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Frequently Asked Questions Addendum - 1 June 2012

Frequently Asked Questions Addendum - as at 1 June 2012

PDF printable version of Frequently Asked Questions Addendum (PDF 32 KB)

Can I use grant funds to meet my own costs in managing the project?

Costs that funding recipients incur on a GP Super Clinic project prior to signing the funding agreement cannot be met from grant funds.

So long as they are detailed in the Project Budget approved by the Department, a funding recipient’s own costs in managing the funding agreement and the project can be met from the capital works category of funding. To evaluate whether Directors of a funding recipient have given paramount consideration to ensuring value for money is achieved, the Department may seek a range of information about the costs a funding recipient proposes to incur in undertaking the project. For example:

• Was there a market appraisal undertaken of the average cost per hour of the different tasks and functions required?

• Where a person carrying out work on the project is an existing Director or employee of the funding recipient, or a consultant to the funding recipient, what steps has the funding recipient taken to assure itself that the Director, employee or consultant holds the necessary skills and capabilities to carry out the particular work on the project?

• Where a person carrying out work on the project is a consultant to the funding recipient, what procurement process was followed to ensure that engaging the consultant at the consultant’s hourly rate is the most cost effective way to obtain the services the consultant provides?

• What arrangements and processes has the funding recipient implemented to oversee work undertaken on the project and verify:

• that particular project tasks have been properly performed;

• the time taken to perform those tasks; and

• the costs incurred in undertaking those tasks?

What happens if I want to use a mortgage or loan to partly fund the project?

The Department’s focus is to ensure continuity of service delivery to the GP Super Clinic’s local community. Commercial loans secured by mortgages can put that at risk. Accordingly, funding recipients need to obtain the Department’s approval to obtain borrowings from a lender or to grant a mortgage over the GP Super Clinic property. The Department will consider each proposal to obtain borrowings on a case by case basis. The Department may not approve borrowings from a lender, either at all, or on the terms and conditions proposed by the lender.

To ensure that continued service delivery is not put at risk, the Department must be notified immediately if the use of commercial borrowings is being considered. The Department will require the following information in order to consider the funding recipient’s proposal:

• The terms sheet of the loan proposed by the lender. The Department will not accept “all monies” mortgages which seek to secure additional loan facilities.

• Three year cash flow projections demonstrating how the loan can be serviced without putting at risk the maximisation of the delivery of team-based multidisciplinary primary health care services that are focused on preventing and managing chronic disease. (The Department can provide a template cash flow projection for funding recipients to complete.)

• A current “as constructed” valuation of the GP Super Clinic, prepared by a registered property valuer, that: Top of page

• incorporates a Bill of Quantities prepared by an independent quantity surveyor; and

• demonstrates that the loan amount will not exceed a ratio of 30%-40% of the value of the building once construction is completed.

Should the Department approve the proposed loan in principle, the lender will have to agree to sign a Deed of Priority with the Department under which the amount of the loan is capped and the lender commits to ensuring that the GP Super Clinic will continue, even if there is a default under the mortgage.

What happens if I want to lease the whole GP Super Clinic building to a separate organisation to operate the clinic?

The grant funding is for the establishment and operation of a GP Super Clinic. The Department’s focus in on ensuring any subcontract arrangements that could impact on the GP Super Clinic’s operation recognise the Commonwealth’s rights and will not affect the capacity of the GP Super Clinic to maximise the delivery of team-based multidisciplinary primary health care services that are focused on preventing and managing chronic disease.

The funding recipient must immediately notify the Department if it is considering or intending to engage a subcontractor to operate the GP Super Clinic. This type of subcontractor is generally referred to as an “Operator”. The Department will require the following information:

• The terms of the proposed Operator subcontracting arrangement whether, for example, the arrangement is a lease or a management services agreement. Funding recipients should note that:


• where the Commonwealth has paid for 100% of the GP Super Clinic, only a nominal rent may be charged to an Operator (though the Operator may also be required to pay for rates, taxes and outgoings);


• a proposed lease to an Operator should indicate what additional arrangements the parties are implementing to maximise services delivered at the GP Super Clinic in lieu of the Operator paying only a nominal rent;


• where the funding recipient has also paid for part of the GP Super Clinic, the funding recipient may charge the Operator a commercial rental amount that is proportionate to the amount of the funding recipient’s contribution to the GP Super Clinic;


• external borrowings obtained by a funding recipient are not considered to be a financial contribution by the funding recipient so even though there are external borrowings, the funding recipient can still charge only a nominal rental;


• a nominal rental payable by an Operator should include provision for future capital expenditure that:


• may be required so that the funding recipient can maintain or upgrade the building or premises, or plant and equipment or other GP Super Clinic facilities; and


• would not otherwise qualify as outgoings or other recurrent expenditure that a tenant would fund themselves.


• Three year cash flow projections demonstrating how, according to its business model, the Operator can meet its rental obligations without putting at risk the maximisation the delivery of team-based multidisciplinary primary health care services that are focused on preventing and managing chronic disease.

Should the Department approve the proposed Operator lease in principle, both the Operator, as lessee, and the funding recipient as lessor, must agree to sign a Deed of Consent with the Commonwealth that recognises the Commonwealth's rights under the GP Super Clinic funding agreement and ensures that the Operator/lessee complies with obligations under the funding agreement that ensure the effective operation of the GP Super Clinic in accordance with the Program. Top of page