will also offer help to all NSW councils to help improve their long-term financial planning, treasury management and investment management.

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