2019-07-09 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                                      9 JULY 2019


QTC uses a scale to provide a rating and outlook for a Council once a credit review is completed.
This scale with detailed definitions is provided for information in Attachment 1. Briefly however
the scales used are as follows:

Rating Scale             Very strong
                         Strong
                         Sound
                         Moderate
                         Weak
                         Very weak
                         Distressed

Outlook Scale            Positive
                         Negative
                         Neutral
                         Developing


QTC has recently completed its latest credit review process for Council, with the credit rating has
been maintained at sound, however the outlook has been revised down to neutral from
positive.

The sound rating reflects Council’s robust historical and forecast financial performance,
supported by a high level of revenue control, a relatively low debt balance, strong cash position,
operating surpluses and a sound debt servicing capacity. In the previous credit review
undertaken by QTC in 2015, Council was assigned a positive outlook on the expectation of
improved operating results and no forecast borrowings outlined in Council’s financial model.

QTC has assessed that whilst Council is continuing to forecast a balanced operating position,
operating surpluses forecast from 2019-2023 are lower than compared to the 2015-2018
historical period, and it was considered that there are no significant positive factors that might
drive the performance up from forecast levels in the near future. A neutral outlook reflects that in
the opinion of QTC there are no known foreseeable events that would result in a rating change
over a one to two year period following the credit review.

Previous Council Consideration
Ordinary Meeting Minutes, 4 June 2015, Item 9, Page 17
That Council note the report by the Director Corporate Services to the General Committee
Meeting dated 1 June 2015 detailing the outcomes of the Queensland Treasury Corporation
(QTC) financial sustainability review of Council’s long term financial plan and request the CEO to
make a copy of the QTC report available on Council’s website.

Finance
The credit review outcome is consistent with Council’s financial maturity as a new entity since
2015 and its ongoing alignment with the financial sustainability policy, with Council’s financial
forecasts outlined in Council’s 2019/20 budget document ensuring modest operating surpluses
are achieved over the next 10 years, overall debt levels reducing and appropriate levels of asset
renewal and replacement to maintain levels of service for the Noosa community.

Council’s 2019/20 budget document does not forecast any loan borrowings for the next 10 years.
It is important to note however that the ability for Council to borrow funds for capital expenditure
is an effective mechanism to achieve intergenerational equity, and smooth cash flows and overall
ongoing financial sustainability if required.



                                                                                     Page 45 of 47