Borrowing capacity ensures financial sustainability

Published on 28 April 2021

One of the strategies Council adopted following the recent Local Government review that found Clarence Valley Council was not financially sustainable, addressed the level of debt by paying down existing loans as a priority.

In 2016, Ernst & Young undertook a review of Council’s debt position and an assessment of Council’s capacity to increase borrowings, which indicated “our debt level at the time to be $130M,” said Council’s General Manager, Ashley Lindsay.

Ernst & Young has again conducted a review and assessment and this was reported to Council at this months meeting.

Mayor Simmons said, “It’s pleasing to see the improved financial performance with an increase in Council’s debt level by $67M, to $197M as of June 2021.”

The General Manager has confirmed that while the current report provides the Council with a better understanding of its borrowing capacity, an increase in borrowing does not automatically follow.

“The recent review of our current debt level shows we have the capacity to increase our borrowing in order to deliver projects to the community, but to do so will require extensive consultation with the community about how we fund projects over time,” said Mr Lindsay.

Members of the outgoing Council made it clear during the debate that any decisions to borrow additional funds is one for the new Council, in accordance with the Borrowing Policy of Council.

”The decisions made by this Council, have resulted in an improved sustainable debt level”, the Mayor stated. “We have made a point of paying down debt in recent years, putting future Councils in a good position to utilise loans for projects.”

Borrowing for capital works is an important funding source for Local Government as the full cost of infrastructure projects should not be borne entirely by present-day ratepayers but be contributed to by future ratepayers who will also benefit. 

 Release ends

28 April 2021

 

 

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