2015-06-29 Special Meeting Agenda

2015/2016 DEBT POLICY




Borrowing Sources
Council will raise all external borrowings at the most competitive rates available and from sources
available as defined by legislation. Consideration will be given to the provision of loans to business
activities from surplus cash reserves held by Council by way on an internal loan.


Proposed Borrowings
Pursuant to section 192 Local Government Regulation 2012, Council must prepare a debt policy
each year that states the new borrowings planned for the current financial year and the next 9
financial years. Proposed Borrowings are outlined in Appendix A

Leases
Funding alternatives for asset acquisition includes leasing. Leases are defined as being either
operating leases or finance leases. Lease versus buy analysis will be undertaken prior to entering
into any contract for leasing.

Operating leases are undertaken for office equipment, computer equipment and vehicles under
master lease facilities subject to periodic review.

Finance leases are essentially loans and require prior approval by Treasury under the Statutory
bodies Financial Arrangements Act 1982.

Internal Loans
The provision and approval of an internal loan will depend on the availability of surplus funds at the
time of application and the capacity of either the business or operational activity to repay the loan.
All applications for internal loans will be made by reference to the Financial Services team for
consideration in accordance with the Long Term Financial Forecast.

The term of the loan will be appropriate to the life of the asset being financed.

The interest rate will be the sum of:
(a) the equivalent QTC borrowing rate for the proposed term;
(b) the QTC administration charge; and
(c) an additional margin above the QTC borrowing rate.

In all cases, where business activities are subject to National Competition Policy provisions, the
cost to the business will be no less than what would apply to an equivalent private sector business.

The interest rate applicable to internal loans relating to operational activities of Council will be the
actual borrowing cost from QTC including administrative charges.

The balance of the outstanding loan may be recorded as a liability in the balance sheet of the
business activity and an asset in the balance sheet of Council.

Provision for the repayment of the loan will be included in the annual budget for the business
activity.




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