The Victorian Government has announced the new Local Council Lending Framework, giving Victorian councils improved access to lower-interest loans to support the development of key infrastructure.
The lower interest loans will be financed through the Treasury Corporation of Victoria (TCV). Victoria’s strong credit rating means the Victorian Government can borrow and lend money at cheaper rates than those commercially available to councils.
Being able to borrow directly from the TCV will help councils to fund general working capital needs as well as project-specific infrastructure.
Victorian Acting Minister for Local Government, Mary-Anne Thomas, said, “I encourage councils to take advantage of the low-interest loans because access to affordable finance can make a world of difference when providing their communities with the best services and facilities.”
The Local Government Act 2020 requires councils to disclose total planned new borrowings in their annual budget.
Councils will have to meet credit criteria to be approved for a loan, including a credit assessment by the Department of Treasury and Finance (DTF). Councils may then apply for loans up to a borrowing limit set by the DTF.
This new framework builds on the Government’s Community Infrastructure Loans Scheme, established in 2019-20 to develop or upgrade crucial community facilities, like the Maribyrnong City Council’s Town Hall and Community Redevelopment Hub in Footscray, through subsidised interest loans.
The $30 million Footscray project is supported with a $10 million loan and will deliver a refurbished Town Hall building and community hub, including a park, community meeting and function rooms.
Where this new framework differs is that councils will now be able to access borrowings from TCV for general working capital requirements, in addition to project-specific infrastructure investment purposes.
To find out more, visit www.localgovernment.vic.gov.au.