2026/27 FINANCIAL POLICIES · Attachment 3 - Debt Policy

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.



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