Meeting papers

      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.
 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.


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 if Council’s relevant
           sustainability indicators in its 10 year financial forecast are 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 risk margin of no less than 1% above the QTC borrowing rate.

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