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TASCORP – Glamorgan-Spring Bay Council Borrowings

Cassy O'Connor MP  -  Tuesday, 30 November 2021

Tags: Glamorgan-Spring Bay, Treasury, Prosser Pipeline, TASCORP

Ms O'CONNOR - Treasurer, are you able to tell us what the current borrowing allocation of the Glamorgan-Spring Bay Council is? It would fit into one of those entities Mr Ferrall was talking about before. It is a marginal local government and obviously, they needed this loan in order to help fund Tassal infrastructure in fact? What is the current interest to operating revenue ratio for Glamorgan-Spring Bay Council? I note in 2018 19 the allocation was $6.55 million and the interest to operating revenue ratio was 2 per cent?

Mr GUTWEIN - The current level of borrowing I have at the moment is just on $8 million and $31 000 for Glamorgan Spring Bay.

Ms O'CONNOR - Wow. That has actually gone up significantly in the past couple of years for a council which has a very low rate base. Are you able to share with the committee what your understanding is of the council's capacity to repay?

Mr FERRALL - I am just getting - to confirm or check that. I think it is lower than that figure. The briefing note might be incorrect.

Ms O'CONNOR - Big question marks over how they can repay that.

Mr GUTWEIN - I recall a couple of years ago discussing this with your colleague, Dr Woodruff. At the time I think in Hansard it talked about around $6 million with loans and the 40 per cent threshold utilised in terms of net debt to revenue. I would need to be corrected but I did think the point was made back then around $8 million at that particular time was within the parameters of the 40 per cent. You might have -

Ms O'CONNOR- I am not privy to that Hansard.

Mr FERRALL - It is slightly lower now, it is 7.9 -

Mr GUTWEIN - 7.988 is their current -

Ms O'CONNOR - And at what rate are they repaying that loan?

Mr FERRALL - It is an amortising loan but I could not give you the full terms and conditions.

Mr GUTWEIN - I am happy to provide that detail.

Ms O'CONNOR - All right. We will put that one on notice.

Ms O'CONNOR - Treasurer, we checked and the last time you were in conversation with Dr Woodruff about Glamorgan-Spring Bay Council's borrowings, at an Estimates table you confirmed that the assessed maximum borrowing of Glamorgan-Spring Bay Council was $7 million. Now we understand it's at $7.98 million, I think you said. Was there a change in TASCORP's view on Glamorgan-Spring Bay's capacity to repay?

Mr GUTWEIN - That conversation was back in 2019. I've got it here in front of me. I imagine that the revenue situation in Glamorgan-Spring Bay Council has increased. In fact, I think we're all well aware that there has been just in recent times some discussion about rate increases in that particular municipality.

Regarding any metrics or benchmarks that are used, they would need to be considered in terms of the current revenue that that council has from its rate base which would be, I would suggest, vastly different to what it was back in 2019. That's the only comment I think I can make on that at the moment.

Ms O'CONNOR - They came to government for an increase in the loan amount, did they?

Mr GUTWEIN - I would have to check that.

Mr FERRALL - We would need to go back but I believe it was through the COVID-19 period -

Mr GUTWEIN - COVID related.

Mr FERRALL - with additional support and the Government was providing support to all local governments and, as you would be aware, many local governments expanded their borrowing through that period.