Tauranga Mayor Mahé Drysdale has hailed this morning’s Government announcement that water Council Controlled Organisations (CCOs) which are financially supported by their parent councils will have greater borrowing capacity as “a significant step forward for local government infrastructure financing”. 

“The news that future water CCOs can have total borrowings of up to five times their annual revenue will substantially increase councils’ ability to invest in infrastructure, while ensuring that costs are paid for by those benefitting over the lifetime of the assets involved,” Mahé says. 

"Tauranga City Council has invested extensively in waters infrastructure, which means that the debt involved accounts for a large proportion of its current debt-to-revenue limit of 285%, as determined by the Local Government Funding Agency (LGFA). So essentially, this will mean that by setting-up a CCO to deliver the city’s water services, the CCO will be able to continue to invest in infrastructure, while also providing more capacity for the council to invest in other needed infrastructure, such as roads and community facilities.” 

Mahé has also welcomed the news that the Government and LGFA will explore increasing debt limits for high-growth councils to up to 350% of annual revenue. 

“The current debt limits restricting council borrowing are arbitrary and don’t take any account of the actual infrastructure investment requirements of New Zealand’s fastest-growing cities. While it will always be essential to ensure that council borrowing is prudent and will not impose unsustainable costs on ratepayers, it does not make sense to constrain our ability to invest in the infrastructure required to meet the needs of today’s and tomorrow’s city residents. 

“The decision on waters CCO lending, combined with the potential to increase Tauranga City Council’s borrowing limit, will create the flexibility the council needs to continue a well-planned and prudent approach to investing in infrastructure in Tauranga, in the best interests of our people,” Mahé adds. 

“As a shareholder of LGFA, Tauranga City Council will be advocating for a sensible review of its current debt limits, so that we can maintain the investment required to make ours the best city in New Zealand.”

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