Council archive · source document
2026/27 FINANCIAL POLICIES · Attachment 3 - Debt Policy
Attachment 3 – Debt Policy
Council Policy
DEBT POLICY
Corporate Plan Reference: Theme No. 5. - Excellence
Objective 5.2 - Continue to deliver a financially sustainable Council
that has the resources now and into the future to achieve its strategic
objectives. This will be supported through the introduction of
enhanced sustainability reporting and performance indicators, as well
as ESG (environment social and governance) accounting practices as
guided by statutory requirements
Endorsed by Council: 23 June 2026
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.
The policy 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 based on sound financial management principles and
ensure that relevant sustainability indicators will meet the target parameters recommended by
Queensland Treasury Corporation (QTC) and outlined in section 178 of the Local Government
Regulation 2012 and the Financial Management (Sustainability) Guideline.
Borrowing Principles
1. Legislation prevents Council from accessing loan financing to fund operating deficits.
2. Council will undertake a full analysis of all funding options as outlined in the Long-Term Financial
Model, including a forward program of capital works, to determine any borrowing requirements.
3. Council recognises that infrastructure demands placed upon Council can often only be met through
borrowings but will always be mindful of the additional cost incurred by the community when assets
are acquired through borrowings.
4. Council will consider loan funding for capital renewal projects on a case-by-case basis, but
predominately borrow only for new, expansion or upgrade capital projects, giving consideration to
inter-generational equity particularly for the funding of long-term infrastructure projects.
5. Where capital expenditure is deferred from one year to the next, the drawdown of approved loan
funds will be reviewed against ongoing funding requirements and the minimisation of future interest
expenses.
6. Borrowings for infrastructure that provides a positive rate of return on investment will take priority
over borrowing for other assets.
Debt Term
Where capital projects are financed through borrowings, Council will repay the loan over a term which
takes into consideration the expected life of those assets, and over a term that optimises cash flow
efficiency.
Page. 1
See the original
The page text is free to read. Viewing or downloading an original file needs an account.
Log in to see the originalFull text of the other 4 pages
Page 2
Attachment 3 – Debt Policy
Debt repayment terms will generally be no longer than 20 years.
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 that relevant sustainability indicators do not
exceed the target parameters recommended by Queensland Treasury Corporation (QTC) and the
Queensland State Government Financial Management (Sustainability) Guideline.
Borrowing Sources
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
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.
Council’s Proposed Borrowings for the 2026/27 to 2035/36 financial years which total $40.0m are outlined
in the following table.
Financial Doonan Landfill Noosa Main Total
Year and Resource Beach Borrowings
Recovery Seawall
Facility Renewal
$’000 $’000 $’000
2026/27 10,830 10,830
2027/28 11,583 11,583
2028/29 11,699 2,250 13,949
2029/30 3,620 3,620
2030/31
2031/32
2032/33
2033/34
2034/35
2035/36
Leases
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.
Any low value (under $10,000) or short term (under 12 months) leases are considered an operating
expense. 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.
Any lease arrangement greater than $2 million (other than any lease for office premises) is
considered borrowings under the Statutory Bodies Financial Arrangement Act 1982 and will require
prior approval by the Queensland State Government before they are committed.
Council will undertake a lease versus buy analysis before entering into any lease contract.
Page. 2
Page 3
Attachment 3 – Debt Policy
Internal Loans
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.
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 compromised.
The term of any internal loan will be appropriate to the life of the infrastructure / asset being financed.
The interest rate for any internal loan will be the sum of:
1. the equivalent QTC borrowing rate for the proposed term
2. the QTC administration charge
3. an additional risk margin of no less than 1% 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.
Provision for the repayment of an internal loan will be included in the annual budget for the business
or operational activity.
GUIDING PRINCIPLES
The purpose of establishing a Debt Policy is to:
• Comply with the requirements of section 192 of the Local Government Regulation 2012
• Provide a comprehensive view of Council’s long term debt position and the capacity to fund
infrastructure growth for the Shire
• Increase awareness of issues concerning debt management
• Enhance the understanding between Councillors, community groups and Council staff by
documenting policies and guidelines
• Demonstrate to government and lending institutions that Council has a disciplined approach to
borrowing.
