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Policy changes could be in store for the $67.6 million Waipori fund, which provides an annual cash return to the Dunedin City Council.
A mood for change was evident among some councillors during an extended debate on the matter on Thursday, but not enough to stop taking dividends, an action it was estimated would cost the city more than $3 million a year.
That outcome was pushed by Cr Lee Vandervis, who, asked how he would make up the money, said one way would be to get rid of staff.
The fund was established in 1999 using proceeds from the sale of the Waipori electricity generation scheme, and has been a valuable contributor to the Dunedin City Council's coffers since.
Its principal, which was $56.7 million when the fund was set up, stood at $69.8 million last June, but has dropped to $67.6 million.
The fund's quarterly report to the finance, strategy and development committee said many governments in high-income countries were "broke" after bailing out the private sector, and fiscal austerity was under way.
Investing in markets was risky, although the underlying conditions for doing so might be improving, the report said.
The fund had a surplus of $1.1 million, but a loss in value of $1.2 million, the report said.
Cr Vandervis argued the council's policy on the fund stated it could not lower the fund's value.
Committee chairman Syd Brown told Cr Vandervis the council had discussed the fund at annual plan meetings in January, while Cr Vandervis was away on holiday.
Cr Brown was referring to annual plan hearings at which the council discussed borrowing from the fund, instead of using commercial lending institutions.
Cr Vandervis moved the council should stop taking dividends from the fund.
He said he disagreed with the council's approach, which was to predict how the fund would do in the following year and decide how much to take based on that forecast.
Instead, it should wait and see how much it made, and then use any surplus, he said.
Finance and corporate support general manager Athol Stephens said that would mean a shortfall for the council budget of $3 million, and that shortfall would have to be funded by debt.
Cr Richard Thomson said he "instinctively" wanted to disagree with Cr Vandervis, but he agreed the policy was not good and needed to be changed. However, stopping taking the dividend was going too far, Cr Thomson said.
Earlier, he said the policy that the fund could not lose value was "dumb", as markets moved from day to day.
That policy needed to be reconsidered, he said.
Cr Jinty MacTavish agreed, and said she looked forward to a report on the fund ordered for the next committee meeting.
Mayor Dave Cull said Cr Vandervis was right to identify a problem, but not taking further distributions from the fund would mean more debt, which Cr Vandervis often said he opposed.
Mr Cull said he wanted more information so the future of the fund could be dealt with in a "more thoughtful way".
Cr Vandervis, who campaigned on a proposal to cut hundreds of staff at the council, was the only councillor to vote for the motion.