LTPs
‘Tis the season of heavy lifting for councils as they come to terms with ratepayers over long-term spending priorities. Our councils will have closed their submission windows by mid-May (HBRC and CHBDC already closed), with public hearings during May and final decisions in late June.
Until the LTPs are officially adopted, however, it’s not too late to let your councillors know how you feel about their proposals.
Most consequential in all of the region’s draft LTPs is an overdue reckoning of the need to compensate for years of neglect of our water quality and infrastructure requirements. One wonders if this reckoning would have occurred without the gastro outbreak in Havelock North and the resulting government inquiry.
So let’s start with Hastings.
Hastings proposes to spend $47.5 million over four years on drinking water, the components of that being a new water supply for Havelock North (replacement of the Brookvale bores) – $27m, full treatment (UV and chlorine) of all water sources – $13.5m, and $7m for improvement of small community water supplies from Waipatiki to Waimarama to Whakatu.
As proposed, this water investment would cost ratepayers an additional $250 per connected property over three years, with the average targeted rate rising from $257 currently to $507 annually, with smaller increases in following years.
Improvements to Hastings’ wastewater and stormwater systems will require another $18.9m to be spent. ‘Normal’ renewals will cost another $4.3m over the next three years; $16.3m for the ten years of the LTP.
Napier proposes to spend $89 million on water improvements over the full ten years of its LTP, with $32m for water supply (reservoirs, $9.9m for chlorination, network resilience), $32m on the stormwater system (including $6.6m, or about $2 rate increase per household for some remediation of discharges into the Ahuriri Estuary), and $25m on wastewater treatment improvements. The total spend in the first three years would be $30.7m, including $4m in renewals.
Central Hawke’s Bay is still in the process of assessing the full dimensions of its future water system investment, but its LTP estimates the total could reach $116.8 million over 30 years. Over the decade of this LTP, in addition to normal renewal expenditures of $9.7m, new water system improvements are projected at $19.2m for drinking water, $8m for wastewater, and $1m for stormwater. Investigations continue into final solutions for the Waipukurau and Waipawa wastewater treatment plants; once a plan has been developed, a separate consultation process will be undertaken.
Thus, for these three districts, improvements to water systems – drinking water, wastewater, stormwater – will amount to roughly $136 million over the next ten years, plus $74m in ‘normal’ operating, maintenance and renewal costs.
As for the Regional Council, its main focus in the water space relates to regulation and incentives involves water quality and allocation, and some physical works (stopbanks, dredging and gravel removal) undertaken for flood management. HBRC’s LTP allocates $67.9 million over the next ten years for asset management and integrated catchment management, including $30m for riparian planting. Costs of day-to-day consenting and compliance work are largely recovered (80%) from consent holders.
[HBRC’s LTP proposals are discussed in more detail in Mar/Apr BayBuzz.]
Across the councils, these are the funds required to meet what most ratepayers would probably regard as the most critical core service our local authorities provide.
Then comes what, by comparison, many would regard as the icing – community facilities that undoubtedly add to our quality and enjoyment of life throughout the region. Each ratepayer will have their own assessment of the need, urgency and priority for these proposed amenities. Here are some readers might care to rank.
Hastings
Central Mall Enhancement $1.6 million
East Block Entertainment Precinct $1.4 million
Civic Square $1.5 million
Park & Public Space Enhancements $8.7 million
Napier
Aquatic Centre $41.3 million
Ahuriri Master Plan $21.4 million
National Aquarium Expansion $10.2 million (assuming $42m of external funding)
CHB
Swimming Complex Upgrade
$650k (assumes $220k of community funding)
The figures above are estimated capital costs; operating costs are ongoing … often exceeding and outlasting the projections made when such projects are being ‘sold’ to ratepayers.
Napier Port
A working group consisting of representatives from HBRC, HBRIC (Council’s holding company) and Napier Port, as well as independent advisors, has reviewed the overall long-term funding and capital needs of the Regional Council and its wholly owned Napier Port. The group has presented its report (search ‘capital review’ on the HBRC website), which recommends a comprehensive strategy for enhancing and managing the council’s investment portfolio.
HBRC is now considering the full suite of recommendations, which, regarding the Port, proposes “at least 33% of current Port holdings be released and reinvested into new investments targeting an average 5% return and with a low-moderate risk profile”.
HBRC has instructed a re-constituted and ‘stripped down’ HBRIC to explore a restructuring of Port ownership to address high risk exposure and provide funding (estimated at $250 million) to meet the development needs of the Port. Two basic options will be examined: a minority sale of Port assets, and a long-term operating lease of the Port whereby control/ownership of the underlying Port asset would remain with Council.
