Council should get ethical with its $25m investments

p2046-Jade-Kudrenko-smKIERAN FINNANE reports. 

 

The Town Council should take a look at divesting from the Big Four banks for environmental and ethical reasons, says Councillor Jade Kundrenko (at left). They should do no such thing, counters Cr Eli Melky, as only the Big Four are underpinned by the Federal Government in times of crisis.

 

Cr Kudrenko raised the issue at last night’s council committee meeting. She noted council’s short-term investment of $25 million, split between NAB and Westpac, both Triple A rated. Council’s policy requires a minimum of 15% to be invested with major banks, while allowing a maximum of 45% to go to regional banks, and a maximum 45% to credit unions or similar.

 

At present 100% of invetsments are with the two majors.

 

Cr Kudrenko’s concern is that the Big Four “are contributing huge lending to the fossil fuels industry”, while council’s business plan and strategic goals are clear: “We embrace sustainable and alternative energy sources.”

 

Cr Kudrenko says other councils and major organisations in Australia have divested or are considering doing so.

 

The City of Fremantle was the first Australian local government to divest. Its investment policy “gives clear directions not to place council funds into banks or financial institutions that support fossil fuel industries, unless there is no alternative”. This move followed a “groundswell of institutions across the globe start to divest from carbon”.

 

Finance director Paul Della says the current process is that when council’s investments are due for reinvestment, the opportunity is put out to tender. The institution offering the best interest rate that fits into council policy gets the money. He is not aware of any criteria around council’s environmental and ethical responsibilities in terms of investment and suggested it would be an issue for councillors to look at in a forum (not open to the public).

 

Cr Kudrenko recognises that making money from council’s investments is “very important to our community’s future” but asked Mr Della to bring to council more information on alternatives to the big banks, “specifically looking at investment opportunities than can guarantee more environmentally sustainable projects”.

p2122-Eli-Melky

 

Cr Melky (at right) signalled that he would “never support anyone other than the Big Four”.

 

“In the Global Financial Crisis the Big Four were underpinned by government. If you invest the town’s money into anything different and something happens like a global crisis we are doomed. I don’t know that the town would very impressed with us if we risked their money [albeit] for a good environmental strategy,” he said.

 

 

 

Be Sociable, Share!

14 Comments (starting with the most recent)

NB: If you want to reply to a previous comment, start your comment with this notation: @n where n is the number of the comment you want to reply to.
  1. Fred
    Posted March 5, 2015 at 8:44 pm

    If council has $25m in the bank there is no need to increase council rates. I am surprised that there are not more Federal cut backs. The government will ask what you are doing with $25m – spend some of this first!

    View Comment
  2. Davo of Alice
    Posted March 1, 2015 at 3:59 pm

    Jade, it’s just come to light that the Alice Springs Town Council is getting reduced financial assistance grants and CEO, Rex Mooney, has stated they may have to increase rates to cover the $60,000 shortfall.
    Give us a break and use the interest earnings from OUR $25m investment to make up for any increases, not keep slugging the weary rate payers.
    Anyone else out there agree?

    View Comment
  3. Support Local
    Posted February 21, 2015 at 1:02 pm

    Refinancing the ASTC building “mortgage” is a reasonable idea and completely in step with Councillor Kudrenko’s basic proposition that ASTC reviews where its investments are held and how to achieve best value and effect from the management its finances and cashflows.
    So let us not diminish the intention of Cr Kudrenko’s basic idea with the simple finger waving and general contempt for Council’s past decision making!
    I doubt also that Cr Kudrenko or anyone is seriously suggesting ASTC put “all its investments” into one place!
    What is important here is that Cr Kudrenko has actually started a conversation which is more than can be said for others, who it seems would prefer to just “keep things as they are”. Thank you Cr Kudrenko for your open-mindedness and common sense!
    To those who think that the Big 4 have a higher level of trust-worthiness / security than other banks, really it is just simply naive. Since the deregulation of the finance and banking industry in the 80s, things are very different to what you may have been assured as children.
    Keep believing the Big 4’s fairy tales if you like, but good luck with your superannuation holdings in your retirement if you’re trusting one of their investment products.
    Might be a good idea to check out today’s news about the NAB’s investment division: http://www.theage.com.au/business/banking-and-finance/whistleblowers-nab-leak-reveals-persistent-bad-behaviour-in-financial-planning-fuels-royal-commission-calls-20150220-13hv1f.html

    View Comment
  4. Bev
    Posted February 16, 2015 at 6:49 pm

    It’s always wise have have your eyes wide open when it comes to finance. Things that seem OK today may suddenly be bad news tomorrow. Trouble is that a depression happens when people become too confident. I wonder how many of those who lost thousands with their super fund because they took to great a risk are happy with their retirement savings today?
    If the investments are not covered then if the worst does happen then all will lose out. The Adelaide Bank was shaky for a while so I got out of it. If Adelaide Bank is backing the Bendigo Bank then the conditions surrounding the Adelaide Bank will affect the Bendigo Bank. Trouble is, with the younger generations they have yet to experience a loss like that.
    Putting everything into local banks is not a good idea. I have also seen the community here in Alice Springs do a lot of wasting of money with works that are not actually needed, or may have been able to wait a while. I suspect this has a lot to do with the people who want Alice Springs to double or triple in size in a few short years.

