Bennett Glen; Salesa JennyNEW PLYMOUTH DISTRICT COUNCIL (PERPETUAL INVESTMENT FUND) BILLFirst ReadingGLEN BENNETT (Labour—New Plymouth): Kia ora Madam Speaker. I move That the New Plymouth District Council (Perpetual Investment Fund) Bill be now read a first time. I nominate the Governance and Administration Committee to consider this bill.The New Plymouth District Council (Perpetual Investment Fund) Bill protects one of New Plymouth District's key financial assets: the Perpetual Investment Fund—or as we locally call it PIF which I will refer to it as from now on. The protections in the bill ensure the perpetual nature of this fund continues for benefit of the New Plymouth district community into the future. This is about generational investment.I want to acknowledge the New Plymouth District Council particularly Mayor Neil Holdom and his team who have brought this bill to Parliament today. I also want to acknowledge the people of the New Plymouth district and thank those who have already engaged on this so that we can be here today in this first reading.Now the background of this bill shows why the council is asking that this Parliament puts in place a more sustainable legal arrangement for our PIF. The PIF was formed back in 2004—I remember it well—when the council sold off its share in Powerco. The initial value that we received was $259 million. The PIF was formed as a more diversified investment with an active investment approach taken.Now the global financial crisis of 2007-2008 hit the PIF hard as it did many other large investment funds around the world. The value of the PIF decreased. However the council of the day was concerned about maintaining the release and it took from the PIF to subsidise rates to avoid a large shock to ratepayers. What this meant though was that the PIF continued to drop in its value. It was not until 2011 that the council began a programme to reduce the release to a more sustainable level without causing too great of a shock to ratepayers of New Plymouth.Now the council finished its programme in 2015 and in the following year put in place a new governance model to a more sustainable management of the PIF. This included establishing the New Plymouth PIF Guardians Limited—get my tongue around that one—to set the investment principles around its annual release rather than the council doing this. This insulates the PIF from direct political pressure which is good. The council and the PIF Guardians also have a governance deed that clearly outlines their role. This governance deed is embedded through requiring a 75 percent majority vote by councillors in order to amend terminate or waiver it. This sets a high political threshold and requires a degree of political consensus.As history shows New Plymouth District Council has had some hard lessons on how to ensure that PIF is used in a sustainable manner. The council has already put in place a range of measures for this particularly with the PIF Guardian mode and model which follows best practice. The PIF Guardians provide well-diversified investment strategy. The release to the council each year is set at a sustainable level and has been growing slowly. This financial year the release was $10.4 million and will reduce the average residential rates by $163. However the balance as of 30 June 2020 was $339 million—about $50 million below the inflation-adjusted opening balance.While the council has done what it can to protect the PIF the council could only go so far on its own. The council has asked this Parliament to put in place a more enduring legal arrangement that will ensure the mahi will not be undone by a short-sighted future council. To do this the bill will ensure that the council always considers the long-term nature of the PIF whenever it makes decisions. It ensures that the council is always seeking to maintain or increase the real value of the PIF's capital. While there is an exception provided for this it is deliberately set high so that it only applies in things such as natural disasters or other crises when sufficient funding may be required to rebuild the district.Now the bill also has the exemption which works alongside existing protections that the council has put in place. It does not replace the 75 percent majority requirement in council's standing orders to amend the PIF governance deed. Instead it sets out a legal test that must meet before council can begin the process.The bill also sets out some requirements for investment decisions that help to future embed the PIF as a long-term investment for the community. Investments need to be made independently from the elected council just as things we have in this House—such as the Superannuation Fund and ACC investments which are made separately independently—so this will happen for our PIF in New Plymouth. Investment decisions will need to be made on a prudent commercial basis that maximises return without undue risks.The council is also seeking a small exemption from the standard Local Government Act 2002 obligations so that the PIF can be invested into any listed airport or port within New Zealand without having to go through long-term plan processes. Now this isn't around seeking a loophole for the council to purchase assets to gain control because as I said moments ago the bill requires decisions to be made independently of the elected council.Now the future aspect of this bill and looking further at this bill is that it sets in stone that the PIF is only to be used for the benefit of the New Plymouth district community as it exists today. This means that the beneficiary that benefits from the community of the PIF remains and begins as being the same community that is which contributed to its establishment all those years ago.Now this has been done before. An example of that is not far from home for me in South Taranaki. They took a very similar approach back in 1999 where they created the South Taranaki District Council had their long-term investment fund through their 1999 local Act and therefore provides balance to the two big local government investment funds in Taranaki.Ultimately this bill is about assisting New Plymouth District Council to help protect its Perpetual Investment Fund from short-term thinking which is important and therefore ensuring that this fund continues to benefit the district's community well into the future. This is a long-term plan. The bill permanently etches into the council's legal obligations many of the principles that sit behind its current arrangements. This allows the council to change the arrangements if this Parliament changes the Local Government Act to allow new organisations to be formed and other options while ensuring that any changes still meet the fundamental objectives of a long-term fund that looks beyond the current political issues. This is a long-term investment.This bill is the last piece of the jigsaw puzzle to ensure that the Perpetual Investment Fund can achieve its name for the New Plymouth district community. This is a Perpetual Investment Fund. This is looking long-term. This is ensuring that ratepayers and members within the New Plymouth district have certainty and security into the future. On that I commend this bill to the House.ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to.