August 24, 2014
The US Government has what’s known as “The Black Budget” a top-secret allocation, estimated at $52.6 billion in 2013, that funds the country’s covert action, surveillance and counterintelligence programmes across more than a dozen agencies.
Here in Hawke’s Bay, we too have a “Black Budget” – the closely guarded amount to be spent by HBRIC, the Regional Council’s holding company, to develop and market the CHB dam project.
On Wednesday, the Council will be debating – in public-excluded session, as matters now stand – a “re-forecasting” of this budget.
One need not be a brain surgeon to surmise that a “re-forecast” involves an additional spend.
At its last public accounting of the dam development spend, presented at the 30 July Council meeting, HBRIC reported that $11.5 million in capital expenditure and $529,362 in operating expenditure had occurred in the year through June 2014. This so-called “Phase 2” spending is in addition to $3.5 million spent in “Phase 1”. All in, by my calculations, about $15.5 million to date. About $2.7 million has been underwritten by the Ministry for Primary Industries, with some additional contribution by institutional investors (now departed).
And now a “re-forecast” on Wednesday – to be decided in secret against the backdrop of an ever changing “financial close” date by which a yes/no decision on the dam is projected to be made … now suggested as 31 March by HBRIC.
The current legal appeals regarding the Board of Inquiry’s (BOI) plan for the Tukituki will not be heard until November, at the most optimistic scheduling, with those matters not resolved fully probably until next year. Further uncertainty is created by HBRIC’s application to take all 15 million cubic metres of water made available from the Ruataniwha aquifer in the BOI’s decision. A number of growers have indicated they will challenge that proposal, which bears on who might have access to aquifer water instead of dam water.
So one might reasonably worry that the “re-forecast” period required to be funded could well extend beyond the new projected March close date.
When is enough, enough? How much is required?
The public has every right to know. Absolutely nothing about this “re-forecast” deserves to be considered in secret.
And therefore an attempt will be made to conduct this debate in public session on Wednesday.
If that fails, as past history suggests it will, then I urge you to approach the councillors of your choice on Thursday with this simple question: “Did you vote yesterday to allocate additional funding to progress the Ruataniwha water storage scheme?”
I will be happy to report in BayBuzz the response you get.
6 comments »
July 25, 2014
Entrepreneur/philanthropist Gareth Morgan has been weighing in on water issues lately, including the new freshwater management standards, in terms quite critical of Government policy.
He’s gone about his self- and public education process very carefully.
For example, here are the water scientists he assembled as a panel to assess NZ’s water quality situation:
Dr Bob Wilcock— NIWA
Dr Roger Young – Cawthron Institute
Dr Rick Pridmore – Dairy NZ
Dr Mike Joy, Massey University
Dr Phil Mladenov – Fertiliser Manufacturers Association
Dr Alison Dewes – Agricultural consultant
Graham Sevicke-Jones – Greater Wellington Regional Council
Professor Jon Harding – University of Canterbury
Professor David Hamilton – University of Waikato
Dr Marc Schallenburg – University of Otago
Dr Rich McDowell – Agresearch
Shirley Hayward – Dairy NZ
Dr Clive Howard-Williams – NIWA
Professor Gillian Lewis, Auckland University
Ken Taylor – Environment Canterbury
Dr Mike Scarsbrook – Dairy NZ
Looks like a pretty credible group to me. Check out the 21 Scientist Statements they agreed upon, in most cases unanimously.
One of the panelists, Graham Sevicke-Jones, was formerly HBRC’s chief scientist, but left for greener pastures … or cleaner water, as some have it.
The results of this assessment are presented very effectively on the myriver.org.nz website, sponsored by Morgan.
I urge you to take a look. Check out the interactive feature that let’s you pinpoint a place on a map to report on river pollution. Use it!
Tomno comments yet »
July 23, 2014
Since writing my Murky Waters post on Sunday about the modus operandi of the Regional Council and its holding company, HBRIC, I’ve had numerous inquiries … mostly incredulous.
The gist of the questions … “Who’s in charge there, anyway?”
Most people have the quaint notion that their elected representatives, Councillors, are supposed to be in charge.
So they naively assume that if a Councillor asks for a piece of official information — for instance, a boilerplate Water Users Agreement, the financial linchpin of the proposed dam scheme — the response should be automatic and straightforward … staff should provide that information forthwith.
Or, if HBRIC decides to file a resource consent for 15 million cubic metres of aquifer water, elected Councillors should not find out about it two months later, from outside sources.
So the questioners press on … “Who exactly makes the decisions to say NO to information requests from elected Councillors?” [Or at least from certain Councillors.]
Here’s my impression.
If the information is held by HBRIC, access to it is denied by HBRIC chief executive Andrew Newman and/or chairman Andy Pearce. Presumably with acquiescence of other HBRIC directors.
Actually, it’s not considered kosher for mere elected Councillors to request information directly from HBRIC.
We are expected to make such requests through our Regional Council chairman, Fenton Wilson, and/or interim chief executive Liz Lambert. Either one might or might not accede to, endorse or pursue the request. A case in point would be Councillor Graham’s official request to chairman Wilson, weeks ago (on behalf of himself and Councillors Barker, Beaven and Belford), for various pieces of financial information regarding the dam. To date, no reply … no information … not even a polite rejection of the request.
The requests just seem to disappear into a silent black void. Moreover, as Councillor Barker often comments, then there’s what we don’t know, and therefore cannot ask about!
This doesn’t seem to concern HBRIC directors, just as it doesn’t concern the five Councillors who appear to have no probing questions about the viability of the dam scheme.
