Ernst & Young is currently undertaking a piece of work for the Australian Government, which includes assessing the feasibility of establishing a national financing authority for local government in Australia. This builds on the finding in the report ”Strong Foundations for Sustainable Local Infrastructure” that there is a suboptimal use of debt finance in the local government sector which is contributing to the under provision of infrastructure.
In this work Ernst & Young have studied Kommuninvest and the LGFA in New Zealand.
The objectives of establishing an agency that ”Strong Foundations for Sustainable Local Infrastructure” puts forward are in short:
- To provide all councils in Australia with access to lower-cost debt finance,
- To establish a conduit between councils and capital lenders
- To provide financial and legal assistance and expertise to those councils with limited in-house capacity
- To provide finance to qualifying regional bodies which have responsibility for community infrastructure
- To apply rigour and discipline in financial planning
- To act as a “bank” with the ability to develop financial products for the private investor market
- To provide and facilitate due diligence and prudential oversight for the sector
In a mail I have received from Ben Carlton Jones, Ernst & Young Australia, he emphasises that that the proposal for a collective financing vehicle is still at a very early stage, and there is no policy commitment from the Government or any of the states or territories in Australia.
I and, surely, the existing local government funding agencies would warmly welcome an Australian agency.
Lars M. Andersson