Councillor Jacob Heremaia has again urged Logan City Council to diversify its loans to shield ratepayers from market instability.
According to the second term councillor, most of council’s borrowed money is in long-term, fixed-rate loans from the state government’s finance body, the Queensland Treasury Corporation, as per council policy.
While that money is being spent on important community infrastructure like roads and water, Cr Heremaia expressed concern about “how we’re going about borrowing that money”.
“[Council’s] debt policy 2024/25 shows that council expects to take out hundreds of millions in new borrowings over the 2024/25 and 2025/26 periods,” he said in a letter to Logan CEO Darren Scott.
“To manage long term obligations, council should investigate borrowing maturities that are diversified. A balanced maturity profile should be considered to ensure that ratepayers are not exposed to unnecessary interest rate risk.”
He raised the issue again in response to the release of the 2025 city budget on Wednesday.
In June last year, mayor Jon Raven supported Cr Heremaia when he raised the issue of Logan council’s “bad debt deal”.
According to Cr Heremaia at the time, the council could get stuck paying five times the amount of interest on its record-high loans than it was four years prior.
It was revealed in a special budget meeting that council would borrow $195 million over the following year, and potentially $350 million over the next four years.
Cr Jacob Heremaia said the loan would likely be locked in at a 5% interest rate, paid off over 20 years – because of council policy.
He said that in the current market, high interest rates caused council to spend more money on repayments and “less money on our community”.
Instead, he recommended council “reform and diversify” its debt policy to determine the “smartest way to borrow”.
“Should we borrow some on five-year loans, 10-year loans, 20-year loans,” he said.
“Get down and do some homework and figure out how we can make sure we reduce repayments and put more money into the community instead of paying our bankers.”
