Local Government Finance Authority pays $2m dividend to councils

Posted on October 23, 2014

Local Government Finance Authority Chief Executive Officer Paul Slater   Source:  Supplied

By:  GIUSEPPE TAURIELLO                              From:  The Advertiser,  October 21 2014               

The state’s local councils will share a record $2 million dividend from the profits earned by their financier, with a further $1.54 million made available for local government research and development projects.

The Local Government Finance Authority (LGFA) reported profit before tax of $5.12 million for the year to June, up from $4.35 million in 2013 and the highest level since 2008.

At the same time, the authority reported a record level of loans to councils of $626.4 million, up from $591.6 million.

LGFA chairman Tony Pederick said the strong result came despite strong competition within the banking industry.

“Loan activity with councils has been quite buoyant this year, particularly towards the end of the financial year,” he said.

“Despite strong competition from the banks and other financial institutions LGFA continued to write 100 per cent of the loan business and estimate our share of available deposits was in excess of 75 per cent.”

“With fixed-term lending rates in the low-to-mid 5 per cent range it provided excellent funding opportunities for councils and we anticipate that out lending to councils will continue to grow in this current market.”

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.

Through the Local Government Research and Development Scheme, an income tax equivalent amount is paid to the State Government each year to fund research and development projects across the state.

This year’s $1.54 million contribution is up from $1.31 million in 2013.

Since the authority’s inception, it has paid $22 million into the research and development scheme, delivered $34 million of bonuses to councils and made grants of $3 million.

Recent projects to which the LGFA has contributed funds include the $13.2 million Port Lincoln Airport upgrade, the redevelopment of the Walkerville Civic and Community Centre and the $19.5 million Port Augusta Community and Sporting Hub which is due for completion later this month.

Local Government Association president David O’Loughlin said this year’s record bonus for councils reflected the authority’s strong level of profitability.

“Since its inception we estimate that the LGFA has saved Local Government at least $200 million from lower borrowing rates and better investment rates,” he said.

“This is a unique service that only exists in South Australia and is the envy of other local government jurisdictions across the country.”

(08) 8223 1550

Local Government Finance Authority of South Australia

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