2022-06-28 Special Meeting Agenda

SPECIAL MEETING AGENDA   28 JUNE 2022




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SPECIAL MEETING AGENDA                                                                            28 JUNE 2022

             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)   anadditional 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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