Global economic downturn may see NSW North Coast councils return to roads, rats and rubbish

In The Northern Star yesterday North Coast local government exposure to the failing US subprime market was discussed.
Byron Bay Council takes issue with NSW Treasurer Michael Costa's assessment of the situation, but Lismore Council admits to difficulties.

It was revealed yesterday that NSW councils faced service cutbacks and even higher rates after losing up to $400 million in the sub-prime mortgage crisis.
Byron Shire was listed among the top 10 worst-affected councils, with a reported loss of $6.9 million - or 11 per cent of its total investments. But the council yesterday hit back, saying the claims were deceptive.--
Lismore City councillor and finance journalist David Tomlinson said it was clear Lismore City Council, which lost $3.1 million in the credit crunch, did not really understand the sort of product that was being used to invest ratepayers' funds.
"The strategy being recommended by our financial advisers is to hang on and hope for the best," he said.
"There is, however, a real credit risk if things do not improve.
"Lismore has $1.7 million at what is now regarded as relatively high risk, and another million regarded as troubled.
"We could lose the lot."

In the Clarence Valley some ratepayers are also beginning to worry that all is not well in their financial garden and wonder about the level of subprime exposure there.
Clarence Valley Council's investment income was $1.3 million lower than expected in the 12 months to January 2008.
This despite State Government assurances that the forced amalgamation of valley councils into Clarence Valley Council would see economies of scale, annual savings in the vicinity of $1.5 million and an increased ability to take advantage of investment opportunities.
At present the projected budget deficit stands at around $778,840 and the end of this financial year is fast approaching.
Both the mayor and general manager have flagged a review of investment and funding sources.
However, if the books are to balance by 30 June as promised, then expenditure will also have to be carefully examined.

It looks as though North Coast councils are being forced back into the old rates, roads, rats and rubbish mould by the ongoing failure of federal and state governments to address the role of contemporary local government, increasing levels of cost-shifting being forced on this sector and poor investment advice.