2014-01-02 Budget Attachments

2013/2014 DEBT POLICY


                                                                                     ATTACHMENT 7
NOOSA SHIRE COUNCIL DEBT POLICY


POLICY PURPOSE
The purpose of this policy is to ensure the sound management of Council’s existing and future
debt.

POLICY OUTCOME
The policy will provide clear guidance for staff in the management of Council’s debt portfolio and
maintenance of appropriate debt and debt service levels.

POLICY SCOPE
This policy applies to all Councillors and Council staff and extends to all borrowing activities of
Council and any controlled entities.

POLICY STATEMENT
Council will utilise a debt management strategy based on sound financial management principles
and ensure net debt (net financial liabilities) remains within benchmark financial sustainability
targets.
Borrowing Purposes
1      Council will not utilise loan funding to finance operating activities or recurrent expenditure.
2      Council undertakes full analysis of all funding options to determine loan funding
       requirements.
3      Council recognises that infrastructure demands placed upon Council can often only be met
       through borrowings, but will always be mindful of the additional cost incurred by the
       community when assets are acquired through borrowings which increases the cost of
       providing capital infrastructure.
4      Council will endeavour to fund all capital renewal projects from operating cash flows and
       borrow only for new or upgrade capital projects, having regard to sound financial
       management principles and giving consideration to inter-generational equity for the funding of
       long term infrastructure projects.
5      Where capital expenditure is deferred from one year to the next, the drawdown of approved
       loan funds will be reviewed to minimise interest expenses.
6      Borrowings for infrastructure that provides a return on assets will take priority over borrowing
       for other assets.
Debt Term
7      Where capital projects are financed through borrowings, Council will repay the loans within a
       term not exceeding the life of those assets (up to a maximum of 20 years) and over a term
       that optimises cash flow efficiency. Current loans are planned to be repaid within a twelve
       (12) year term.
       7.1    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.
       7.2    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.




Noosa Shire Council                                                                            Page 1 of 4