14611 (2025). Tangi Utikere to the Minister of Local Government

14611 (2025). Tangi Utikere to the Minister of Local Government: Has the Minister received any analysis on whether the Standard & Poor’s credit rating downgrades will affect the ability of councils to fund essential services?

Hon Simon Watts: S&P Global has signalled the possibility of a deterioration in council credit ratings for some time and the Coalition Government has been aware of this. I have not received any analysis regarding potential impact of credit rating downgrades on councils’ ability to fund services. I have received analysis on the potential impact on councils’ cost of borrowing. I am advised that for those councils who borrow through LGFA, the impact is unlikely to change the fact that LGFA remains the lowest cost provider of finance to the sector. The Government has moved quickly to implement Local Water Done Well to bring certainty to the sector and key stakeholders like ratings agencies that there is a path set out to ensure financial sustainability of water services. The Local Water Done Well financing arrangement with Local Government Funding Agency provide for more focused use of lower cost debt to fund water infrastructure investment under the oversight of the Commerce Commission’s economic regulation. With greater use of LGFA finance to fund water infrastructure investment, councils and their water organisations will be cushioned from changes to their own creditworthiness by LGFA’s strong credit rating. LGFAs’ credit worthiness is supported by the liquidity facility provide to it by the Crown, which the Government agreed to increase last November.