2015-06-29 Special Meeting Agenda

ATTACHMENT 4


                                                                              Council Policy
                                                              DEBT MANAGEMENT

 Corporate Plan Reference:                    A sustainable Council

 Endorsed by Council:

 Policy Author:                               Director Corporate Services



 POLICY BACKGROUND

 The purpose of this policy is to ensure the sound management of Council’s existing and future
 debt. This policy complements the Financial Sustainability Policy and will provide clear guidance
 for staff in the management of Council’s debt portfolio and maintenance of appropriate debt and
 debt service levels. This policy applies to all Councillors and Council staff and extends to all
 borrowing activities of Council and any controlled entities.

 COUNCIL POLICY

 Council will utilise a debt management strategy that aligns with the Financial Sustainability Policy
 to ensure net debt (net financial liabilities) remains within financial sustainability targets.

 Borrowing Purposes
 Council will endeavour to fund all capital renewal projects from operating cash flows and will
 borrow only for upgrade or expansion capital projects, having regard to sound financial
 management principles and giving consideration to inter-generational equity.

 Where capital expenditure is deferred from one year to the next, the drawdown of approved loan
 funds will be reviewed to minimise interest expenses.

 Borrowings for assets that provide a return to ratepayers may take priority over borrowing for other
 assets.

 Debt Term
 Where capital projects are financed through borrowings, Council will repay the loans within a term
 not exceeding the life of those assets, and over a term that optimises cash flow efficiency.
 If surplus funds become available, and where it is advantageous to Council, one-off loan
 repayments will be made to reduce the term of existing loans.

 In an environment of fluctuating interest rates, and where there is a distinct economic advantage to
 Council, consideration will be given to renegotiating any outstanding loans to obtain the best long-
 term benefit to Council.


 Repayment Ability
 Council will maintain close scrutiny of debt levels to ensure compliance with the financial
 sustainability policy and to ensure that the relative sustainability indicators will not exceed target
 parameters recommended by Queensland Treasury Corporation (QTC) and the Local Government
 Regulation 2012.

                                                                                           Page 1 of 5