Government Investment Code Exposes Ratepayers 
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Tuesday 21 August 2007 Local councils are risking ratepayer funds across NSW due to inadequate guidance in the Local Government Act which fails to outline a requirement to diversify investments, said Shadow Minister for Finance Mike Baird. “The Ministerial Investment Order makes no restrictions in terms of the concentration of investments whatsoever. Any fund manager will tell you that diversifying is a key to mitigating risk,” said Mr Baird. “Today we’ve heard that Manly Council has half its $10 million-plus portfolio in what now appears to be one highly volatile investment. Councils at Coffs Harbour, Tenterfield, Burwood, Gosford, Woollahra and Wingecarribee are reported to be in a similar position. “It is surprising that the latest Ministerial Order does not provide boundaries for councils so they can avoid concentrating their investments and exposing ratepayers’ funds to this higher risk,” said Mr Baird. “Councils are currently required to review their investment strategy at least annually, however the question is, are councillors best placed to review these intricate investment decisions? Or indeed are these reviews taking place? “Is it fair to ask local council staff or councillors to assess credit ratings, maturity profiles and asset classes?” Mr Baird suggested the Iemma Government consider appointing an expert to centrally manage investments on behalf of all councils. “Councils are currently responsible for managing billions of dollars and there remain questions around the level of expertise of the staff and councillors who are making these decisions. “It would be a logical step for the Iemma Government to ensure that ratepayer funds were being overseen by experts,” said Mr Baird. “Accordingly we ask the Iemma Government to urgently address the Ministerial Investment Order and then consider a model that lets experts manage the investment risk.” Add to:          Write Comment
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