The Local Government Minister Paul Lynch’s refusal to debate council investments in Parliament today shows the Iemma Government’s ongoing negligence while councils are struggling with huge losses following the sub-prime crisis, Shadow Minister for Finance Mike Baird said.

“The Iemma Government’s review of local council investments is now three months overdue and meanwhile councils are none the wiser while the market continues to deteriorate," Mr Baird said.

“It is a shame the Local Government Minister gagged discussion on this issue during debate on the Local Government Amendment (Election Date) Bill today, even though financial management will be a key issue in the upcoming council elections," he said.

“The Minister used spurious standing orders to stop me speaking because he wants to cover up the Government’s negligence on the issue.

“More than six months ago, the NSW Liberal/Nationals outlined the holes in the Government’s Ministerial Investment Order that need to be fixed in order to protect ratepayer funds. Importantly we identified the need to appoint a central panel of experts to manage the investment risk on behalf of councils."

The recommendations, outlined by Mr Baird on 28 August 2007, were:

• Introduce a diversification principle that limits investments to no more than 20% of council portfolios
• Ensure the minimum credit rating also applies to banks, building societies and credit unions, and consider increasing the lowest credit rating from A- to AA-
• Limit the tenure of investments to 10 years
• Limit councils to take no more than 10% of any single bond or security issue
• Ensure council investments are approved/monitored by a central panel of experts.

“The Iemma Labor Government’s inadequate guidelines and lack of action since the sub-prime crisis has put millions in NSW ratepayer’s funds at risk," he said.

“Wingecarribee Council recently crystallised a $2.5 million loss and it is estimated the total loss felt by councils nationwide is $200 million.

“Councils have argued all along that they have followed the Ministerial guidelines, yet they have experienced significant losses. The Government needs to acknowledge its responsibilities and act on our call for experts to manage the investment risk so ratepayers don’t suffer," Mr Baird said.

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