Bathurst Regional Council has decided against repaying a contentious internal loan of $4.5 million earlier than scheduled. This decision follows a series of discussions and recommendations regarding the loan, which was drawn down to support the council’s cash flow.
In May 2025, the council sought approval from the Minister for Local Government for an internal loan from the sewer fund to the general fund. The request aimed to prevent the council’s unrestricted cash from falling below necessary levels. The $5 million loan was approved on June 27, 2025, and by mid-July, the council had accessed $4.5 million of that amount. The loan is structured to be repaid in quarterly installments over a five-year period at an interest rate of 4.10 percent per annum.
The council’s Financial Sustainability Committee, which offers advice but does not make binding decisions, suggested that the loan should be repaid using Financial Assistance Grant (FAG) funds as they are received. During the ordinary meeting on July 16, 2025, Councillor Natalie Cranston proposed an amendment to formally adopt these recommendations. However, the motion lacked sufficient support, leading the council to simply acknowledge the information in the mayoral minute and defer further discussion on the FAG payment schedule.
At the ordinary meeting held on September 17, 2025, the council reaffirmed its decision not to expedite the repayment of the $4.5 million loan. Interim finance director Peter Smith presented a report detailing the financial assistance grants and the implications of the loan on the general fund. The council’s formal resolution states, “Council confirms that the $4.5 million internal loan from the sewer fund to the general fund is not repaid early; it is to remain payable over a five-year period to help address council’s cash flow issues.”
The report cited advice from the Local Government Grants Commission, emphasizing the unpredictability of FAG prepayments. Councils are cautioned against relying on the availability of future advance payments or their values. Additionally, it noted limitations surrounding early loan repayments. “Council remains limited as to its options to repay the interfund loans early whilst the review of its income and expenditure goes on,” Mr. Smith stated.
Councillor Cranston, who has been critical of the internal loan, expressed satisfaction with the clarity surrounding its purpose. “There is no room for grey now as to the intention of the loan. It is obviously finally acknowledging what was, in my mind, the intention all along,” she remarked. Councillor Sophie Wright supported Cranston’s view, highlighting that the “exact intention” regarding the loan’s usage is now “quite officially on paper” for the community to see.
As the council navigates its financial landscape, the decision to maintain the loan repayment schedule reflects its broader strategy to manage cash flow effectively, while also adhering to the advice given by financial oversight bodies. The outcome underscores the complexities involved in local government financing and the importance of strategic planning in ensuring fiscal sustainability.
