- McGowan Government creates new lending facility to support local governments and universities facing cash flow pressures due to COVID-19
- Taking advantage of record low interest rates to provide low cost access to liquidity for these essential sectors
- No loan guarantee fee will be charged on borrowings under this facility, which will save the sector $700,000
The McGowan Government has today announced a new lending facility to support local governments and universities impacted by reduced revenue due to the COVID-19 pandemic.
The new lending facility adds to the McGowan Government's $1.8 billion of stimulus and relief package for businesses and households.
It also complements the passage of legislation by State Parliament last month to enable local governments to be more agile in their response to the pandemic, including removing restrictions and red tape to support businesses and households. The Government has also frozen the waste levy in 2020-21 to ease pressure on local government budgets.
The new lending facility will enable local governments and universities to access short-term loans to support the liquidity of their operations. The facility will be available from the Western Australian Treasury Corporation (WATC), with applications opening on June 1, 2020.
To be eligible, local governments and universities will need to demonstrate the impact COVID-19 has had, and is expected to have, on forecast cash flows for 2020-21.
Local governments and universities will benefit from a further 70 basis point reduction in overall cost of borrowing through WATC, with the loan guarantee waived for the facility, saving $700,000.
The facility builds upon the ability of local governments and universities to borrow from WATC to fund long-term projects. WATC currently has loans of over $590 million to local governments and $260 million to universities.
Local governments and universities are not limited in the amount they can borrow through WATC. Loans are assessed based on the borrower's ability to pay, which factors in revenue streams such as local government rates, service charges and Developer Contribution Plans.
For more information on eligibility criteria and how to apply please enquire through your WATC Client Services manager at email@example.com
Normal lending arrangements are also in place to support longer-term borrowings for asset investment. For more information, visit https://www.watc.wa.gov.au
Comments attributed to Treasurer Ben Wyatt:
"This new facility is a key step in supporting local governments and universities to manage the financial impacts of COVID-19.
"The $100 million facility will be reviewed within three months, and could be increased depending on take-up.
"WATC also offers longer-term loans to assist local governments and universities in progressing important capital works projects.
"I encourage local governments and universities to take advantage of the historical low interest rates to bring forward projects to support local communities and the economic recovery from COVID-19."
Comments attributed to Education and Training Minister Sue Ellery:
"The university sector was one of the first impacted by the COVID-19 pandemic, and has a challenging period ahead while it responds to reduced overseas enrolments and changes to on-campus course delivery.
"Low cost liquidity support, in the form of this new facility, will assist Western Australian universities in meeting the challenges posed by COVID-19, and being best positioned to recover once conditions start to return to normal."
Comments attributed to Local Government Minister David Templeman:
"Local governments have a key role to play in supporting our communities in responding to, and recovering from, COVID-19.
"A consequence of the necessary social distancing measures in place is that many local governments will receive less revenue in 2019-20, and into 2020-21 than they had budgeted for, and will need to draw on cash reserves.
"The introduction of a new short-term liquidity facility will provide local governments a valuable tool in managing their liquidity through this crisis.
"I'd also encourage local governments to utilise their borrowing capacity, including for example, leveraging DCPs, to bring forward works to support local jobs in response to the pandemic."
Treasurer's office - 6552 5900
Education and Training Minister's office - 6552 5700
Local Government Minister's office - 6552 5400