Could US-style bonds scheme help fund new playgrounds and footpaths for Adelaide councils?
EXCLUSIVE: Would you voluntarily help fund new playgrounds and footpaths for your local area if it meant you could earn back interest? A new proposal for SA councils would see just that.
RESIDENTS would be encouraged to invest in their local council to help pay for public infrastructure, such as playgrounds and footpaths, under a proposal to stimulate the state’s economy.
The Civil Contractors Federation wants SA’s 68 councils to adopt a US-style bonds scheme and let the community play a more active role in the maintenance of infrastructure.
Under the scheme, residents and investors could buy bonds — in effect lending money to the council — in exchange for regular interest payments.
CCF chief executive Phil Sutherland said the scheme would help councils fund projects in a sluggish economy and create jobs at a time of high unemployment.
“South Australia is desperately crying out for audacious and visionary initiatives to inject some life into our ailing economy and stimulate jobs growth — and this is one,” he said.
“It would allow councils to bring forward much-needed new infrastructure ... in turn generating crucial jobs for the state and providing stimulus to the local and wider economy.”
Currently, councils fund projects from rates, their own borrowings and government grants.
The idea has prompted interest from the State Government which was willing to consider the initiative to help stimulate economic growth.
“We would be eager to see more details and are willing to consider any initiatives that would deliver additional investment in infrastructure,” a spokeswoman for Infrastructure Minister Stephen Mullighan said.
Local Government Association president David Burgess said he was open to new ways of encouraging investment and creating jobs, but more detail was needed.
The scheme has had a mixed reaction from councils, some believing it would be difficult to promote the idea in a tough economic climate.
Port Augusta Mayor Sam Johnson said it was an interesting concept, but many people did not have the disposable income to invest in a bond.
“The theory behind the idea is great, but with increasing unemployment the last thing people want to do is invest their money,” he said.
Wattle Range Council Mayor Peter Gandolfi was unsure how councils would be able to provide returns that would be looked upon favourably by residents to invest.
The CCF said if the proposal was supported by councils it would lobby the state and federal governments to establish law and regulations for the scheme.
It would also lobby to make the interest derived from the bonds tax free.