Borrowing strategy Refer to Appendix J for a detailed schedule of Council’s forecast borrowings, including existing and new (assumed) borrowings, principal repayments and finance costs.
LONG TERM FINANCIAL PLAN 2022 - 2031
This section covers the components of Council’s borrowing strategy including Council’s philosophy on debt, future loan strategy and requirements.
Background to Council’s current debt portfolio The below table highlights Council’s current position in respect of all interest-bearing liabilities and the movements that have occurred during the past three financial years, as well as the forecast borrowings balance at 30 June 2021.
Interest bearing loans and borrowings
Actual Balance
Actual Balance
Actual Balance
Forecast Balance
30 June 2018
30 June 2019
30 June 2020
30 June 2021
$'000
$'000
$'000
51,826
58,525
59,891
$'000 56,636
Future loan strategies What is Council’s philosophy on debt? Many Victorian councils are debt averse and view the achievement of a low level of debt or even debt free status as a primary goal. Others see the use of loan funding as being a critical component of the funding mix to deliver much needed infrastructure to the community. The use of loans to fund capital expenditure can be an effective mechanism of linking the payment for the asset (via debt redemption payments) to the successive Council populations who receive benefits over the life of that asset. This matching concept is frequently referred to as ‘inter-generational equity’. Council has accessed debt funding to complete a range of major infrastructure projects including the Springvale Community Hub, Dandenong Civic Centre and Library, redevelopment of the Drum Theatre, Dandenong Market and Noble Park Aquatic Centre that will be enjoyed by the populations of the future (refer table below).
Project Drum Theatre Dandenong Market Noble Park Aquatic Centre Dandenong Civic Centre Springvale Community Hub Total
Total cost ($ million) 13.0 26.0 21.0 65.5 52.7 178.2
Loan funds used ($ million) 9.0 20.0 5.0 47.2 20.0 101.2
The significant replacement of Dandenong Oasis, estimated at over $62 million, will be part funded by proposed new borrowings of $30 million (forecast evenly across years 2022-23 and 2023-24 in this LTFP).
LONG TERM FINANCIAL PLAN 2022 - 2031 CITY OF GREATER DANDENONG
Page 36
