Meeting papers

Attachment 6 - 2023-24 Debt Policy
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:              17 August 2023

 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 net debt (net financial liabilities) remains within financial sustainability targets.

Borrowing Purposes
1.    Legislation prevents Council from accessing loan financing to fund operating deficits.
2.    Council undertakes 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 to minimise 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
7.    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.
      7.1. 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.

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