Pooling Piggybanks : The Case for Combining Ontario's Municipal Reserves
Public-sector investment funds (especially pension funds) have been increasingly pooled and managed by investment management firms in Ontario. Pooled asset management generates a net benefit to public-sector spending patterns by realizing benefits from economies of scale, including reducing costs associated with the duplication of fund management while also enhancing risk management. However, a focus on pooling public-sector pensions has meant that the possibility of consolidating other public-sector assets, like municipal cash reserves, has received less attention.Ontario’s local governments are accumulating significant liquidity reserves. Municipal reserves come in various forms, each symbolizing a distinct savings category. This report’s calculations show that in 2020, Ontario municipalities, counties, districts and cities held $39.7 billion in reserve funds. In the Greater Toronto Area (GTA), excess municipal reserves coincide with population and housing growth rates, while some non-GTA areas have also accrued substantial holdings. Occasionally, these savings are held in cash and equivalents. This study finds that local governments collectively held $20.1 billion in cash and temporary investments in 2020.The growth of municipal reserves and cash balances raises questions about how best to manage and utilize these funds. The point is not that municipalities are mismanaging their reserves and cash holdings. Instead, this report suggests that Ontario’s local governments could collectively benefit from pooling these reserves and cash holdings. One just needs to look at recent municipal investments as proof. In 2020, municipalities earned a return of just greater than 2 percent on their reserves through interest and investment income.Clearly, cities could be getting better investment returns. One potential solution is improving the coordination between local governments and Ontario’s public-asset management institutions such as ONE Investment and the Investment Management Corporation of Ontario (IMCO). Both are knowledgeable about municipal needs, consolidating public funds and dispersing investment returns.To implement better pooling and higher-return investments for municipal government, the Ontario government should consider legislative changes to the Municipal Act and Development Charges Act to remove limits on investment durations and improve clarity on investment pooling. With careful planning and collaboration among municipal governments, the province and other agencies, the consolidating of public funds in Ontario can benefit local governments, public agencies and the communities they serve
Year of publication: |
[2023]
|
---|---|
Authors: | Kaufman, Andrew |
Publisher: |
[S.l.] : SSRN |
Subject: | Kanada | Canada | Währungsreserven | Foreign exchange reserves |
Saved in:
freely available
Extent: | 1 Online-Ressource (22 p) |
---|---|
Series: | |
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 5, 2023 erstellt |
Other identifiers: | 10.2139/ssrn.4410900 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014345065
Saved in favorites
Similar items by subject