Part 9Finances

Chapter 9—Finances Part 1—Sources of funds 133—Sources of funds A council may obtain funds— (a) as permitted by or under this or another Act; and (b) as may otherwise be appropriate in order to carry out its functions under this or another Act. The following are examples of ways in which a council may raise funds: (a) by imposing rates and charges in accordance with this Act; (c) by selling property; (d) by leasing or hiring out property; (e) by obtaining grants and other allocations of money; (f) by carrying out commercial activities; (g) by recovering fees, charges, penalties or other money payable to the council. Part 2—Financial arrangements 134—Borrowing and related financial arrangements (1) A council may borrow money and obtain other forms of financial accommodation. (2) A borrowing may take any form considered appropriate by the council, including through the use of an overdraft or finance lease. (3) A council may enter into financial arrangements for the purpose of managing, hedging or protecting against movements in interest rates or other costs of borrowing money, including— (a) interest rate swaps; (b) forward interest rate agreements; (c) interest rate options; (d) other prescribed arrangements. (4) However, a council must not enter into a financial arrangement under subsection (3) unless or until— (a) the council has obtained and considered independent and impartial advice about the proposed financial arrangements and the appropriate risk-management policies, controls and systems that should be in place from a person whom the council reasonably believes to be competent to give the advice; and (b) the council has adopted risk-management policies, controls and systems by a resolution passed by at least a two-thirds majority of the members of the council. 135—Ability of a council to give security (1) A council may provide various forms of security, including— (a) guarantees (including guarantees relating to the liabilities of a subsidiary of the council); (b) debentures charged on the general revenue of the council (including to support a guarantee provided under paragraph (a)); (c) bills of sale, mortgages or other charges (including to support a guarantee provided under paragraph (a)). (2) If a council proposes to issue debentures on the general revenue of the council— (a) it must assign a distinguishing classification to the debentures to be included in the issue so as to distinguish them from those included or to be included in previous or subsequent issues; and (b) if the debentures are being offered generally to members of the public, it must appoint a trustee for the debenture holders. (3) The holders of debentures of a particular classification rank equally and have priority over the holders of debentures included in a subsequent issue. (4) If a council defaults in carrying out an obligation secured by debenture charged on the general revenue of the council, the Supreme Court may, on the application of a creditor or trustee for debenture holders— (i) direct the council to appropriate a specified portion of its revenue to the satisfaction of its obligations; or (ii) require the council to raise a specified amount by way of rates and direct that the amount raised be applied towards satisfaction of the council's obligations; and (b) give incidental or ancillary directions as may be necessary or desirable. (5) The rights of a creditor or trustee under subsection (4) are in addition to other rights that exist independently of that subsection. debenture includes any form of charge on the general revenue of a council. 136—State Government not liable for debts of a council (1) The Crown is not responsible for the debts or liabilities of a council, or a subsidiary or other body of a council, and the holder of a security issued by a council under this Act has no claim against the Crown in respect of that security. (2) This section does not affect a liability or claim that may arise by operation of the law. Part 3—Expenditure of funds 137—Expenditure of funds Subject to this or another Act, a council may expend its funds as the council thinks fit in the exercise, performance or discharge of its powers, functions or duties under this or other Acts. 138—Council not obliged to expend rate revenue in a particular financial year The revenue raised from rates in respect of a particular financial year need not be completely expended in that year. Part 4—Investment 139—Investment powers (1) A council may invest money under its control. (2) A council must, in exercising its power of investment— (a) exercise the care, diligence and skill that a prudent person of business would exercise in managing the affairs of other persons; and (b) avoid investments that are speculative or hazardous in nature. (3) Without limiting the matters that a council may take into account when exercising its power of investment, a council must, so far as may be appropriate in the circumstances, have regard to— (a) the purposes of the investment; (b) the desirability of diversifying council investments; (c) the nature of and risk associated with existing council investments; (d) the