2014-01-13 Deamalgamation Report Attachment

2.5.1 The Queensland Treasury Corporation

The Queensland Treasury Corporation (QTC) was engaged by the Department of Local
Government to provide assistance and advice to the Queensland Boundary Commission in regard
to identifying the financial viability of the two Councils if de-amalgamation were to take place; and
the cost of de-amalgamation for both the new Noosa Council and the continuing Sunshine Coast
Council.

The QTC determined a sustainability rating for the existing council, the proponent council (new)
and the continuing council.

Sustainability Rating     Existing Council      Proponent Council          Remaining Council

QTC rating                Strong (neutral)      Moderate (neutral)         Sound (neutral)


The existing council’s strong rating is supported by:
    historical and forecast operating surpluses in all years.
    very low gearing levels throughout the forecast period and high interest and debt service
     cover ratios.
    strong liquidity, and
    forecast capital expenditure of $718 million with only 14.3 per cent funded by new
     borrowings.

The remaining council’s sound rating is supported by:
    minor operating deficits over the forecast period, and
    a reasonable level of borrowings which are able to be adequately serviced.

The proponent council’s moderate rating is supported by:
    minor operating deficits over the forecast period, and
    adequate capacity to meet its financial commitments in the short to medium term and
     acceptable capacity in the long term.


Appendix 4:      Queensland Treasury Corporation De-amalgamation Analysis of Sunshine
                 Coast Regional Council


2.5.2 Balance Sheet Allocation Methodology

The Transfer Committee agreed the split of assets and liabilities between the new Noosa Council
and the continuing Sunshine Coast Council to enable the opening balance sheet position of the
new Noosa Council to be determined. The de-amalgamation transfer methodology required the
Transfer Manager to prepare and present to Council at its first meeting, a detailed report outlining
the new Noosa Councils opening financial position and short-term financial outlook.

The QTC de-amalgamation report included a financial analysis prepared by QTC. As part of this
analysis, QTC established an opening balance sheet position as at 1 July 2012 as a base case for
testing. Given the considerable effort and cost involved in this undertaking, the de-amalgamation
transfer methodology recommended that the Transfer Committee adopt these figures established
by the QTC.


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