2017-06-29 Special Meeting Agenda

DEBT POLICY


Repayment Ability
8.    Council will maintain close scrutiny of debt levels to ensure that relative sustainability indicators
      will not exceed target parameters recommended by Queensland Treasury Corporation and the
      Local Government Regulation 2012
Borrowing Sources
9.    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 provision of loans to
      business activities from surplus cash reserves held by Council by way on an internal loan.
Proposed 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 includes leasing. Leases are defined as being either
      operating leases or finance leases. Lease vs. Buy analysis will be undertaken prior to entering
      into any contract for leasing.
      11.1. Operating leases are undertaken for office equipment, computer equipment and vehicles
            under master lease facilities subject to periodic review.
      11.2. Finance leases are essentially loans and require prior approval by Treasury under the
            Statutory bodies Financial Arrangements Act 1982.
Internal Loans
12.   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.
      12.1. 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.
      12.2. The term of the loan will be appropriate to the life of the 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. The interest rate applicable to internal loans relating to operational activities of Council
            will be the actual borrowing cost from QTC including administrative charges.
      12.5. Council may, upon reasonable notice being given, require repayment of part or all of the
            balance of the loan at any time, which would require the business activity to convert the
            outstanding balance of the loan to an external facility.
      12.6. The balance of the outstanding loan will be recorded as a liability in the balance sheet of
            the business activity and an asset in the balance sheet of Council.
      12.7. Provision for the repayment of the loan will be included in the annual budget for the
            business activity.




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