2026/27 FINANCIAL POLICIES · Attachment 1 - Financial Sustainability Policy

Attachment 1 – Financial Sustainability Policy

 Established management plans for Council’s asset and infrastructure classes will incorporate annual
 maintenance financial estimates as well as ten (10) year renewal / replacement forecasts developed
 from regular asset condition assessments. Asset management plan financial forecasts will be
 incorporated into Council’s ten (10) year financial plan and annual budget to ensure financial
 sustainability implications are appropriately considered.

 Annual depreciation forecasts will be developed on an asset-by-asset basis utilising methodology
 endorsed by the Queensland Audit Office, with assets regularly revalued in accordance with
 legislative requirements.


 The QTC project decision framework will be utilised for business case analysis for all new and
 replacement capital projects in accordance with policy. The outcomes from the analysis will be used
 to inform Council of whole of life costing implications associated with each project.

 Debt Management

 New debt will only be incurred as part of Council’s strategic approach to:
 •    Liquidity management that considers surplus cash holdings
 •    Intergenerational equity requirements.

 The leverage ratio is a measure of financial sustainability required under legislation, which indicates
 Council’s ability to repay its existing debt. It is calculated as the book value of debt as a percentage
 of Council’s operating result (excluding depreciation, amortisation and finance costs). The target
 leverage ratio set by the state government is 0 – 3 times measured as a single-year result and five-
 year average result.

 Council will adopt a conservative approach to new debt to ensure that the leverage ratio is within the
 target band over the life of the ten (10) year financial plan. New debt that may be required to assist
 with the funding of trunk infrastructure to cater for population growth will be considered on a case-
 by-case basis.

 Full Cost Pricing

 Council will ensure that competitive neutrality and full cost pricing outcomes required under
 legislation with respect to its business activities are complied with on an annual basis.

 Commercial Opportunities

 Commercial opportunities will only be considered if they provide value for money to the community
 and have a positive net impact on overall general rate funding requirements of Council.

 The QTC project decision framework will be utilised for business case analysis for all new identified
 commercial opportunities. The outcomes from the analysis will be used to inform Council of whole
 of life costing implications associated with each commercial proposal.

 Climate Change

 Council recognises that mitigation measures to address climate change may have financial
 sustainability implications. Ongoing infrastructure and operating funding will be considered as part
 of long-term planning and addressed via inclusion in the 10-year financial plan and discussed
 annually through the budget process (where identified).

 Council will also ensure that operational and strategic decisions made today with associated climate
 change implications will give adequate consideration to minimising the exposure of future Councils
 to potential financial risk.

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