State government offers cheaper loans for local councils

Victorian treasurer Tim Pallas and local government minister Adem Somyurek were in Bendigo earlier today to announce the $100-million Community Infrastructure Loans Scheme.

The scheme will provide local governments access to low interest rate loans ranging from $500,000 to $10-million.

Cr O'Rourke said regional cities had been advocating for the opportunity to borrow at treasury rates for some time.

She welcomed the announcement on behalf of Regional Cities Victoria, which she chairs.

Priorities for Bendigo could include expanding the Bendigo Airport Terminal and re-branding and expanding the Golden Dragon Museum - both big-ticket projects in the city's investment prospectus.

"But we really want to look towards community hubs for our community," Cr O'Rourke said.

"There are a number of programs we think could fit this, it's just working through the timing of those and what would be of the most benefit at this point in time," she said.

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The Community Infrastructure loans scheme was modeled on the state government's $100-million Community Sports Infrastructure Loans Scheme, which is over-subscribed.

"We're hoping there will be another round of that one, too," Cr O'Rourke said.

Mr Pallas was hopeful the new loans scheme would deliver benefits similar to the Community Sports Infrastructure Loans Scheme.

"Of the $100-million on offer we expect we will be able to leverage about half a billion dollars worth of investment out of that scheme," he said.

"That's an enormous amount of economic activity we're talking about as well as an enormous amount of community opportunity."

He said the state would underwrite the loans to ensure local governments got access to the state's triple-A borrowing rate.

"Then, to make it even cheaper, the state will pay half of those interest rates up to a maximum of 1.5 per cent," Mr Pallas said.

He expected demand for the loans to be considerable, but distanced the issue from the constraints imposed on councils in a rate capping environment.

"It's not so much the environment that we're in... I think there's an enormous embedded demand for community infrastructure to be delivered," Mr Pallas said.

He said the funding would allow councils to be more imaginative and forthcoming with the projects they were able to bring forward.

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The new loans scheme will complement the grants programs open to councils.

Mr Somyurek said the state government understood the importance of local infrastructure.

He said councils controlled $102-billion of infrastructure and spent $2-billion annually on infrastructure.

"What this government is committed to is ensuring our councils are financially sustainable, particularly in the rural and regional areas where financial sustainability can be a big issue," Mr Somyurek said.

A similar loans scheme was proposed in about 2014, but was not implemented.

Mr Pallas said the government had not wanted to crowd out loan offerings Municipal Association of Victoria was providing to local government.

"In consultation with MAV it's quite clear they are keen to see government add to the level of secured loan facilities in place," he said.

The loans scheme is expected to be open between October and November, with decisions about successful applicants to be made early next year.

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