ACELG has recently released an excellent report on the use of debt by Australian local government, Debt is Not a Dirty Word: The Role and Use of Debt in Local Government. There is a compelling case for local government to increase its use of debt. Perhaps harking back to an earlier time of financial mismanagement and extreme interest rates, local governments often see it as a financial disaster. We also see the fear factor surrounding local government debt in the community. The report states that “It is probably difficult for business owners, homebuyers and anyone else who has ever needed to use debt, to understand why local governments make so little use of debt”. I doubt it! Those very business owners and homebuyers etc who use debt appropriately in their own lives, are very often the first ones we see demanding a long term financial plan with little or no debt. Great to see this resource to help local governments understand that they are not doing their communities any favour with low debt and mounting infrastructure renewal backlogs.