It is estimated that the minority sale option would release $50-$100m (net of repaid debt) for alternative investment, while the leasing option would release in the range of $350m (net). The pros and cons of these alternatives will be fully examined, and any proposed restructuring of Port ownership will be subject to full and separate public consultation, with an aim of undertaking any consultation within the next year.
In the meantime, the Regional Council’s LTP assumes continued payment by the Port of its approximately $10 million annual dividend to HBRC.
HBRC has also tasked the re-organised HBRIC with exploring a possible large-scale investment in commercial forestry (potentially $100 million by Council, complemented by iwi and Government funds). The Regional Council recently indicated an interest in principle of partnering in such an initiative at the invitation of Ngāti Kahungunu (NKII), which has committed $100m itself for this purpose.
While commercially-focused, this would not be a programme to re-paper Hawke’s Bay with pine trees, but rather would advance a 20-year planting effort that included natives, pine and longer rotation species like redwoods.
From HBRC’s perspective, such an investment would yield long-term revenue, provide major sediment control (the region’s predominant water quality and land management challenge), and support enhanced biodiversity.
Global warming
The past few weeks have seen a number of increasingly alarming warnings about the pace and consequences of global warming. The International Energy Agency (IEA) reported that global greenhouse emissions rose faster in 2017, after flattening out in the three previous years. Ramped-up economic growth in Asia was the main culprit.
I’ll bring this home to Hawke’s Bay in a moment.
A number of the reports have focused on our oceans, of particular importance to an island nation. For example …
Two studies published in Nature indicate that the Atlantic Ocean’s circulation is the weakest it has been in about 1,500 years. And the slowdown is intensifying. Ocean water circulation is a crucial determinant of global climate patterns.
The slowdown of the Atlantic’s Gulf Stream, which redistributes heat north from the tropics, had been predicted by computer models, but researchers can now observe it. They expect more extreme weather across the Northern Hemisphere, with more severe winters in Europe (and, ironically, more severe heat waves in summer), and increased sea level rise and inundation risk along the U.S. East Coast.
Coincidentally (?!), the East Coast of the US has already had three $1 billion weather disasters since January. From 1980 to 2018, the average number of $1 billion-plus events has been 5.5 per year. Last year saw 16 weather disasters costing more than $300 billion.
Meantime, steady warming of the tropical Pacific appears to be contributing to the fastest pace of meltdown ever of Alaskan glaciers, based on evidence of ice cores that can measure back to the mid-17th century.
A study published in Nature Communications found that our oceans have seen a 54% increase in ‘heat wave’ days from 1925 to 2016, with the trend expected to continue. Abnormally warm ocean temperatures have been blamed for recent deaths of crabs, sea lions and whales, and are particularly devastating to coral reefs.
Close to home, a marine ‘heat wave’ hit the Tasman Sea this past summer, with the average temperature reaching 6°C higher than average in December … highest since records began more than 100 years ago. A NIWA meteorologist called the Tasman heat wave “the most anomalous on the globe”.
The 2016/17 Tasman heat waves killed half the coral on the Great Barrier Reef. Said one researcher: “They didn’t die slowly of starvation, they died directly of heat stress. They cooked because the temperatures were so extreme.”
Apart from ecological effects – disruption of plankton (the food fueling our fisheries), reef destruction, invasive marine species and diseases – ocean warming will generate more intense storms for New Zealand, including our region, which is already home to some of the most severe hill country soil erosion in the world.
Warmer water evaporates more, leading to more intense lows and storms with significantly more rainfall or bursts of high rainfall in a brief period of time. In the NZ Herald, MetService meteorologist Lisa Murray observed: “An example of sea surface temperatures contributing to the development of an intense low, was the low which caused flooding and coastal inundation in many areas including Auckland, Coromandel, Thames, Christchurch and Wellington in the first few days of this year.”
Or recall our own Eskdale flooding more recently after an intense rainfall, or Napier’s rainfall-triggered overflow of sewage into the Ahuriri Estuary.
Now or later
Global warming presents a critical choice to policymakers – act now in a more precautionary manner, or hold off until disaster strikes.
A report prepared for Westpac indicates that the New Zealand economy could benefit by $30 billion by 2050 if government and business take early action on climate change, as opposed to waiting for a ‘shock event’ that forces the nation to act.
In a similar vein, a new study from AUT, Climate Finance Landscape for Aotearoa New Zealand, which Climate Minister James Shaw has cited, comments: “Recent modelling by the OECD estimates that a collective ‘decisive transition’ could boost long-run economic output among G20 countries by 2.8% on average. If avoided costs of climate-related damage are also included, then the net effect for 2050 rises to 4.7% higher than a business-as-usual scenario.
