Councillor Patrick McGinlay says the difference between two loans is not worth sacrificing Eurobodalla Shire Council’s autonomy – but that cost remains commercial-in-confidence.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Cr McGinlay raised questions on notice about proposed loans to the council from the NSW Treasury Corporation (TCorp).
A motion to act on climate change by divesting investments linked to fossil fuels, where the interest rate and risk was similar to other institutions, was approved in December 2017. The council set a goal of 66 per cent investment in financial institutions with no relationship to fossil fuels. However, after the credit ratings of many institutions were downgraded in May, TCorp insisted the council re-evaluate. It indicated it would not lend to council otherwise. An amendment to reduce divestment to 50 per cent of the portfolio was tabled on May 22.
Cr McGinlay sought more information: “I asked about the differential between TCorp’s and banks’. Is the difference significant enough for us to give up our autonomy? That’s the price we pay. I think (it) is not sufficient to accept a loan that has such conditions.”
The council’s commercial and corporate director, Anthony O’Reilly, said TCorp had the lowest rates, and the council was always beholden to the state government.
“These loans are tendered out and TCorp was the most financially advantageous,” he said. “I made councillors aware of the difference in confidential (session). (The council is) beholden to any ministerial order from the state government at any time, although we can always have discussion.”
Cr Lindsay Brown said the conditions were understandable, as the council offered no security: “When going to TCorp, they don’t have any security from us, and the only leverage they have is the council’s investment policy. The state government can do anything they like.”
Mr O’Reilly said it was the first time in his experience such conditions were attached to a loan, but other councils had been given the same conditions.