Trim 12/60458

CP1 – 54 Investment Policy

Corporate & Community Relations – Finance

18/07/2017 | Rev C

Page 1 of 4

Council complies with the requirements of the Local Government Act 1989

.

Council funds are preserved.

Council maximises the return on funds whilst operating within the requirements

of the Local Government Act 1989

.

Ensure that the investment portfolio is structured to provide sufficient liquidity

to meet all reasonably anticipated cash flow requirements.

All funds must be invested in accordance with Section 143 of the

Local Government Act

1989.

This policy applies to all Council funds invested in financial institutions.

Investments shall be made with good judgement and care, not for speculation, and

considering the probable safety of the capital as well as the probable income to be derived.

In Government securities of the Commonwealth.

In securities guaranteed by the Government of Victoria.

With an authorised deposit-taking institution.

With any financial institution guaranteed by the Government of Victoria.

On deposit with an eligible money market dealer within the meaning of the

Corporations Act. and

In any other manner approved by the Minister after consultation with the

Treasurer either generally or specifically, to be an authorised manner of

investment for the purposes of this sub-section.

Manager Finance, Coordinator Financial Accounting and the Financial Accountant

have the authority to invest surplus funds managed in an investment portfolio, under

the supervision of the Chief Financial Strategist, Director Corporate and Community

Relations and the Chief Executive Officer.

CP1 – 54 Investment Policy

Corporate & Community Relations – Finance

18/07/2017 | Rev C

Page 2 of 4

The Council’s funds will be invested after taking into consideration the market risk,

credit risk and liquidity are all appropriately balanced.

Council will only invest directly into cash and fixed interest securities, as specified in

section 4.1 (a) to (f). Based on the credit rating, the amount invested with any one

financial institution should not exceed the following percentages or term to maturity

of the total funds invested at that time. When placing investments, consideration

should be given to the relationship between credit and interest rate.

A1+

AAA to AA-

40%

3 years

100%

A1

A+ to A-

25%

1 year

60%

A2

BBB+ to BBB- 10%

90 days

40%

Not less than three (3) quotations shall be obtained from authorised institutions

whenever an investment is proposed. The best quote on the day will be successful

after allowing for administrative and banking costs, as well as having regard to the

limits set above.

Managed Cash, cash-plus funds and fixed interest funds are to have a minimum

credit rating of AAAm or AAf respectively, by Standard & Poor’s or equivalent ratings

of Moody’s and Fitch.

No funds should hold more than 40% of Council’s total amount of average funds.

Cash

0-90 days

0-100

Cash-Plus

3-12 months

0-95

Fixed Interest

3-5 years

0-25

The combined average weighted days to maturity and the overall volatility of any

managed fund should be appropriate to Council’s investment objectives and long

term financial plan.

CP1 – 54 Investment Policy

Corporate & Community Relations – Finance

18/07/2017 | Rev C

Page 3 of 4

The investment portfolio will remain sufficiently liquid to enable Council to

meet all operating requirements which might be reasonably anticipated.

Investment maturities will be scheduled to coincide with projected cash flow

needs.

Council will maintain a current list of ADI’s, Short and Long Term paper ratings of all

Institutions, funds and Fund Managers being not more than six (6) months old. If any

of the funds/securities held are downgraded, such that they no longer fall within

Council’s investment policy guidelines, the security concerned will be divested within

30 days or as soon as is practicable.

The review of cash requirements and investments will be assessed by the

Manager Finance on a regular basis.

Accounting for investments will comply with the Australian Accounting

Standards (AAS), Urgent Issues Group (UIG), Consensus views, and the Act.

A report will be provided to Council detailing investment income versus

budget year to date, investments undertaken including return rates and credit

risk assessments. This report is to be at least provided quarterly.

For audit purposes, bank confirmations must be obtained from the banks/fund

managers confirming the amounts of investment held on Council’s behalf at

30 June each year.

Local Government Act 1989

This policy is issued under the delegation of the Chief Executive Officer or their delegated

representative, and is authorised to approve variations to this policy if the investment is to

Council’s advantage and/or due to revised legislation.

The contents of this document represent the current policy of Council and reflect the current

practices and experience of Council. All significant changes to this policy are to be reported

to Council within two months.

CP1 – 54 Investment Policy

Corporate & Community Relations – Finance

18/07/2017 | Rev C

Page 4 of 4

– This rating indicates the lowest expectation of credit

risk. They are assigned only in the case of exceptionally strong capacity for payment

of financial commitments. This capacity is highly unlikely to be adversely affected by

foreseeable events.

– This rating indicates expectations of very

low credit risk. They indicate very strong capacity for payment of financial

commitments. This capacity is not significantly vulnerable to foreseeable

events.

– This rating indicates expectations of low credit

risk. The capacity for payment of financial commitments is considered

strong. The capacity may, nevertheless, be more vulnerable to changes in

circumstances or in economic conditions than is the case for higher ratings.

– this rating indicates that there is currently an

expectation of low credit risk. The capacity for payment of financial

commitments is considered adequate, but adverse changes in

circumstances and in economic conditions is more likely to impair this

capacity. This is the lowest investment-grade category.

- Extremely strong degree of safety regarding timely payment.

– A strong degree of safety.

– A satisfactory capacity for a timely payment.

Local Government Act 1989

Council’s Financial Authorisations and Delegation.

June 2008

Date Approved

by CEO

August 2012

Reviewed

A

14/12/2011 New Format &

Adopted by

Council

14/12/2013

B

24/03/2016 Reviewed and

Updated

14/12/2017