OBERON Council has been forced to wrestle with the question of whether the security of the big banks is more valuable than the community ethos of the smaller operators as it decides where to keep its money.
And central to the debate has been councillor Andrew McKibbin, who has urged caution because "we do not know what businesses are going to fail" during the COVID-19 economic fallout.
Council, at its June meeting, carried a recommendation on its Investment Policy.
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The policy was amended to state that investments in authorised deposit-taking institutions (ADI) which are unrated should be limited to $250,000 per institution.
The Federal Government guarantees deposits up to $250,000 in authorised institutions.
The policy was also amended to note that other than the unrated institutions, the maximum amount is per investment, not per institution.
During the public exhibition period for the policy, the independent members of the Central Tablelands Alliance Audit, Risk and Improvement Committee were asked for their opinions on the amendments to the Investment Policy adopted by council on April 21, 2020.
Cr McKibbin said he had, after the April meeting, completed a report on investment institutions and submitted it to council's director of corporate services for comment, but said he hadn't had a response.
"Major banks have been through a major stress test during the GFC [global financial crisis]," he said.
"We do not know the outflow of COVID. Australia is better than most, but we do not know what businesses are going to fail.
"We will not know until September or December. We have $17 million - what analysis has been done?"
In corporate services director Lynette Safranek's report, it said it was worth adding a clause to put in exemptions for a major bank downgrade, as credit rating agency S&P has downgraded Australia's outlook from stable to negative and Fitch Ratings has already downgraded the major Australian banks from AA- to A+.
Ms Safranek indicated in her report that moving council's money from smaller to larger institutions was not a financial decision alone, saying it would limit "council's ability to support community or social obligations" and "while we may receive a higher interest rate with the large institutions, the [Federal Government] guarantee is still only $250,000".