2015-06-12 Special Meeting

                                                                             Council Policy
                                                             DEBT MANAGEMENT

Corporate Plan Reference:                    A sustainable Council

Endorsed by Council:

Policy Author:                               Director Corporate Services



POLICY BACKGROUND

The purpose of this policy is to ensure the sound management of Council’s existing and future
debt. This policy complements the Financial Sustainability Policy and will provide clear guidance
for staff in the management of Council’s debt portfolio and maintenance of appropriate debt and
debt service levels. This policy applies to all Councillors and Council staff and extends to all
borrowing activities of Council and any controlled entities.

COUNCIL POLICY

Council will utilise a debt management strategy that aligns with the Financial Sustainability Policy
to ensure net debt (net financial liabilities) remains within financial sustainability targets.

Borrowing Purposes
Council will endeavour to fund all capital renewal projects from operating cash flows and will
borrow only for upgrade or expansion capital projects, having regard to sound financial
management principles and giving consideration to inter-generational equity.

Where capital expenditure is deferred from one year to the next, the drawdown of approved loan
funds will be reviewed to minimise interest expenses.

Borrowings for assets that provide a return to ratepayers may take priority over borrowing for other
assets.

Debt Term
Where capital projects are financed through borrowings, Council will repay the loans within a term
not exceeding the life of those assets, and over a term that optimises cash flow efficiency.
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.

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
Council will maintain close scrutiny of debt levels to ensure compliance with the financial
sustainability policy and to ensure that the relative sustainability indicators will not exceed target
parameters recommended by Queensland Treasury Corporation (QTC) and the Local Government
Regulation 2012.

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