The question of whether NSW councils should be able to invest their cash reserves ethically has drawn an evasive response from the new local government minister, Paul Toole (Nationals).
It comes as Byron Shire Council’s finance manager recently told Echonetdaily that current state government policy prohibits ethical investments.
Council’s James Brickley said ‘While Council would like to consider ethical investing as per the standing resolution, it is not able to due to state government direction; plus Council has no power to direct financial institutions where it places its funds for investment.’
‘[This is] due to the current Ministerial Investment Order (MIO) prohibiting councils from investing in such products, and as a result there are no financial institutions offering ethical investments to councils.’
MIOs were revised in response to the issues related to Collateralised Debt Obligations (CDOs), according to minister Toole’s office.
Echonetdaily understands that the revision occurred after the 2008 Global Financial Crisis (GFC) and some councils were affected by sub-prime mortgage investments linked to the US financial system.
But the minister’s office declined to answer whether it was a concern that the state’s 152 councils are prohibited from investing ethically.
According to Byron Council’s schedule of investments, most of its cash reserves in Australian-owned banks and building societies.
Mr Brickley said Byron Council ‘is receiving monthly valuations on these investments and two of these will mature before Christmas 2014.
‘Council is confident that it will recover all of the funds invested given the three investments all have a capital protection mechanism that will ensure full repayment at maturity date,’ he said.