June 19, 2013
In a front page story in the current NZ Farmers Weekly (17 June 2013), prominent farming economist/consultant Phil Journeaux comments on the vastly different productivity and profitability profiles of different farms, focusing on the dairying sector.
Citing Ministry of Primary Industries data from 2011/12, he notes that the top 10% of farms were 65% more profitable than the average farm, and 185% more so than the bottom 10%. [Another article in the same Farmers Weekly makes the same point about sheep & beef farmers.]
Journeaux then argues that pulling the average farm up to the top 10% would generate an extra $3 billion a year for the dairying industry. And notes that such a payoff would easily outstrip the the promised $2 billion income claimed to result from more irrigation investment using $200 million of taxpayer funds. [Actually, the Government has earmarked $400 million to subsidise irrigation.]
Says Journeaux: “Keep an iron control on farm working expenses, particularly labour, feed and fertiliser. Always consider if the marginal revenue from any input will be greater than the marginal cost.”
This is precisely the point local farm economist Barrie Ridler makes about adding irrigation water as an input, at prices envisioned by the Regional Council’s dam scheme, to farming systems in CHB. He’s analysed individual farms, demonstrating that smarter farming practices can indeed profitably increase farm productivity, while adding expensive water eliminates profitability. See BayBuzz post: Dam economics fail at the farm.
Unfortunately, that reality doesn’t suit the HBRC party line as they press ahead trying to sell the dam to skeptical CHB farmers. HBRC would rather hand farmers a subsidised dam than try to upskill them.
Part of the problem is that farmers don’t seem to clamour for help in upskilling. A third article in the same Farmers Weekly describes a project led by DairyNZ to work with farmers to improve their productivity. Small group and one-on-one counseling was offered, with a focus on better staff management, improved mating strategies and lifting pasture skills. Of a potential pool of 600 farmers, only 60 elected to participate.
The ideas implemented by participating farmers generated an extra $500 per hectare per year profit over the trial’s five-year run. However, feedback from the trial revealed that farmers would pay only about $500 for the advice that made the extra profit possible.
Given that experience, and the very significant upside potential if farmers do up-skill, why shouldn’t ratepayers and taxpayers demand to see programmes (and participation rates) that achieve those gains before even considering subsidising $600 million water schemes like proposed by HBRC?
$80 million from ratepayers (and more from Government/taxpayers) as our ‘investment’ in a dam, versus serious money spent on farmers who seriously want to up-skill? Seems like a ‘no-brainer’ to me.
As Journeaux observes, why throw money at under-performing farmers … those he calls “long-tail laggards”?
P.S. These are the kind of issues we’ll be discussing at the Transparent Hawke’s Bay public forum on the dam, next Tuesday the 25th at the Clive Hall, 7pm. Hope you can join us.
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June 11, 2013
In the biggest political ‘no-surprise’ of the year so far, the Minister for the Environment Monday announced that the HB Regional Council’s proposals for building a $600 million dam and managing the Tukituki catchment will be directed to a Board of Inquiry (BoI).
No details were released as to either the make-up of the Minister-appointed Board that will consider the environmental sufficiency of these proposals, or the official timeline for triggering the review process. Under the revised RMA, once the decision is officially notified, the Board of Inquiry will have nine months to make its determination.
The BoI process will review only environmental issues, such as the adverse environmental impacts of farming intensification in the Ruataniwha Plains and the habitat/biodiversity losses surrounding the dam and its reservoir … and whether the environmental protections envisioned by HBRC are adequate to deal with these issues.
The integrity of the review process — controlled by a Government that sees irrigation as the path to the Garden of Eden — will be measured by the caliber and independence of the BoI appointees, the evidence presented by all parties, and the extent to which the BoI will follow relevant Environment Court precedents as it makes its judgments.
The environmental and iwi communities have been preparing for what has been seen as a pre-determined ‘call-in’ by the Minister. HB Fish & Game and Ngati Kahungunu will play a major role in presenting the substantial environmental concerns surrounding the proposed dam during the review process that will be undertaken.
In the meantime, a host of economic and financial questions around the dam will remain unexamined, if HBRC has its way. This despite the reality that many in the community question the economic viability of the scheme and the financial risks associated with it … risks for the farmers being asked to buy into it and for the ratepayers who will ultimately pick up a substantial, and yet undefined, cost … particularly if farmer take-up of the scheme is minimal.
As Pauline Elliott says in Transparent Hawke’s Bay’s media release on the call-in (full release here):
“So far the serious concerns of the Mayors of Hastings and Napier, business leaders, Iwi leaders, environmental groups and submitters have gone unheeded. At no time have the people of Hawke’s Bay had an opportunity to understand exactly what is involved here, or to understand the level of risk for ratepayers.”