ROLES AND RESPONSIBILITIES
Councillors
Pursuant to section 192 of the Local Government Regulation 2012 review the details and approve
proposed borrowing for the current year and the future 9 years as prepared annually as part of the
budget process.
Chief Executive Officer (CEO) and Executive Team
The CEO and Executive Team will endorse for Council adoption and provide leadership and
commitment in complying with the Policy and relevant legislation and documents.
External Authorities
Applications outlining proposed borrowings will be forwarded to the Minister for Local Government,
Water and Volunteers for approval.
Periodic Credit Reviews will be undertaken by the QTC on behalf of the State Government.
Page. 3
Page 4
Attachment 3 – Debt Policy
Financial Services
Loan proceeds will be drawn down subject to cash flow requirements annually so as to minimise
interest expenses.
All lease proposals will be referred to Financial Services for evaluation to assess alternatives for
funding asset acquisition and to ensure statutory compliance.
MEASUREMENT OF SUCCESS
Financial sustainability indicators remain within target ranges, and the provision of necessary
infrastructure is not constrained through the lack of capital funding.
Details of outstanding loans will be reported annually in Council’s Financial Statements and Annual
Report.
DEFINITIONS
Business Activity – A Council activity subject to the application of full cost pricing principles as
defined in the Local Government Act 2009 and Local Government Regulation 2012.
Inter-generational equity – This relates to the fairness of the distribution of the costs and benefits of
a policy when costs and benefits are borne by different generations. (i.e. the principle whereby those
who derive a direct benefit from the service or infrastructure provided actually pay for that service).
Net financial liabilities ratio – This is an indicator of the extent to which the net financial liabilities of
Council can be serviced by its operating revenues. A ratio greater than zero (positive) indicates that
total liabilities exceed current assets, whereas a ratio of less than zero (negative) indicates that current
assets exceed total liabilities and therefore Council would appear to have the capacity to increase
loan borrowings.
Leverage Ratio – This is an indicator of Council’s ability to repay its existing debt. A higher leverage
ratio indicates an increasingly limited capacity to support additional borrowings due to already high
debt levels and/or decreasing operational performance, while a lower ratio indicates the converse.
RELEVANT POLICIES AND LEGISLATION
Local Government Act 2009
Local Government Regulation 2012
Statutory Bodies Financial Arrangements Act 1982
Statutory Bodies Financial Arrangements Regulation 2007
Noosa Shire Council Financial Sustainability Policy
HUMAN RIGHTS COMPATIBILITY STATEMENT
In developing this policy, the subject matter has been considered in accordance with the
requirements of the Queensland Human Rights Act 2019. It is considered that the subject matter
does not conflict with any human rights and supports a human rights approach to decision making by
Council.
This policy should be read in conjunction with the Human Rights Act 2019 (QLD) and Council’s
Human Rights Policy.
Page. 4
Page 5
Attachment 3 – Debt Policy
Version control:
Version Reason/ Trigger Change (Y/N) Endorsed/ Reviewed by Date
1.0 Create new Manager Financial Services 23/12/2013
2.0 Annual Review Manager Financial Services 02/06/2014
3.0 Annual Review Y Manager Financial Services 02/06/2015
4.0 Annual Review N Manager Financial Services 20/05/2016
5.0 Annual Review Y Director Corporate Services 19/05/2017
6.0 Annual Review Y Council 29/06/2018
7.0 Annual Review Y Council 06/07/2018
8.0 Annual Review N Council 28/06/2019
9.0 Annual Review Y Council 10/07/2020
10.0 Refinancing Review Y Council 17/02/2021
11.0 Annual Review Y Council 30/06/2021
12.0 Budget Review Y Council 17/01/2022
13.0 Annual Review Y Council 28/06/2022
14.0 Annual Review Y Council 30/06/2023
15.0 Budget Review Y Council 17/08/2023
16.0 Annual Review Y Council 28/06/2024
17 Annual Review Y Council 28/06/2025
18 Annual Review Y Council 23/06/2026
Page. 5
Used in these records
2026/27 FINANCIAL POLICIES · Attachment 3 - Debt PolicyAttachmentsMeeting 1158 · read item & discussion ↗
About this file
- File size
- 129 KB (small file)
- File type
No other editions are linked here.