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Financial arrangements requiring the Treasurer's approval

Purpose

To remind local governments they must seek the Treasurer's approval before entering into certain financial arrangements, for example, forming a company, or entering into joint ventures, partnerships or trusts.

Background

Section 60A of the Statutory Bodies Financial Arrangements Act 1982 (the Act) states a statutory body (including local governments) may, with the Treasurer's approval, enter into a Type 1 financial arrangement.

A 'Type 1 financial arrangement' is defined in the Act as an arrangement that provides for, relates to, is directed towards or includes one or more of the following:

(a) Entering into or performing a deferred payment arrangement if the payment period is more than three years. (b) Entering into a joint venture, partnership or trust. (c) Forming, or participating in forming, a corporation. (d) Acquiring, consolidating, dealing with, disposing of, holding or issuing bonds, debentures, inscribed stock, shares, stock or other securities of any statutory body or corporation. (e) Entering into an arrangement, covenant, guarantee, promise or undertaking to meet liabilities or obligations incurred by or to a person, whether or not the person is a party to the arrangement, covenant, guarantee, promise or undertaking. (f) Underwriting an issue of debentures, shares or other securities. (g) Entering into another arrangement prescribed under a regulation as a Type 1 financial arrangement.

Key points

Common transactions that fall under the above requirements include:

Please note Treasury's requirements for granting approval for the formation of a corporation are quite extensive. Council should first contact the department for guidance.

Council should ensure that all proposed financial arrangements and contracts are reviewed to ascertain whether the Treasurer's approval is required. A request containing the complete details of the proposal should then be made as soon as possible to the department to allow sufficient time for the department to assess council's request and to obtain the necessary approvals from Treasury on council's behalf.

Councils are also reminded that should they wish to borrow (including finance leases), obtain a working capital facility, enter into a bank guarantee arrangement, or enter into derivative transactions, that they must also seek approval. These arrangements are covered under other sections of the Act.

It remains the responsibility of each council to familiarise themselves with the Act.

Register of approvals to be maintained Section 74 of the Act requires that a statutory body keep a register of the Treasurer's approvals. There is no prescribed form for the register and it is considered that a binder with a copy of the Treasurer's approvals would be sufficient.

Further information

For further information, contact the department.

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