Last year councillors asked staff to investigate a local member's bill in Parliament to ensure the PIF's capital base only be used in a significant emergency, and only if 75 per cent of councillors agree.
The bill would also restrict the benefits of the PIF to the area of New Plymouth District, protecting it in case of local body amalgamations.
Council officers have now recommended a new law is possible and would add more "incentives and statutory considerations" to prevent unsustainable withdrawals from the fund.
They advised a bill should be drafted, and the issue go out for community consultation.
Taranaki iwi representative Jacqui King said it didn't feel right to put a single option up for consultation, which would block discussion about alternatives.
"There are other methods out there that allow for the power of the PIF to be utilised to ensure socio-economic disparity is not continued … to utilise the strength of our investment to ensure that the socio-economic gap does not broaden further, especially during crisis times.
"As iwi and Māori we are used to intergenerational investment, protecting the pūtea but also meeting immediate needs. I don't see any opportunity to do that under what is proposed."
Councillor Dinnie Moeahu also stressed that iwi had experience of perpetual investment.
Moeahu said he had been asking for two and a half years for discussion about alternative uses of the PIF but had "met wall after wall".
He also worried that any "significant emergency" that might justify a raid on the capital base was undefined.
"The intent of this bill is good but the reality is we don't know what an emergency is – there's so much uncertainty."
Council officers had advised that opportunities to break into the fund for emergencies would be "significantly more limited than at present and would only apply to the most serious natural disaster (for example eruption of Maunga Taranaki) or major financial market disruption".
Deputy mayor Richard Jordan, who does not have a vote on the committee, said the PIF was sufficiently protected when councillors tightened the operating rules six years ago, copying the protections of the century-old Stanford University fund.
"I believe we already have protections that are more than adequate.
"To put a bill before Parliament we are trying to build a concrete bunker where no concrete bunker is required."
Mayor Neil Holdom strongly supported the bill and said there was no need for the fund to be available except for emergencies.
He said rates, user pays, borrowing and government grants were enough to meet any other needs.
Holdom said if Three Waters reforms went through New Plymouth would have an even stronger balance sheet.
"At that time our PIF will be close to $400 million and we'll have total debt less than $80 million. We'll have the strongest balance sheet of any council in New Zealand and the capacity and ability to do anything we need.
"We have the ability to make changes now to pay it forward for future generations. In my view we have enough levers to make sure that fund … is going to be there in 100 years providing value long after we are all gone."
The vote to recommend officers go ahead with the member's bill was lost 7-3.
A further motion for no further work on a bill, and to keep things as they are, was drawn 5-all but passed with the casting vote of committee co-chairman Gordon Brown.
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Brown said the purpose of the committee was to advance the perspectives of the iwi represented on the committee, and they were clearly opposed to a bill.
The issue now goes to the full council to consider.