“One notable example of future costs is the problem of ‘stranded’ fossil fuel assets. It has been estimated that, to stay within 2°C warming, capex in fossil fuels worth US$2.2 trillion would need to be forfeited. In other words, 60–80% of all existing global fossil fuel investments will be written off as “stranded assets” as the fossil fuel market shrinks to fit a 2°C carbon budget.”
As former Green Party co-leader Jeanette Fitzsimmons recently noted in NZ Herald: “The industry exists to invest in new infrastructure: wells, pipelines, power stations, processing plants, with an expected life of 40 years. The Government, in accordance with the Paris Accord on climate change, has a target of reducing our net emissions to zero by 2050. Is the industry planning for a whole string of stranded assets, and have they told their shareholders this, or are they planning to ignore our national target?”
Our Government’s adoption of ‘decisive transition’ thinking can be seen in the policy announcement regarding no further offshore oil and gas development (allowing existing commitments to peter out over the next decade) – “the nuclear-free moment of our generation,” said Jacinda Ardern. Clearly, with the Government’s commitment to ‘green investment’, the thinking is to get out of the ‘sunk investment’ trap early, not later.
As Ardern noted, “The world has decided.” Her Government will introduce a Zero Carbon Bill later this year. She wants NZ to be “on the right side of history”.
What does this mean for Hawke’s Bay? Probably a ‘nuclear-free moment’ for our region as well – no oil and gas exploration is likely to ever occur offshore (or onshore) in our region. Perhaps saving HBRC the trouble of further pursuing its anticipated plan change aimed at preventing any oil & gas exploration or development that would endanger our water supplies.
Without having to worry about oil & gas development, Hawke’s Bay can focus on climate change mitigation, resilience and adaptation.
The initial work of sizing up the coastal risks from global warming – erosion and/or inundation from sea rise and severe storms – has been completed by a joint HBRC/HDC/NCC sponsored working group involving extensive community participation. This exercise identified risk priorities and recommended pathways for coastal protection for the next 100 years. These recommendations have now been accepted by each of the councils, and work will soon begin on more detailed costings, financing alternatives, and near-term implementation.
For its part, the Regional Council has set a goal of carbon neutrality for Hawke’s Bay by 2040. An initial study, available on the Council website, has outlined the steps that would achieve this goal, starting with making Council’s own operations carbon neutral. From there, broader initiatives can be taken in transportation, reforestation, sustainable farming and alternative energy. For example, HBRC’s ‘Sustainable Homes’ proposal in its LTP would extend a successful, rates-neutral ‘Heat Smart’ programme into incentives for home solar/PVC investment.
A particular challenge for Hawke’s Bay, whose electricity is already largely provided by alternative energy sources, is our use of diesel fuel, especially in the farming sector. A recent report from Crown research agency Scion, Biofuels Roadmap, argues that an ambitious biofuels programme producing a diesel alternative could reduce NZ greenhouse gas emissions by 5,000,000 tonnes per year by 2050, the equivalent of taking half our cars off the road. [Read more on this in Keith Newman’s article on p.46, Biofuel Debate Burns On.]
A Zero Carbon future. Port ownership review. Reforestation. Nearly $200 million in overdue water system investments. Serious challenges for ratepayers and their councils to face … starting now.
The favourite mantra of my former boss, Ted Turner, was “Lead, follow, or get out of the way”. Hopefully our region will choose to lead.
Stay tuned.
Turning the ship?
As a related side note of positive relevance to our ‘maritime’ province,
The International Maritime Commission has adopted a first-ever strategy to blunt the sector’s large contribution to climate change. The strategy would lower emissions from container ships, oil tankers, bulk carriers and other vessels by at least 50% by the year 2050 from where they stood in 2008. For example, by 2025 new ships are required to be 30% more efficient than ships built in 2014. Collection of ship fuel oil consumption information is now mandatory.
Shipping is responsible for about 800 million tonnes annually of carbon dioxide emissions (comparable to the emissions from Germany), according to the International Council on Clean Transportation. That means shipping’s emissions are 2.3% of the global total.
The ICCT says that to be consistent with the Paris agreement, shipping should emit no more than 17 billion tonnes of carbon-dioxide-equivalent emissions from 2015 onward; the new agreement implies emissions between 28 billion and 43 billion tonnes. No action at all, however, would mean 101 billion tonnes.
For shipping to decarbonize, current fuel oils would have to be replaced by biofuels or, perhaps ultimately, hydrogen or batteries. But so far such innovations are being tested only in smaller ships.