Council to borrow millions for Rubyanna
MAYOR Jack Dempsey has a simple philosophy when it comes to debt.
“As long as a capacity to repay debt exists, borrowing funds is a simple day-to-day arrangement for any business operation.
“Council is a business and does borrow money. The facts are that council has more than the required capacity to repay any funds it seeks to borrow.
“During the 2015/16 financial year we did plan to borrow $32 million but this strategy became unnecessary and council did not borrow one cent during the last financial year.
“As a result we finished the 2015/16 financial year with a debt figure of around $56 million.
“During the new financial year we have budgeted to borrow $24 million which will increase council debt to $80 million heading into 2017/18.”
Cr Dempsey said council held community assets, fully clear of debt, that are worth $1.78 billion. Council’s total liabilities represent just 6.5% of its assets.
“Notwithstanding that huge level of equity, council borrowings are clearly tied to a capacity for repayment from our revenue sources and are assessed on a very stringent risk-to-benefit basis. The funds we intend to borrow during this new financial year will be injected into the Rubyanna and Multiplex projects as well as a new animal pound facility which we have ascertained are projects of immense community and economic benefit.
“The commitment by council to reducing debt is evident in its scheduled future borrowings.
“We anticipate that in the 10 years from 2016/17 to 2025/26 council will, in total, borrow $63 million. However, through debt redemption over that same period we will end the 2025/26 financial year with debt of just over $47 million,” said Cr Dempsey.
“The adopted budget provides some very big numbers when we talk of operational revenue of $172 million, operational expenses of $168 million including a capital expenditure budget allocation of $124 million. We anticipate ending the 2016/17 financial year with a surplus of $4.2 million.
“I want to assure residents that council is being run as a very efficient and cost-effective business with a focus on maximising a return from every dollar received and subsequently reinvested in our region.”