“Councils reap benefits of authority’s success”

Posted on October 30, 2013

Article featured in “The Advertiser” 22 October 2013
COUNCILS REAP BENEFITS OF AUTHORITY’S SUCCESS
GIUSEPPE TAURIELLO

Councils reap benefits of authority's success

We have certainly encouraged councils towards floating-rate debt
instead of fixed-rate debt and they’ve benefited from lower short-term rates
PAUL SLATER

THE state’s local councils will share a $1.74 million dividend from the funds earned by their financier, the Local Government Finance Authority (LGFA).

The LGFA reported a pre-tax profit of $4.35 million for the 12 months to June, up from $3.77 million in 2012.

A $1.74 million bonus will be paid to local councils according to the level of business they hold with LGFA.

A further $1.3 million will be made available for local government research and development projects throughout the state.

LGFA chief executive Paul Slater said the statutory authority continued to provide 100 per cent of the lending to local councils.

“We’re up about $25-to-$30 million, we had record levels of deposits on our books and profit was above planned,” Mr Slater said.

“We don’t need great big margins to make a profit. We have small staff, small margins, small overheads.”

The LGFA was established during the credit squeeze of the mid-1980s as a statutory borrowing and investment authority to provide councils with an alternative to the major banks.

Since being established, it has paid $32 million in bonuses to councils, and $21 million to the State Government for local government research and development.

At the end of June, the organisation held a record level of loans worth more than $591 million, up from $581 million in June 2012.

Mr Slater expects lending activity to escalate in the year ahead, given the low interest rate environment.

“We really are set up and operate as a mutual operation, a mutual society,” he said. “We’ve got fantastic loyal support on the liabilities side of our balance sheet, which allows us to provide tremendous opportunities on the lending side.”

“The year ahead looks extremely good – the fact that interest rates are low has worked in our favour.”

“We have certainly encouraged councils towards floating-rate debt instead of fixed-rate debt and they’ve benefited from lower short-term rates.”

LGFA chairman Tony Pederick said the LGFA was committed to providing low-cost funding to the state’s councils.

“In 2012/13, councils were able to access relatively cheap funding to provide the myriad functions and services their communities now desire,” Mr Pederick said.

“Councils can be assured that with their continued support the LGFA will continue to provide fee-free, low-interest rate funding to our council clients.”

Local Government Association president David O’Loughlin said the LGFA was proof of the benefits of councils working together.

“The LGFA continues to provide an outstanding result for SA councils,” he said.

The LGFA will celebrate 30 years of operation in March.

 

 

 

 

 

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