Jane Nees BOP Regional Councillor www.janenees.co.nz

One of the key challenges this region faces is its ability to fund essential infrastructure. Such infrastructure is very expensive and because of its long life, needs to be designed and built to cope with significant population growth. This means very large capital outlays and has led to huge strain on local government balance sheets.

The Bay of Plenty Regional Council is in a fortunate position relative to other councils, since it has good investment income streams and it has leveraged these to benefit the region. In 2008, the regional council, through its investment entity Quayside, issued Perpetual Preference Shares to establish a $200 million infrastructure fund.

The aim of the fund is to reduce the need to for external borrowing by council to complete council's own infrastructure projects and enable council to offer financial assistance to regional third party infrastructure projects. To date, $44 million of the fund has been spent on infrastructure. Currently $8.3 million has been allocated via direct grants to local authority infrastructure projects.

Under the IRD binding ruling, which enabled the fund to be set up, all of the fund has to be spent. There are triggers, however, built in which can cause the fund to be wound up. If this happens, the perpetual preference shares will be redeemed. There are now signals coming from central government about local government reform. Amalgamations and even abolition of regional councils have been mooted. In the Bay of Plenty, options for reform will have to be carefully considered to understand what effect they may have on the infrastructure fund in future.

If you have any views on this or any other issue, please phone 07 579 5150, email [email protected] or visit www.janenees.co.nz