$1b for councils to get around their own shitty credit rating

When I heard National were handing out $1b to councils, my first question was: Where the hell did Bill English find a spare billion?

The Government says councils facing dire housing shortages are “incredibly enthusiastic” about the $1 billion infrastructure development fund that’s just been announced.

It’s the latest move to tackle the Government’s most pressing problem and Prime Minister John Key says it could help create “tens of thousands” of new homes.

He announced the initiative at the National Party’s annual conference in Christchurch on Sunday.

The fund will be open to councils in areas with high population growth – Auckland, Christchurch, Queenstown, Tauranga and Hamilton.

“I’ve spoken to all five of those councils, they are incredibly enthusiastic about its potential,” Building and Housing Minister Nick Smith told reporters.

“The Government wants pace around housing.”

Auckland is the city with the most need, and Mayor Len Brown has welcomed the announcement.

“We face significant housing challenges… this initiative could help provide more upfront funding without increasing the burden on ratepayers,” he said.

The councils can use the fund to build roads, water supplies and other infrastructure – a key barrier to development.

It isn’t a handout and they will have to pay it back when people move into the homes and start paying rates.

The Government is going to borrow the $1b but it won’t pass on interest costs to the councils.

“This is bridging finance, money we know we can pay back,” Mr Key said.

“It’s a great way of us being the middle man.”

Of course, Len Brown would have been excited. His council has been told it is no longer allowed to borrow any more money lest they risk their credit rating and pay lots more in interest costs. So, the government is doing nothing more than use its credit rating to get a lump sum of cash and essentially act as a guarantor for councils that have misdirected millions and millions over decades into sports stadiums, performing arts centres other non-essential infrastructure, instead of sticking to the basics of rubbish, reticulation and roading.

Even though these are essentially local problems, the general taxpayer is now going to have to cover the interest on an “interest free” loan to councils who have already spent and committed their share of their ratepayers’ money, and have run out, to ensure the cities can grow properly.

Instead of being “enthusiastic”, they should be deeply embarrassed they even need to hold their hands out.

 

– Newshub


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