Insider Trading !

It is very clear what will happen when someone working for a company making expansionist moves gives that information to a third person - who buys shares on the stock exchange and makes a packet when the news breaks and those shares rocket upwards in price.   That's called "Insider Trading " and it comes with a significant prison term.

The present boom in house prices has shone the spotlight on the incestuous relationship between property developers and their place on the decision making panels that set the rules that apply in local government areas.    It seems that the very people who will benefit from rule changes are the people elected to sit as councillors - and make those decisions.

A small change in the rules that apply to new buildings can deliver literally millions of dollars extra profit if it increases allowed building heights or makes a change to floor space ratios, or changes the LEP plan.   This "Local Environment Plan " is the safeguard home owners have that a huge factory will not materialise next door, or lot sizes will not be downgraded to create a virtual favella.

As things stand, a developer sitting on a council is only required to make it known that his or her interest in a development exists when matters relating to it come up for discussion - and decision. The normal safeguards that apply in the stock market are missing when it comes to local government administration.

There are moves to force the amalgamation of the 152 councils that administer New South Wales and the preferred option is for these to become just fourteen super councils.   These amalgamations would introduce economy of scale and seriously reduce the number of actual councillors - and that raises the question of whether people with business interests that are subject to council votes should be distanced from standing for office.

It will also raise the subject of renumeration for holding office.  At present the top earning council bureaucrat takes home $ 475,000 annually - and that is $ 116,000 more than the state Premier. If that fourteen council plan succeeds each instrumentality will be similar in size to our biggest corporations and would need to attract people of talent accordingly.   To do that, we would need to provide a pay scale commensurate to the skills level of the international market.

Over a century ago, holding office as a Mayor or councillor was deemed to be a "civic duty " and attracted no salary.  Often the elected person was a local business owner, usually able to afford the time attending to council affairs and was often rewarded with a civic honour after a long term of service.  Today, running a council requires a level of professional skill that competes with the business world to attract the highly qualified - and the financial reward needs to match that level of attraction.

Unfortunately, most of the public still see local government as an extension of politics.  Many contenders run for office as the proxy of a political party and often the political content of council changes along with the political cycle of government.   It is unlikely that bigger local government will break this nexus.

The opportunity exists with change in the air to install the protocols that apply to the world of business.  That "Insider Trading " provision should automatically exclude from discussion or the vote to any person who has a financial matter before council.   In particular, developers should be barred from holding office under the "conflict of interest " provisions that apply to local government.