The Ruataniwha dam prospects get steadily cloudier … and the decision-making around it ever more opaque.

Challenge to Board of Inquiry decision

Last week two conservation organisations – Fish & Game and Forest & Bird – filed High Court appeals challenging the final Board of Inquiry decisions on the Tukituki water management plan (Plan Change 6) and the proposed CHB dam. The Environmental Defence Society intends to file in support of these two.

These groups argue that in modifying (some would use the term “softening”) its stance from its draft decision, largely in response to HBRC/HBRIC objections, the BOI acted improperly in view of the legislation it is charged with implementing.

At the centre of dispute is whether farmers – and the dam — would indeed be held accountable for meeting nitrogen (DIN) limits in the catchment, and thereby give effect to national water quality objectives. The BOI appeared to say ‘Yes’ in its draft decision, but ‘No’ in its final decision.

As the consent applicants for the Plan Change and dam respectively, HBRC and HBRIC will now need to respond. All other original submitters to the BOI have the same prerogative.

The ensuing judicial process could easily carry into next year.

Given the legal fluidity, not an especially inviting environment for CHB farmers to decide whether the proposed dam’s irrigation water is viable for them, or for external investors to commit funding to the dam scheme.

Investors and Water Purchasers

Speaking of investors … the Central Hawke’s Bay District Council (CHBDC) will NOT be bringing any money to the table. CHBDC voted against making a $5 million investment in the dam, responding to CHB ratepayers’ lack of appetite for the additional council borrowing that would be required.

As reported by Hawke’s Bay Today, Councillor Mark Williams said it all:

“I think I can say this council is unreservedly in favour of the dam going ahead but somewhat divided about the investment. We should not be borrowing money to invest in the dam – if it was such a good investment I would have considered it, but I have been convinced by submitters it’s not a good investment.”

In other words, wishful thinking and rally speeches are in ample supply in CHB; real cash is not.

There’s no sign that the farmer-beneficiaries of the proposed scheme are yet prepared to invest in it … or buy water from it.

We keep waiting on Mayor Peter Butler, owning land in the dam footprint, to table his signed Water User Agreement.

Water User Agreements (WUAs)

As for WUAs, these would supply the absolutely required revenue underpinning for the nearly $300 million financial edifice proposed by HBRIC. A WUA commits the farmer to purchasing dam water each year, whether needed or not, for 35 years. Those payments provide virtually the entire cash flow on which the financial viability of the dam depends.

However, there are none yet signed. And as indicated above, legal uncertainty about the environmental regime to be required will further deter sign-ups.

And just as important, uncertainty exists regarding just how “unconditional” or escape-proof the WUAs are.

Despite repeated requests, Regional Councillors have never been shown the boilerplate WUA by HBRIC.

Nor have we received a legal briefing on the WUA terms and how well those terms protect the HBRC from loss of revenue as years go by, and farmers reassess their water needs and/or their willingness to abide by potentially more demanding Farm Environmental Management Plans. Unbelievably, we recently learned that our legal counsel had never reviewed the WUA … because staff had never requested it. We’re still awaiting that review.

Truly unconditional WUAs – accounting for at least 40 million cubic metres of purchased water – are essential to the scheme, but lack of transparency around these is just the tip of the iceberg.

It gets worse

Councillors Graham, Barker, Beaven and myself have officially requested much additional financial information about the construction and financing of the dam – all ignored to date. Regional Council Chairman Fenton Wilson, our official channel to HBRIC, admonishes us for wanting to get too deep into the weeds.

For our part, we four Councillors believe the ‘devil is in the detail’ and that digging into that detail is critical to fulfilling our fiduciary role. If we were Directors of a corporate entity looking to make a $80 million investment (just counting the upfront HBRC share, more could follow), we’d be criminally derelict for not examining such detail.

The habit of refusing to inform Councillors goes well beyond failing to provide documents and financial analysis.

The most recent example of failed transparency involves HBRIC’s pre-emptive (i.e., first come, first served) consent application to take for itself all additional 15 million cubic metres of water authorized by the Board of Inquiry to be extracted from the Ruataniwha aquifer. In other words, cornering the market … pre-empting all other potential users of additional aquifer water.

This consent application was filed 17 May. Councillors only found out about it in mid-July – not from HBRIC, not from HBRC staff – but only ‘through the grapevine’.

Indeed, throughout this decision-making process, we have learned more — and in a more timely manner — from ‘sources’, than through official channels.

So much for transparency and ‘no surprises’ policies as between HBRC and HBRIC (our holding company after all), as well as between Councillors and staff.

Is this the way you want to see a $300 million investment decision made on your behalf?

Tom Belford

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11 Comments

  1. The thing about capitalism is when people smell a good deal (and ascertain beyond doubt it is not a rat) they will throw them self with great enthusiasm at the chance to get their finger in the pie. Havent seen this happen here have you? So far the only investors are a bunch of ratepayers who haven’t been asked if they want to invest or not. The market isn’t working here. What has gone wrong. (what has gone right?) Years ago there was a massive apple growing development around Christchurch. 700+ hectares employing 3000+ staff from memory. It is all gone, some of it is under motorway, part is a quarry a lot is now new housing. What went wrong? The experts and developers (and investors) forgot the high risk of hail and premiums went to about 33% of crop value. Should have asked more questions when this scheme was originally proposed I guess. If there is any risk or doubt about public investment in anything the questions should never be shut down, they should be encouraged. Todays rebel councillor could be tomorrows ‘Knight in shining armour’.

