In a move that will save approximately $4 million, Sunshine Coast Council has transferred all borrowings for the Sunshine Coast Airport Expansion Project from the Commonwealth Government to Queensland Treasury Corporation (QTC).
In 2016, council received approval from the Queensland Treasurer for the full borrowings required to deliver the Airport Expansion Project.
However, council was also able to secure a concessional loan for $181 million at a fixed interest rate of 2.5% per annum over five years from the Commonwealth Department of Infrastructure, Regional Development and Cities (DIRDC), which was approximately 1% below the interest rate available from QTC at that time.
With reductions in interest rates over the last year, council is now able to access finance from QTC at 1.3% – nearly half the rate below the fixed interest rate applying to the concessional loan from the Commonwealth Government.
Deputy Mayor and Division 2 Councillor Tim Dwyer – who is also responsible for the Corporate Planning and Finance Portfolio and the Airport Expansion Project – said that as the DIRDC was unwilling to revise its fixed interest rate on the concessional loan to at least match the rate available from QTC, council made the decision to switch its borrowings for the Airport Expansion Project to QTC.
“Council committed at the outset that it would always pursue the best outcome for the ratepayer in progressing this project – and that is exactly what we have done,” Cr Dwyer said.
“With reductions in interest rates, it is prudent to take up the availability of finance from QTC at a lower interest rate.
“Switching our borrowings to QTC will provide savings to the project budget of approximately $2 million, with another $2 million in savings to be realised after construction has been finalised.
“Our council prides itself on prudent and responsible fiscal management and so this is an opportunity that we were not prepared to pass up.
“It is also worth noting that the borrowings for the Airport Expansion Project – all of which now resides with QTC – are now at an interest rate that is lower than what we receive as a financial return on the majority of council’s other investments.
“So, once again, we have taken a fiscally responsible approach on behalf of our ratepayers, which is one of the reasons why the Sunshine Coast Council continues to be one of only a few councils in Queensland to hold a Strong Financial Sustainability rating.
“In many respects, what council has done with this project is no different to what many home-owners with a mortgage do – if they can secure a better interest rate from another bank, they move banks,” he said.
Cr Dwyer made the point that council was very grateful for the assistance that the Commonwealth Government was able to provide in the initial phases of the Airport Expansion Project with its concessional loan, which enabled the project to proceed.
“Our council also wants to acknowledge the assistance and support of the Member for Fairfax, Ted O’Brien MP in securing the concessional loan in 2016 and his continuing support for this project.
“Council appreciates the support that has been provided by the Commonwealth Government for this project and looks forward to continuing to work with the Member for Fairfax and the Federal Government on growing the opportunities for the tourism industry and Sunshine Coast exporters to access new markets as a result of the expansion of the Sunshine Coast Airport,” he said.
The borrowings for the Sunshine Coast Airport Expansion Project will be repaid from the proceeds which council receives from Palisade Investment Partners under the terms of the commercial management agreement for the Sunshine Coast Airport.