“In ignoring calls for less haste and greater transparency, the Regional Council’s decision to push ahead has squandered the last remnants of public confidence. The Council is on notice that future consultation will demand a robustness not yet seen anywhere in the process to date.”
Transparent Hawke’s Bay intends to press ahead with independent research, public education and advocacy, as well as fundraising to support those efforts. We are determined to bring the full picture into focus … so that voters can knowledgeably challenge candidates for the Regional Council in September/October.
If you want THB’s work to continue, we need your help … and that includes donations. THB’s contact and bank information is below.
Transparent Hawke’s Bay is hosting a public meeting on the Board of Inquiry process, what it means, the economics of the scheme, and how you can be involved at the Clive Hall on Tuesday 25 June at 7pm.
We urge you to spread the word and attend … and we appreciate any support you can provide.
Transparent Hawke’s Bay Inc
PO Box 821
ASB account: 12-3144-0245035-00
For more information on THB, contact Pauline Elliott at:
May 30, 2013
The Regional Council under Fenton Wilson never fails to disappoint when it comes to matters of due process.
With scarcely four months remaining in its current term, the Regional Council voted 4 to 4+1 to award Murray Douglas the seat just vacated by Eileen von Dadelszen.
Fenton ‘Strong Arm’ Wilson needed to use his threatening chairing style as well as his chairman’s casting vote to overcome a 4-4 division of councillors and close the deal to install Douglas (who won the highest number of votes amongst losing Hastings candidates in 2010).
The four councillors who voted to make this appointment — Fenton Wilson, Kevin Rose, Alan Dick and Christine Scott — had only goal in mind. That was to protect their anti-amalgamation and pro-dam agenda, on which their political futures rely, by giving an election advantage to a sympathetic presumptive candidate a few months from now. They’re banking on support around the table in the next term.
Of course, the reason they gave was that the Council’s workload over the remaining pre-election months desperately required the two extra hands.
But let’s cut to the chase. Can anyone seriously imagine that these four councillors would have offered an interim appointment if Tom Belford were the candidate polling next highest in 2010?! [I was next behind Murray.] Yeah right!
So two councillors from Napier, one from Wairoa, and one from Hastings (Kevin Rose) chose to install their candidate, over the strenuous objections of an equal number of other councillors (including two from Hastings), who preferred to let Hastings voters choose their own representative in about 120 days.
Kevin Rose was the chief ball carrier for Team Douglas. Indeed, the last time I saw Councillor Rose this energetic in Council deliberations was when he introduced his controversial motion congratulating the All Blacks for winning the Rugby World Cup … in between these bursts of accomplishment has been a long snooze. Councillor Rose is awakening just in time to seek a 6th term on HBRC.
You can now witness the debate firsthand online, given that the HBRC’s delayed webcasting is now functioning. This is politics in full fury (caution: rated V and M), viewable in four installments starting here (about 45 minutes of total viewing pleasure).
Meantime, the Regional Council welcome mat, a bit tattered, is out for Murray.
The public is now notified of the proposed appointment, which must be be ratified at the HBRC’s June 10th meeting.
P.S. As for Murray, he does bring three assets to the table, however briefly: 1) he’s new; 2) he lifts the Council’s Intelligence Quotient; and 3) he can spare Fenton Wilson from making more tie-breaking votes.4 comments »
May 24, 2013
Attached here is the exact challenge Mayors Yule and Arnott laid before the Regional Council back on May 3rd. I urge you to read their message in its entirety.
Here are some excerpts.
Regarding conflict of Interest and perceived conflict of interest of elected members:
“When these entities [Ed: referring to HBRIC in this case] are represented by directors who are also Councillors it is impossible to provide a community with confidence that decision making processes are transparent, fair and undertaken without a degree of predetermination. The position that the members of both HBRIC and the HB Regional Council find themselves, in relation to the dam project, may become untenable.”
Regarding shared chief executive role:
“…the structural model of sharing the the role [Ed: of Chief Executive, Andrew Newman] between HBRIC and HB Regional Council exposes the Council and ratepayers to significant risk around independent advice that may be given to the Council. In our view this is not best practice and exposes the Council to financial and legal risk.”
Regarding risk analysis:
“…we believe that a thoroughly prepared risk analysis report (single document) would be helpful to all parties including the Council itself. This would be consistent with the best practice advocated by the Office of the Auditor General in Local Government capital works planning …
“It is a fact that these projects carry large single factor and multi factor risk elements including the bottom line risk of cost overruns of both capital and operating that could fall entirely on current and future ratepayers of the region.”