  2. When do fish and game intend to ask us licence holders what we feel about the new dam go for I say we need more clean water when rivers are in flood.The new lake will give us that. And by the way no “$50.000 per year to maori scholarships as per the handout I have one law for all none of this we owe u nonsense

  3. The “all About Hawkes Bay” website claims that Liz Lambert assisted HBRIC in preparing the application for the aquifer water. She is quoted on that site as saying that ” the proposal had been discussed with the Ruataniwha Water Users Group ahead of the consent application being lodged and the group had been advised once the council received the application”. If no WUAs have been signed, who is the Ruataniwha Water Users Group? How come Liz Lambert did not bother to tell her employers, the HBRC, what she and HBRIC, a wholly-owned subsidiary, were doing? Time to involve the Auditor General’s office I think, as well as the Local Government Commission.

  4. We were told at a meeting organized by the HBRC and the local anglers club at Waipukurau that the Ruataniwha aquifer was being mined by about 60,000 cubic metres pere annum. Therefore we needed the dam. Now the council wants to take a further 15 million cubic metres from the aquifer. It beggars belief! Thank god we have some councillors who appear willing to a brake on.

  5. Tom, I can´t see how this deal is going to be bankable unless there are sufficient iron-clad Water Use Agreements in place. I would also expect that lenders would be looking for some form of back-up guarantee from HBRC, or some other body with revenue-raising power, just in case some or all of the WUAs fall over.
    The wording of the WUAs will be important. What happens if the farmer goes bankrupt? Are there any restrictions on sale of the property? It is possible that the reason that you have not been shown a WUA is that the wording is still subject to negotiation. To be fair to the farmers in the area, I don´t blame them for not rushing to sign up at this stage, given the likelihood of further developments.
    Keep asking the questions – maximum sunlight is the best guarantee of a deal that is in everybody´s best interests.

  6. I would be interested in reading the parallels between a failed investment institution’s early signs of disaster in the market, losing investors money, and the signals around the Ruataniwha Dam Scheme’s financial puddle.
    We have put directors of failed schemes into prison for failing to adequately inform and adjust spending. We should be grateful to these four councillors who don’t want to be responsible for a disaster and so are still investigating and asking for the whole story. Only when the whole story is out there can we honestly and safely move ahead.
    Why does the CHBDC see this as a bad investment? Perhaps they are right to be cautious. So why, why, why would anyone agree to spend their money to benefit the very people who don’t want to pay for it because they think it is a bad investment. That old adage ‘put your money where your mouth is’ has a certain resonance methinks.

  7. Apologies for the potentially naive question – but if councillors are unhappy with the conduct of council staff – surely you can replace them? (or at least the CEO).

    Seems a bit pointless to have councillors – if the council staff aren’t accountable to them on behalf of ratepayers.

  8. Who actually makes the decisions for Regional Council? It seems Newman and Pearce can determine what councillors can and cannot see (I wonder if this is all councillors, or just the ones they find annoying?)
    HBRIC would have been well aware that a Resource Consent application for the extra 15 million cubes of water, identified by the BoI, was a major move and chose, along with staff, to keep this under-hand move in cover-up mode. (Sorry Liz Lambert, ‘secret squirrel’ has nothing on you guys)
    Who makes these decisions? Who decides what councillors can and cannot have access to?
    Fenton Wilson needs to take another look at the fiduciary responsibilities of elected councillors and indeed, his own role as chair. If his thinking is “don’t dig too deep in the weeds” then he may well need to give that a second thought. Sounds perilously close to a breach of duty. Of course we know there are weeds down there Fenton – continually obstructing the daylight is a dangerous and corrupt practice..
    Could we just let our Councillors do their job; provide open and transparent mechanisms for them to do this; and put an end to the game of thrones HBRIC is so intent on winning, by foul means or any other, abetted by council officials who, it seems, do not know the meaning of ‘responsible’, ‘objective’ ‘co-operative’ etc.

  9. Council staff should always provide the elected councillors with information relevant to council decisions. If such information has been requested, but not provided, the Chairman on behalf of all the councillors should direct the chief executive to disclose it, or provide a full written explanation why not. The templete for Water User Agreements is an obvious case in point.

    So far as I can judge from outside, HBRIC is now effectively running the Council, rather than the other way round. Yet the HBRIC members are not elected, and not directly accountable to ratepayers. Why is this travesty being allowed to continue?

    As a former councillor (1992-5) I can state with certainty the council I was a member of, so capably led by the late Doug Walker, would never have permitted this situation to arise.

  10. Hi Tom
    I have been unable to find any information about the HBRIC Resource Consent application for 15 Million cu m from the Ruataniwha Aquifer, filed 17 May on the HBRC web page. I am hoping it maybe it is because HBRC is not assessing this HBRIC Resource consent application. Has the application been public or limited notification and have HBRC and HBRIC adequately informed all those affected? Are there any submissions to be heard and will there be a hearing?
    The lack of information made available by HBRIC or HBRC to the community in regard to this proposal could be questionable. HBRIC and HBRC had the opportunity to announce and explain with transparency this proposal in all the RWSS HBRC/HBRIC public consultation meetings, did they?

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