The framework will enable Victorian councils to achieve interest cost savings by being able to access low-interest loans financed through the Treasury Corporation of Victoria (TCV). The option to access TCV loans provides greater flexibility for Victorian councils to finance their future operational and capital requirements.
All Victorian councils are eligible to be considered for loans under the framework.
Local Government Victoria (LGV) in the Department of Jobs, Precincts and Regions (DJPR) is administering the framework in collaboration with the Department of Treasury and Finance (DTF).
Further information is available in the TCV loans framework guidelines PDF, 929.48 KB.
Why are TCV loans being made available to Victorian councils?
Victorian councils have significant economic responsibilities as they collectively own and manage community assets and infrastructure worth in excess of $107 billion and spend over $9 billion on the provision of services annually. The Victorian Government recognises these responsibilities and wants to encourage Victorian councils to responsibly consider the strategic use of cost-effective debt for the benefit of local communities. Victoria’s strong credit rating means that the State can borrow and lend money at cheaper rates than are commercially available to councils.
LGV will survey all Victorian councils annually to determine their indicative borrowing intentions. This information will be communicated to DTF and TCV for budget and planning purposes.
LGV will then collate individual planned council borrowings disclosed in adopted budgets to determine total new borrowings for consideration and endorsement by the Minister for Local Government.
DTF will then undertake a credit assessment of all Victorian councils planning to borrow to ensure that the councils meet the minimum requirements and other loan conditions.
Following this, the recommended TCV borrowing limit (which may differ from the requested amount) will be presented to the Treasurer for approval. Subject to the Treasurer’s approval, councils will be advised of their TCV borrowing limit.
Once a council receives advice of their confirmed TCV borrowing limit, they may formally apply to TCV for loan funds. TCV will then fund loans to individual councils up to the approved limit.
The objectives of the framework are:
- to provide councils with access to lower cost debt which is ultimately to the benefit of ratepayers;
- to incentivise councils to consider the strategic use of debt to fund capital expenditure that provides intergenerational community benefits;
- to incentivise councils to bring forward community infrastructure delivery by providing increased opportunities to access affordable finance;
- to support a range of local community projects which ultimately deliver on the objectives of both the Victorian Government and the local council and maximise community access and benefit; and
- to provide additional support to encourage economies and communities as they emerge from the coronavirus (COVID-19) pandemic.
The framework provides Victorian councils with access to TCV loans to fund infrastructure and general working capital requirements. Loans do not have to be project-specific and will be secured against the council’s revenue from general rates. This framework is designed to complement, not replace, existing funding programs and sources.
Proposed borrowings that will not be supported under the framework include, but are not limited to:
- applications to refinance an existing loan or borrowings prior to their current contractual repayment date (but these loans can be refinanced once they reach contractual maturity); and
- investment in financial assets.
Individual Victorian councils may request to borrow from TCV up to a borrowing limit. Council borrowing requirements will be established based on review of adopted budgets as part of the annual budget process. Borrowing limits will be subject to individual council credit assessments undertaken by DTF.
TCV will work with participating councils to identify the most appropriate loan term on a case-by-case basis.
Once a council receives advice of their confirmed TCV borrowing limit, they may formally apply to TCV for loan funds. Please refer to the TCV loans framework guidelines for further details of the client account onboarding process.
Please read the guidelines for the indicative timelines for the establishment year (2021-22) and future years.
Framework Supporting Documentation
For more information on the TCV loans framework, please contact:
Department of Jobs, Precincts and Regions
Sector Performance and Operations
Local Government Victoria
(03) 8392 7166
Treasury Corporation of Victoria
Treasury Client Services
(03) 9911 3636
Level 12, 1 Collins Street
MELBOURNE VIC 3000
(03) 9651 4800
Page last updated: 20/09/21