desirability of maintaining the real value of the capital and income of the investment; (e) the risk of capital or income loss or depreciation; (f) the potential for capital appreciation; (g) the likely income return and the timing of income return; (h) the length of the term of a proposed investment; (i) the period for which the investment is likely to be required; (j) the liquidity and marketability of a proposed investment during, and on the determination of, the term of the investment; (k) the aggregate value of the assets of the council; (l) the likelihood of inflation affecting the value of a proposed investment; (m) the costs of making a proposed investment; (n) the results of any review of existing council investments. (4) Without limiting the matters that a council may take into account when exercising its power of investment, but subject to the operation of subsection (3), a council may, so far as may be appropriate in the circumstances, have regard to— (a) the anticipated community benefit from an investment; (b) the desirability of attracting additional resources into its local community. (5) A council may obtain and consider independent and impartial advice about the investment of funds or the management of its investments from a person whom the council reasonably believes to be competent to give the advice. 140—Review of investments A council must, at least once in each year, review the performance (individually and as a whole) of its investments. Part 5—Miscellaneous 141—Gifts to a council (1) A council may accept a gift made to the council. (2) If a gift is affected by a trust, the council is empowered to carry out the terms of the trust. (3) A council may apply to the Supreme Court for an order varying the terms of a trust for which the council has been constituted a trustee. (4) Notice of an application under subsection (3) describing the nature of the variation sought in the terms of the trust must be given— (a) by public notice; and (b) in such other manner as may be directed by the Supreme Court. (5) The Supreme Court may vary the terms of a trust if it is satisfied that it is impracticable for the council to give effect to the trust in its existing form. (6) The council must, within 28 days after an order is made under subsection (5), publish a copy of the order in the Gazette. 142—Duty to insure against liability (1) A council must take out and maintain insurance to cover its civil liabilities at least to the extent prescribed by the regulations. (2) A regulation cannot be made for the purposes of this section except after consultation with the LGA. (3) Membership of the Local Government Association Mutual Liability Scheme constitutes insurance for the purposes of this section. 143—Writing off bad debts (1) A council may write off any debts owed to the council— (a) if the council has no reasonable prospect of recovering the debts; or (b) if the costs of recovery are likely to equal or exceed the amount to be recovered. (2) A council must not write off a debt under subsection (1) unless the chief executive officer has certified— (a) that reasonable attempts have been made to recover the debt; or (b) that the costs of recovery are likely to equal or exceed the amount to be recovered. (3) If a council delegates the power to write off debts under this section, the council must set an amount above which the delegation will not apply. 144—Recovery of amounts due to council (1) If a provision of this or another Act provides that fees, charges, expenses or other amounts may be recovered by a council from a person, or are payable to the council by a person, the fees, charges, expenses or other amounts are recoverable as a debt by action in a court of competent jurisdiction. (2) If a fee, charge, expense or other amount payable to a council relates to something done in respect of rateable or other property, or is payable by a person as the owner or occupier of rateable or other property within the area of the council, the council may, after giving at least 14 days notice requiring payment of the fee, charge, expense or other amount, recover the fee, charge, expense or other amount as if it were a rate declared on the property at the time of the notice requiring payment. (3) Subsection (2) does not apply to— (a) rates, charges, interest or fines recoverable under Chapter 10; or (b) fees, charges, expenses or other amounts of a prescribed kind. (4) Unless otherwise provided by another provision of this Act, or by another Act, or by the regulations, a fee, charge, expense or other amount recoverable under subsection (2) as a rate is not a charge on land. 145—Payment of fees etc to council All fines, penalties and forfeitures recovered in proceedings commenced by a council, an employee of a council, or a subsidiary, (or by a person acting under a delegation from, or on behalf of, a council, an employee of a council, or a subsidiary), before a court for an offence committed within an area against this or another Act, or against a regulation or by-law made under this or another Act, must, except where otherwise provided, be paid to the council of the area.