The return to health of the Dunedin City Council's
multimillion-dollar Waipori Fund should not encourage
councillors to consider selling it, the fund's head has
The message from Dunedin City Treasury Ltd chairman Ross
Liddell came as he presented an update on the fund to
yesterday's finance, strategy and development committee
His report showed the fund's value was $76.3 million at June
30 this year, up from $69.7 million at the same point last
year, and up from $56 million since the fund's creation in
The latest annual result still represented a $4.3 million
fall in the real value of the fund in the past year, after
inflation adjustments and distributions to the council were
However, that was actually a $4 million improvement on the
expected position at the start of the year, councillors were
Then, the drop in the fund's value stood at $8.3 million
because previous distributions to the council had gone beyond
what the fund earned, a council staff report said.
Mr Liddell said the result could have been even better if not
for $2 million in distributions to the council and a bad
month for the fund's investments, which cost it $1.1 million
Despite that, he remained upbeat: ''The Waipori Fund has had
a very good year.''
However, the result, coupled with predictions of more stable
international markets ahead, prompted Cr Lee Vandervis to
question whether the time was right to consider cashing in
The money could then be used to pay down council debt, he
Mr Liddell cautioned against that, pointing to the fund's
contribution to council coffers.
Since its creation in 1999, after the forced sale of the
Waipori electricity scheme, the fund's investments had earned
$61.1 million, of which $40.7 million had been distributed to
the council, the staff report said.
''I would be holding on to it,'' Mr Liddell said.
''It's easy to pay off a bit of debt and then you turn around
and buy something else, and then you have got debt again.''
The comments came after some councillors previously raised
concerns the council was in breach of the fund's policy by
taking more from the fund than it made, thereby lowering its
The fund's directors had also expressed concern at the
declining real value of the fund.
The concerns had prompted suggestions the fund should be
cashed in or used as a bank to pay for council borrowing,
although the ideas have so far come to nothing.
Yesterday, Cr Teresa Stevenson wanted to know whether the
fund's portfolio of shares could be shifted more towards
investments in Dunedin.
The fund's national and international portfolio included
about 12.5% invested in New Zealand, which Mr Liddell said
was ''quite big'' given the ''tiny'' New Zealand economy.
However, the fund was conservative and there were few
opportunities to invest in Dunedin, he believed.
''There's lots of Dunedin businesses, but not too many of
them are listed,'' he said.
Despite that, council services and development general
manager Dr Sue Bidrose, responding to a question from Cr
Jinty MacTavish, said a staff report on ethical investment
opportunities was close to completion.
It would be completed within ''two or three weeks'' and be
presented to the incoming council after local body elections,