Shearer David: Local Government Borrowing Bill — In Committee 
Shearer David: Local Government Borrowing Bill — In Committee 
[Volume:675;Page:21168] 
DAVID SHEARER (Labour—Mt Albert) 
: 
 I thank the Minister of Local Government for explaining that. It was actually one of the issues I was going to bring up in terms of the credit rating and how it will be properly established. I think as the Minister said with more than 80 local bodies investing into this the huge amount of infrastructure and obviously the rating potential that they have they are likely to attract an AAA rating which would bring down the cost of borrowing and be good for them as a whole. It is almost a virtuous circle in the sense of working in that particular way. 
I just wanted to reiterate some of the comments of my colleagues that the Labour Party will obviously be supporting this bill. I also want to praise the bill in terms of what it will actually be doing. Certainly in looking at the Auckland situation and the sort of infrastructure that we are looking at needing there to ensure that we move along in the way that we would like it to go we see it will need a source of funds that enables the Auckland Council to move in that direction. 
The New Zealand Local Government Funding Agency will be able to issue debt—and that is what Part 1 in particular speaks to—on behalf of all participating local authorities. If the cooperation and support of those councils is sufficient the funding agency would be expected to achieve as I said before a very high credit rating and therefore save—I think the estimate is at the moment certainly according to the regulatory impact statement—about $25 million. 
But that is only the beginning of the benefits of this type of scheme. There are other benefits not only to the councils but also to New Zealand as a whole as well. They stem from the ability of investors—ratepayers if you like—to invest in a bond market that will actually invest in people’s own future the future of the very communities in which people live. That is also to be commended. 
I will also reiterate a couple of things that the Minister touched on as well which is that the Government would take a minority stake and as I understand it would not be guaranteeing the viability of this organisation because in a sense it is actually guaranteed by the eight or more local councils that put money into it. But the Government will take a minority equity stake by putting $5 million of seed funding into the proposal. As the Minister said it is not yet there but we understand that it will be coming. 
It will also allow the ability for the Auckland Council to borrow in foreign currencies which comes more into Part 2. But it is an important point for the Auckland Council which as I said before is looking at an extraordinary amount of capital that needs to be raised to be able to meet the needs that are coming up. I speak to one particular need which is the inner-city transport link or the rail link that Auckland will need which seems to be getting at best lukewarm support from this Government—in fact “lukewarm” is probably a massive exaggeration if we listened to Steven Joyce in the House at question time today. 
These sorts of moves for the Auckland Council are extraordinarily important because Auckland grows at a rate of one Wellington City about every 8 years. I do not think that people quite understand that between now and 2030 Auckland will have grown by exactly an entire Wellington City and more and for that reason it needs to be able to access sufficient capital to enable that infrastructure to be built—particularly the transport infrastructure and particularly the transport infrastructure around rail and public transport because right now the roading network which has been funded largely by central Government is effectively complete. There is actually very little of the motorways—