Credit rating threat to councils
REGIONAL councils risk forking out up to $5million in extra interest repayments on their loans if the state's credit rating falls.
According to figures provided to APN Newsdesk, Ipswich City Council would be one of the hardest hit regional councils and would be out of pocket $5million a year in extra interest repayments if Queensland's credit rating fell from AA+ to AA.
Rockhampton Regional Council would be up for $2.9million in extra payments and the difference in interest for the Sunshine Coast would be $3million per year alone.
Overall, local government debt is expected to hit $7billion at the end of the financial year.
The figures have been revealed as the government, amid much controversy, slashes jobs and cuts funding in an attempt to tackle Queensland's deficit.
Local Government Minister David Crisafulli said the state was a heartbeat away from sliding to an AA rating earlier this year.
"When we think that in many cases, what regional councils have had to scoop and save for and put the rates up more than they have wanted to, this is proof of poor financial management in days gone by," he said. "I want to show people about how important it is that we regain an AAA rating."
Mr Crisafulli said the ability of councils to afford loans impacted on infrastructure in towns.
"If we do the right thing, not the easy thing, we'll regain the AAA credit rating Labor lost in 2009 and avoid councils paying up to $80 million more a year in interest," he said.
Other regional councils that would be slapped hard under a credit rating downgrade include the Fraser Coast which would be up for $1.5 million in extra interest payments.
"I'm sure ratepayers would like to see that money in their own pockets or spent on improvements to community parks, footpaths or bikeways along the esplanade," he said.
According to the Commission of Audit released in July, Queensland will not regain its AAA credit rating until the 2017/2018 financial year and will need $30 billion in savings to get there.
Extra Interest to Councils if Credit Rating Falls
- Gladstone Regional Council - $1.9 million
- Rockhampton Regional Council - $2.9 million
- Bundaberg Regional Council - $850,000
- Ipswich City Council - $5 million
- Sunshine Coast Regional Council - $3 million
- Fraser Coast Regional Council - $1.5 million
- Lockyer Valley Regional Council - $297,000
- Whitsunday Regional Council - $900,000