ordinary meeting of council to be held on tuesday, 26 april 2005 at ...

Principal
Repayments
New Loans
Taken Up
Net Debt
Repayment
$’00
0
$’00
0
$’00
0
$’00
0
$’00
0
$’00
0
$’00
0
$’00
0
$’00
0
$’00
0
$’000
2,154 1,538 1,706 1,857 1,877 1,779 1,690 1,514 1,315 1,224 16,654
1,600 1,400 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 11,000
554 138 706 857 877 779 690 514 315 224 5,654
The debt service ratio assesses the degree <strong>to</strong> which operating revenues are committed <strong>to</strong> the
repayment <strong>of</strong> debt. It is reported in the Annual Financial Statements and is calculated by:
interest plus principal repayments
<strong>to</strong>tal revenue less specific purpose grants
Council’s debt service ratio will reduce from 5.6 per cent in 2003/2004 <strong>to</strong> 1.9 per cent at the
end <strong>of</strong> 2013/2014. The reduction in debt service ratio is a result <strong>of</strong> Council’s strategy <strong>to</strong>
reduce new borrowings during the life <strong>of</strong> the Model.
The Ten Year Financial Model also includes an initiative <strong>to</strong> restrict any reductions achieved
in debt servicing costs <strong>to</strong> go <strong>to</strong>wards works <strong>of</strong> direct community <strong>be</strong>nefit. The base year for
this initiative is 2001/2002.
Debt servicing costs in the base year 2001/2002 was $4.4 million. In the following years,
the difference <strong>be</strong>tween the base year 2001/2002 and each subsequent year’s debt servicing
costs are allocated <strong>to</strong> works <strong>of</strong> direct community <strong>be</strong>nefit. In 2005/2006 $2,177,000 will <strong>be</strong>
restricted <strong>to</strong> works <strong>of</strong> direct community <strong>be</strong>nefit.
Between 2002/2003 and 2013/2014, $23.3 million will <strong>be</strong> allocated <strong>to</strong> works <strong>of</strong> direct
community <strong>be</strong>nefit as a result <strong>of</strong> this initiative. This strategy aims <strong>to</strong> increase the amounts <strong>of</strong>
money that can <strong>be</strong> sustainably applied <strong>to</strong> the renewal and management <strong>of</strong> community assets.
Table 15 shows the calculation <strong>of</strong> the reductions in borrowing costs and the amounts that are
<strong>to</strong> <strong>be</strong> restricted on an annual basis.
Table 15 Reduction in borrowing and transfer <strong>to</strong> works <strong>of</strong> direct community <strong>be</strong>nefits (WDCB) restricted
asset fund.
Interest
Expense
Principal
Repayments
Total
Repayments
Difference
from Base
Year (01/02).
Restricted <strong>to</strong>
W.D.C.B
01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
1,001 817 729 694 698 725 694 676 583 491 454 427 413 8,402
3,412 2,780 2,543 2,153 1,538 1706 1857 1,877 1,779 1,690 1,514 1,315 1,224 25,389
4,413 3,597 3,272 2,847 2,236 2,431 2,551 2,553 2,362 2,181 1,968 1,742 1,637 33,791
Nil 500 1,141 1,566 2,177 1,982 1,863 1,860 2,051 2,232 2,446 2,671 2,776 23,265
Figure 16 shows the annual amounts that will <strong>be</strong> allocated <strong>to</strong> works <strong>of</strong> direct community
<strong>be</strong>nefit as a result <strong>of</strong> this initiative.
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