Local Government investing: a form of gambling?

Jones, Greg and Bowrey, Graham (2010) Local Government investing: a form of gambling? Australiasian Journal of Regional Studies, 16 (1). pp. 37-50. ISSN 1324-0935

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Abstract

Local councils in New South Wales (NSW) have the authority to invest ratepayers’ money that is not currently required for any other purpose by the council. At the end of 2006-07 financial year local councils in New South Wales had invested $590 million dollars in structured financial products such as collateralised debt obligations (CDO). By the end of January 2008, six months later, the market value of these investments dropped $200 million to $390 million. Since then the financial investment market has further significantly reduced with the value of the councils’ investments losing many more millions of dollars. In NSW the state government commissioned a review of the financial exposures of NSW local councils to be undertaken by Michael Cole. The Cole Report published in 2008 found that while acting within the parameters of the Local Government Act (1993), local councils had pursued high return high risk investment strategies. This paper reviews and evaluates how the local councils in NSW, identified by Cole as having a high level of exposure to these forms of investments, have disclosed their financial investments in their 2007-08 financial reports; the type of audit opinion expressed on these reports; and the impact of these investment related losses on the ability of NSW local councils to provide current and future services.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Access to published version in accordance with the publication policy of the publisher.
Faculty / Department / School: Historic - Faculty of Business - School of Accounting, Economics and Finance
Date Deposited: 27 Feb 2018 00:58
Last Modified: 27 Feb 2018 00:58
Uncontrolled Keywords: Local councils, collateralised debt obligations (CDOs), Cole report
Fields of Research : 15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150103 Financial Accounting
15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150199 Accounting, Auditing and Accountability not elsewhere classified
15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150303 Corporate Governance and Stakeholder Engagement
Socio-Economic Objective: E Expanding Knowledge > 97 Expanding Knowledge > 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
URI: http://eprints.usq.edu.au/id/eprint/28622

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