Byron Shire Council has ‘totally refuted’ an article in The Sydney Morning Herald headed ‘Ratepayers hit as $400m wiped’ out regarding local government investments which names Byron Shire Council as losing $6.9m.
“It is disappointing that these comments have been made, as they are misleading and do not tell the full story of each council’s individual circumstances,” said Acting General Manager Phil Warner.
“Byron Shire Council is not exposed to the sub-prime market and while many investments have a current market value less than the purchase price, these investments are long-term and are expected to mature at face value, with no impact on ratepayers.
“Council is unable to ascertain how the $6.9 million figure was calculated and staff are following up as to the calculation.
“In March Council reported its investment portfolio balances for the end of February, highlighting a current market value of $52.2 million as against the principal invested of $56.2 million. The $4 million difference consisted of $2.6 exposure to the equity markets and $1.4 exposure to the credit markets.”
Mr Warner said the council’s exposure to the equity markets is capital protected, which means that if held to maturity, as proposed, the full amount of the principal invested will be returned to the council.
“The exposure to the credit markets does not include sub-prime and will return to full value as it approaches maturity date,” he said.
“While these products are not capital protected, the investments held at Byron Shire Council are expected to reach full value at maturity.
“In the meantime,council will continue to receive interest payments on its investments.
“The maturity dates for council investments range from 2008 to 2014. Council is not exposed to longer maturity dates such as 2047 referred to in the article.
“Ratepayers can be assured that there will be no rate increases or reduced ability to provide infrastructure as referred to by (Treasurer) Mr Costa”.