Regarding specific financial information:
“…we suggest that further work be undertaken in the area of feasibility (the big picture financially), insurance, certainty and sensitivity analysis around pricing, cost overrun risk and uptake lag …
“…without further assurance around the financial modelling there is an inevitable risk for the ratepayers that is larger than any other single financial risk that we are aware of or can reasonably forecast. Unless this work is completed in a manner that brings confidence to the community, the project itself (regardless of its merits) runs a serious risk of being fatally flawed in its process.”
The mayors, speaking for their respective Councils, then offered to directly fund a peer review of the issues they had raised.
To me, it sounds like the mayors are rather nervous about this enterprise, as much as they would like to believe there’s a pot of gold at the end of Andrew’s rainbow.
Indeed, the mayors — with their much closer perspective — appear far more concerned than supposedly independent decision-makers in Wellington, whom HBRC has lobbied assiduously — and of course one-sidedly — for well over two years now.
With the Prime Minister (joining a chorus of his Ministers) gushing over the dam recently in Dannevirke, who can seriously believe that the scheme will receive any kind of objective and un-predetermined review by a Government-appointed Board of Inquiry? If HBRC and the Government have such confidence in their scheme, why not direct it to the Environment Court, as the law permits?
Attached here is the HBRC response, which asserts that there is “plenty of time” to address the issues and that “we will take further advice on all issues”. Hence, no ‘time out’ in the process as requested by local iwi, business and environmental leaders.
So, now what happens is that HBRC spends another $9 million over the next several months attempting to progress the water storage scheme through the environmental consenting process. Effectively, HBRC wants to make the project a fait accompli.
HBRC realises that whatever shaky political capital this project holds at the moment is very possibly more than it will hold when more environmental and economic realities are forced on the table … or a Labour Government takes a fresh look.
So thank you for your letter mayors, says Fenton, but full speed ahead.
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May 23, 2013
Thursday I attended a briefing by the Ministry of Business, Innovation & Employment on Hawke’s Bay’s job prospects in coming years.
There was no new news (full report here). What the briefers had to say repeated what by now should be commonly known in the Bay:
- Demographic trends are quite challenging — little or no population growth overall, with the under-15 years of age and over-65s being the two growing segments. [In fact, the most thorough research on NZ's population future predicts that population in the country's rural provinces has stopped growing ... possibly forever.]
- The biggest economic sectors in HB — agriculture and food processing — also being the slowest growing (and to a large extent, paying the lowest wages).
- A persistent inability to prepare or match youth graduating from school (or simply leaving) with existent jobs in the region.
The audience proffered a range of solutions, all sounding individually intelligent, but none capable alone and in isolation of ensuring attractive jobs for our youth or a vibrant regional economy going forward.
If there were ever a challenge that demands a regional strategy, with all players harnessed to and invested in it, employment growth is it.
The small-minded, like new political blood-brothers Bill Dalton and Stuart Nash, insist that this is not a problem local government can do anything about.
But their view is myopic nonsense.
What is required in Hawke’s Bay is mobilising the efforts of all the significant players and sectors who must cooperate for a better and sustainable economic future …
- The education community (high schools and EIT) — those who must educate and train our youth and help expose them to the full range of employment/career possibilities on offer in the region.
- The business community — those who must identify current and future employment needs and make those needs understood and exciting to the region’s youth and to key enablers in the community (and of course ultimately specialty train and hire).
- Parents — who must choose to provide nurture learning environments, help raise aspirations, provide role models (or not).
- Other role models — who can personify rewarding job paths and careers centered right here in Hawke’s Bay.
- Young people — who must voice their needs and exploit the learning and communications tools and technologies that exist at their fingertips.
- Maori leaders and whanau — whose role is critical given the demographic surge ahead in our young Maori population.
- Communicators — those in the Bay who know how to use today’s online and mobile technologies to connect sectors, to social market, and to facilitate communication, exploration and learning within the youth community itself.
- Central government — a provider of data, working models and (at least) seed funding.
- Local government — which can convene, provide logistical and research support (and seed funding), knock heads together, and negotiate with central government.
All these players must march together to the same drum.
And no institution can make that collaboration happen for Hawke’s Bay better than our own local governments(s).
Of course, so long as we have five local governments, we can count on it taking at least three months to agree on the date for the first planning meeting, another three months for the meeting to occur, and then at least another year to negotiate the terms of of reference for the working party.
Hey, but what’s another year or two of falling all over each other, protecting patches, and bemoaning our fate? The kids can wait. They have nothing else to do. They’ll still be there when we adults are ready.
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May 20, 2013
Our May/June BayBuzz is now online.
Inside the Bay’s thriving horse culture. Is the $600 million dam project moving too fast? Are Hawke’s Bay business groups emerging from growing pains? Why no university in HB? Will Te Aute College survive? Should Hawke’s Bay remain GE Free? Should Hastings be fluoride free? What is a ‘home’ in Hawke’s Bay? Plus volunteering , HB writing and high-tech gaming.
