Credit rating a gift to councils: Qld govt

THE Queensland government has told struggling regional councils the greatest gift it can give them is to restore the state's AAA credit rating.

With one regional council verging on insolvency, a call has gone out to the state government to pay for vital infrastructure.

The outgoing head of the Local Government Association of Queensland (LGAQ), Paul Bell, warned on Tuesday that council debt levels had trebled in the past four years and could double again within five years.

He told an LGAQ conference the cost of new infrastructure needs to be either reduced or taken over by the state.

"It's not a decision the state government can delay beyond next year, otherwise their debt reduction program and attempt to restore its AAA credit rating will be in jeopardy," he said.

Local Government Minister David Crisafulli said overall council debt is about $6 billion and local authorities should look at better ways to pay for projects.

"That might be through working with the private sector," Mr Crisafulli told AAP.

"It might be only delivering infrastructure that councils can afford."

A government-appointed financial controller on Tuesday started working on the books of the debt-ridden Torres Strait Island Regional Council, which is on the verge of financial collapse.

The council has racked up a $4 million debt, linked to poor controls over credit card use and a lack of accountability, and can't afford to pay its bills or wages.

Mr Crisafulli said the debt of all councils had skyrocketed because three major US ratings agencies had cut Queensland's rating since February 2009.

"The state is right in trying to cut our debt because the councils borrow money through the Queensland Treasury Corporation," he said.

"When the former government lost the credit rating it cost them about $55 million.

"The greatest gift the state can give to local government is to restore the AAA credit rating."

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