    View Comment
  5. Posted February 15, 2015 at 10:49 am

    How lucky we are to have a Councillor like Jade Kundrenko, somebody who can push for change rather than business as usual which is getting Alice Springs absolutely nowhere.
    There is so much talent and creativity in Alice Springs, so many people who are up to speed on national and even international events and thinking, and yet the council drags the chain on just about every issue of importance.
    As a business owner and ratepayer in this town for more than 15 years I’d be very happy to see investment shifted away from the big four banks and into other more ethical opportunities.
    A progressive image would be good for our town, get on board Councillors – more power to you Jade.

    View Comment
  6. Fred
    Posted February 15, 2015 at 10:13 am

    Well said, Davo, you would have to say council chambers is extravagant. The town planning is poor, the council does not even have recycling in place.

    View Comment
  7. Tony Memen
    Posted February 13, 2015 at 9:44 am

    Bridget – how about declaring that you are a director of the bank?

    View Comment
  8. Davo of Alice
    Posted February 12, 2015 at 1:49 pm

    Hey Jade,
    You may not be aware, but the Council are still paying off the mortgage on your fancy “Taj Mahal” (or Council HQ).
    How about skimming off some of the profit earned from investments (of RATEPAYERS’ MONEY) and refinance the deal.
    It might even stop them from ripping off ratepayers for more $$ each year as we can’t save because we have to pay all our bills with our OWN money.

    View Comment
  9. Hermann Weber
    Posted February 11, 2015 at 2:30 pm

    I just have to smile. The Fairies in the Alice Springs Town Council? Wow.

    View Comment
  10. Posted February 11, 2015 at 1:51 pm

    A worthwhile topic for Alice Springs Towns Council / community discussion.
    Perhaps a Councillor could advise exactly what is at stake here; i.e. the breakdown / percentage allocation between different asset classes, so that some informed comment can be made?
    Obviously it would need to be determined first: what is the appropriate risk level for cash holdings vs other investment / equity funds etc?
    In any case, there is no good reason why Council should not periodically review the make up of its investments at regular and timely intervals.
    One might even argue that it is an important duty of its elected representatives?
    @ Eli Melky: The example you have provided obviously refers to an Investment Fund / Product. Sad as the Great Southern debacle was / is, the Big 4 are not immune or above similar or even more abysmal and shonky customer treatment in their investment divisions.
    For example, consider the recently exposed behaviour of the Commonwealth Bank. (see http://www.abc.net.au/4corners/stories/2014/05/05/3995954.htm)
    In other parts of Australia it is very interesting to visit communities and notice how much of a positive impact community-minded financial institutions or insurers etc have via the giving-back to their local regions.
    As such, why is it not a good idea for Council to consider various other [non-big four] options on the table, such as local “community” banks?
    If after this review process Council deems that the benefit / risk ratio of holding some of its cash in a “Community Bank” (for example) are too great, the whole community can learn something from the rationale.

    View Comment
  11. Eli Melky
    Posted February 11, 2015 at 6:48 am

    @ 1Jason Reid: Here is another link that people may be interested in before they think about investing the towns money.
    http://www.abc.net.au/news/2014-12-11/supreme-court-accepts-settlement-for-great-southern-investors/5961348
    Congratulations on the Bendigo’s court case win against 40,000 Australian families recently, who will now suffer financial hardship as a result if losing their hard earned savings.
    Bendigo Bank is owned by Adelaide Bank which has lending policies not too different to any of the major banks. By adding the term community ahead of bank does not change the fact that you are still a bank with real lending terms and condition.
    Thanks for the link Jason but I will not change my position and will make sure the whole community is made aware of any risk to the community’s money by any albeit would be good intentioned Councillors.
    Eli Melky
    Councillor Alice Springs

    View Comment
  12. Another Observer
    Posted February 10, 2015 at 9:33 pm

    Well done Jade Kudrenko – how about concentrating on rates, roads and rubbish rather than pushing a completely bankrupt ideology? Until there is an alternative to coal, how about you leave tax payers money where there is some return rather than throwing money away?

    View Comment
  13. Jason Reid
    Posted February 10, 2015 at 4:58 pm

    Understanding of the Government Guarantee Scheme on Deposits can be gained at:-
    http://www.guaranteescheme.gov.au/qa/deposits.html
    Note that a $250k cap has existed since 1st Feb 2012.
    Anyone, bestowed with the responsibility of investing rate payer surpluses, should, at the very least, be across the above guarantee scheme.

    View Comment
  14. Bridget May
    Posted February 10, 2015 at 11:11 am

    It would be great to have money invested with the Community Bank. Their rates should be around the same, but if not, the profit that the community bank would make from the deposits, can be given back to community.
    The council could work with the Community Bank to target where they might want the profit to go, what projects could be helped and build a partnership for the whole town to benefit from.
    It is not all about the rate, it should be about the community.
    The ASTC would be able to give more back to the community, rather than worrying about getting the best rate. I believe that if discussed with the ASP Community Bank, then they could give more money back to community then they would make in interest. But that would have to be discussed with the bank staff, I am just a massive believer in the Community Bank and what it does for the local community.

    View Comment

Post a Comment

Your email is never shared. Required fields are marked *

*
*