By Jess Baker
Southern Downs Regional Council (SDRC) will join five other local governments in forming an official company intended to progress future water security.
Councillors voted unanimously to become a member of the Southern Queensland Inland and NSW Border Regional Water Alliance at last week’s ordinary meeting, nominating Mayor Vic Pennisi as a director of the enterprise.
The Alliance, which now comprises of Southern Downs, Goondiwindi, Toowoomba, Western Downs, Tenterfield and Lockyer Valley Regional Councils, was first established in 2020 with a vision to advance water security across the broader region.
At the Alliance’s second ever meeting – which was held in Stanthorpe in February this year – the group decided to form a Company Limited by Guarantee (CLG).
Mayor Pennisi said the decision would allow the Alliance to access grants and funding for long-term water security solutions.
“By long-term we mean what we are going to do in 100 years’ time?” he said.
Legal advice obtained by Toowoomba Regional Council (TRC), and tabled in last week’s ordinary SDRC meeting, detailed the potential advantages and disadvantages of the Alliance proceeding as a CLG.
Murdoch Lawyers advised TRC that a CLG cannot issue shares, so it must raise all of its capital through other means, such as by bank loan, government grants or fundraising activities.
“Companies limited by guarantee are seen by government as the vehicle best suited for not-for-profit entities that are seeing government funding, particularly federal funding,” read the advice.
The legal advice stated that a CLG would be suitable for “formalising” the Water Alliance as the company would receive “all the benefits of corporate status” and the liability of members would be limited to the sum of the guarantee – which Murdoch Lawyers explained is usually a nominal amount like $10.
Disadvantages of forming a CLG, as outlined by Murdoch Lawyers, include the need for compliance with the Corporations Act and inflexible guarantees.
“(The company’s) directors and officers will be subject to all the duties and liabilities placed on directors by the Corporations Act as well as the common law and equitable obligations imposed by the general law,” read the advice.
The legal advice obtained by TRC was discussed at the Alliance’s February meeting, where forming a CLG was “generally seen as the best way to proceed”.
Minutes from the meeting show members also expressed interest in inviting other councils to participate in the Alliance, including Inverell, Gwydir, Walgett, Moree Plains and Banana Shire.
The next step for the Alliance, now that SDRC has agreed to become a member, is for the company to be registered with ASIC.
“Once the company is registered, the Alliance can move forward with their next meeting and decide on the best steps to gain state and federal funding to underpin the Alliance,” read the SDRC report tabled in last week’s ordinary meeting.
Southern Downs councillor Cynthia McDonald said she was fully supportive of the Alliance forming a company.
“This is a very, very positive step for all of the councils involved, working together in collaboration to look at a problem that has obviously been plaguing us for the last five years, if not longer in some regions,” said Cr McDonald.
SDRC’s decision to join the Alliance follows the Queensland government’s recent announcements of a $20 million drought resilience package for the Southern Downs and a $3 million water assessment for the Southern and Darling Downs.
The council report stated that operation of the Alliance will have “no or little impact” on the 2020-21 budget, but will need to be considered in the 2021-22 budget.
