2021-06-30 Special Meeting Agenda

SPECIAL MEETING AGENDA   30 JUNE 2021




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SPECIAL MEETING AGENDA                                                                    30 JUNE 2021

  DEBT POLICY

  Repayment Ability
  8.   Council will maintain close scrutiny of debt levels to ensure that relevant sustainability indicators
       will not exceed target parameters recommended by Queensland Treasury Corporation (QTC)
       and the Local Government Regulation 2012
  Borrowing Sources
  9.   Council will raise all external borrowings from the QTC. Consideration will be given to the
        provision of loans to business activities and other specifically identified projects and activities
       from surplus cash reserves held by Council by way on an internal loan.
  Proposed New Borrowings
  10    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.
        10.1 Proposed Borrowings are outlined in Appendix A
  Leases
  11.   Funding alternatives for asset acquisition also includes leasing. Leases are defined under
       accounting standard AASB 16 as a contract for the right of use over an asset for a temporary
        period of time.
        11.1. Any low value (under $10,000) or short term (under 12 months) leases are considered an
             operating expense.
        11.2 However, all other lease arrangements under AASB 16 are reported as a right-of-use
             asset with a corresponding liability in the balance sheet recognised with all other debt and
             loan borrowing instruments.
        11.3 Any lease arrangement greater than $2 million (other than any lease for office premises)
             are considered borrowings under the Statutory Bodies Financial Arrangement Act 1982
             and will require prior approval by the Queensland Government before they are committed.
        11.4 Council will also undertake a lease vs. buy analysis before entering into any lease
             contract.
  Internal Loans
  12   The provision and approval of an internal loan will depend on the availability of surplus cash at
       the time of consideration and the capacity of either the business activity or operational activity
       to repay the loan.
        12.1 All decisions regarding internal loans will be made by Council as part of the annual budget
             process. The approval to establish an internal loan will only occur following confirmation
             that Council’s relevant sustainability indicators in the 10 year financial forecast will not be
             compromised.
        12.2 The term of any internal loan will be appropriate to the life of the infrastructure / asset
             being financed.
        12.3 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 the provisions of the National
             Competition Policy, the cost to the business will be no less than what would apply to an
             equivalent private sector business.
        12.4 Provision for the repayment of an internal loan will be included in the annual budget for
             the business or operational activity.

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