You can read it as published here.
Or try these individual articles, which you can comment on, forward, print out or launch into your favourite social media.
A HORSE IS A HORSE, OF COURSE
Mark Sweet takes an inside look at Hawke’s Bay’s horse culture
CHAMBER CHALLENGED TO GET BACK TO BASICS
Keith Newman discovers HB’s business leader groups get taste of own medicine
LAND ISSUES UNDERMINE TE AUTE LEARNING LEGACY
Keith Newman asks if Te Aute College can recover its financial, moral and academic mana
‘CALL-IN’ VERSUS ‘TIME OUT’ ON DAM
By Tom Belford
More voices join effort to slow down the Council’s process in the interest of environmental and financial prudence.
COUNCILS SET ANNUAL BUDGETS
By Jessica Soutar Barron
What projects determine what your rates will be next year?
NEWMAN MEMORIAL DAM
By Brett Monteith
INSIDE HAWKE’S BAY POLITICS, CIRCA MAY
By Tom Belford
Candidates emerging. Tickets too.
By Keith Newman
NOW, Hawke’s Bay telco challenges big duopoly
‘RE-GROOVING’ THE AGRICULTURAL MAFIA
By Phyllis Tichinin
If you want more productive farming, love your microbes
KO AU TE AWA, KO TE AWA KO AU
“I am the river and the river is me” … iwi perspective on HB water issues
THE ‘F’ WORD
By Jessica Soutar Barron
OUT, DAMNED SPOT
By Paul Paynter
GMOs … LIKE POSSUMS, RABBITS AND GORSE
By Pure Hawke’s Bay
WHY DOESN’T HAWKE’S BAY HAVE A UNIVERSITY?
By Claire Hague
BEST YEARS OF OUR LIVES: Volunteering for Cranford Hospice
By Kay Bazzard
THE HAWKE’S BAY HOUSE … JUST ANOTHER OPEN HOME?
By Anthony Vile
KING OF THE BLOCKHEADS PROPELLED TO GAME FAME
By Keith Newman
HAWKE’S BAY’S LITERARY PURSUITS
By Lizzie Russell
May 3, 2013
As reported in the DomPost by Marty Sharpe, Mayors Yule and Arnott have significant concerns about the financial risks posed to ratepayers by the Regional Council’s dam project. So great is their apprehension that they are demanding an independent review of the project’s economic and financial assumptions.
The most obvious cost to ratepayers if the scheme goes forward is the $80 million explicitly budgeted in the Regional Council’s Long Term Plan. However, that’s the tip of the iceberg with respect to the financial exposure that the Regional Council (i.e., ratepayers) would face if various of the economic and operational assumptions underpinning the scheme prove to be overly optimistic … or flat wrong.
And so far, those assumptions — the product of consultants and bankers sucking fees from HBRC — have not been cross-examined by independent authorities. Indeed, with HBRC and HBRIC (its holding company responsible for progressing the dam) sharing councillor-directors and having the same chief executive, the mayors also have conflict of interest concerns … how is HBRC to get suitably independent and informed advice on the viability of the scheme?
So, independent risk assessment is what the two mayors and their councils want … and they are willing to fund the cost for such review if necessary.
Kudos to Mayors Yule and Arnott for taking this stand.
I have been approached by many community leaders, to say nothing of farmers in CHB, who privately voice serious apprehensions about the scheme, but are wary of taking a public stance counter to HBRC. The mayors will be widely applauded for exercising this leadership.
On the basis of a HBRC Powerpoint presentation, or slick advocacy mailing, the dam scheme looks better than sliced bread. It’s only on closer analysis that the dependencies upon dependencies — assumptions upon assumptions — become clear, along with the consequent risks.
And instead of putting these under a glaring spotlight, as befitting a project whose total costs amount to $600 million, the Regional Council is rushing forward, telling everyone to not worry, trust us. Unfortunately, the Regional Council has no ‘trust equity’ in its credibility accounts.
The mayors’ concerns are the same concerns that have led Transparent Hawke’s Bay to file a complaint with the Auditor-General, which is under review, and that have caused others in the community — business leaders, Ngati Kahungunu, and HB Fish & Game among them — to call for a ‘time out’ in the Regional Council’s rushed process. These actions are reported in this BayBuzz article.
A project of this scale must earn a commensurate public mandate … one that weighs all pertinent risks in an informed manner. In effect, what our mayors are saying is that it is premature for there to be any mandate. Too many big, unanswered questions. The mayors have put their concerns on the table. In the coming week we’ll see if our HBRC councillors give a hoot.
It’s mystifying how the Regional Council can continue to profess — and spend ratepayer dollars to propaganise — that everyone’s been fully consulted and endorses the project, when the reality is so blatantly the opposite.
Welcome to Planet HBRC!
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