However, the business people I talk to in the community are quite alarmed. They (like the HBRIC directors) serve or have served as corporate directors and tend to project that sector’s sense of “Who’s in charge?” into the governmental realm. In their world, a director has an absolute right to any information they request of management. And indeed directors are legally culpable if things go awry and they haven’t been diligent in seeking and acting upon the relevant information.
Applying that principle to the Council scenario, they see Councillors as akin to directors … with a right and duty to pursue and receive relevant information for their decision-making. And they find it incredible that ‘management’ denies such information to Councillors.
But folks, that’s the way it goes in the regime of Pearce, Newman, Wilson and Lambert.
When it comes to anything related to the dam, there’s no question who is charge. And it ain’t us ‘rank and file’ Councillors.
As former Councillor Bill Sutton writes:
“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?”
Fair question, Bill. Put it to your Napier representatives on the Regional Council.
11 comments »
July 20, 2014
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?
11 comments »
July 3, 2014
Maybe. Maybe not.
The Board of Inquiry (BOI), in its final decision, appears to think it has rescued the Tukituki.
It has required Farm Environmental Management Plans (FEMPs) in which farmers must commit to how they will meet specified nutrient (nitrogen) leaching limits deemed acceptable for their soil conditions (as indicated by the so-called LUC system). Farmers will need to use farming practices that best enable them to meet the limits.
In turn, the cumulative nutrient load in the river (measured most critically in terms of dissolved inorganic nitrogen, DIN) associated with all farming cannot exceed 0.8 mg/L. This compares to DIN limits of 0.44 mg/L set for the Manawatu-Wanganui and Otago regions. So it’s a good limit, not the best.
This limit – opposed by HBRC – was accepted by the BOI on the basis of evidence from environmentalists, who argued that the overall biological health of the river ecosystem was already harmfully affected by current nutrient run-off in the river. HBRC had argued for significantly higher nitrogen limits based on a more narrow measure – fish toxicity. The higher HBRC limit was seen as an enabler of farming intensification in the catchment (i.e., an enabler of the dam).
That the BOI accepted the case for a DIN limit is a victory for the health of the Tukituki.
Some measuring points in the Tukituki catchment presently exceed the 0.8 DIN limit; some do not. In its own calculations, the BOI considered that a small amount of ‘headroom’ for more nitrogen in the river presently existed and therefore the DIN limit was not unduly harsh.
The individual on-farm leaching limits and the overall catchment DIN limit are intended to work together. As the BOI sees it:
“Effective nitrogen management requires a two-pronged approach. The first component involves the setting of on-land root zone leaching limits which will serve as an important control at the source of the leaching process (the fence at the top of the cliff). The other component involves the setting of in-stream nitrate-nitrogen and DIN limits which will serve as a check as to the effectiveness of the LUC leaching rate control.”
Will this approach improve water quality in the Tukituki?
Environmental advocates believe the on-farm leaching limits will ultimately need to be ratcheted lower and embedded in consents in order to meet the DIN limit … and that the DIN limit itself might need to be lowered.
In its final decision, the BOI seemed to anticipate that outcome, saying:
“It is the responsibility of HBRC to avoid the exceedence of DIN limits in the receiving water by regulating the level of nitrogen discharged at the root zone by the farmer and monitoring subsequent DIN concentration in the receiving water. If observed DIN levels are too high then future adjustment by HBRC of the LUC root zone leaching rates may be required.”
And further, in its reasoning for not now setting a lower/tougher DIN limit, the BOI says:
“As water quality science advances a different DIN limit may emerge as a more appropriate level. In the meantime the Board sees the DIN limit of 0.8 mg/L as a pragmatic level that appropriately protects ecological health while enabling more intensive land use.”
But can we, as the “pragmatic” BOI hopes, both have our cake and eat it too? Or has the BOI simply pushed back the day of reckoning when we finally actually decide whether, as Councillor Rex Graham says, “It’s time for farmers to adapt to the river instead of the river adapting to the farmers”?
In all likelihood, if the BOI-ordered regime stands (at this writing, the involved parties have 10 more working days to file legal appeals), sooner or later the Regional Council will have the same political hot potato back on its hands.
If the DIN limit is exceeded a few years down the road, environmentalists will argue for ratcheting down the on-farm leaching rates, as the BOI foresees. But the HBRC, if it maintains its historic and current mindset, can be expected to say: NO, we can’t do that … we’ve already built a dam and farmers have borrowed millions to irrigate and intensify. We must raise the DIN limit instead … or better still, toss that approach entirely, and switch to more accommodating fish toxicity limits.
Surely, you say, that’s not a possibility. Hasn’t the BOI, having studied the matter for over a year, definitively ordered a regime based on DIN limits?
Yes, they did. But, for all practical purposes, the BOI is already history. The political wheel is already turning.
Today, the Government announced its new National Policy Statement for Freshwater Management (download here). It’s a wimpy disappointment, as expected. And what measure does this NPS adopt for assessing and protecting water quality – fish toxicity! Exactly what the BOI rejected.
So stay tuned folks, the Tukituki ain’t getting better yet. And that’s without the farming intensification a potential dam will encourage.
The BOI might well turn out to be a minor bump in the road — mere road kill — for the dam juggernaut.
Tom Belford3 comments »
June 27, 2014
This past Wednesday, I voted against committing $80 million of ratepayer funds to the Ruataniwha dam scheme.
During the debate, which can be viewed online here, pressure from the four dam skeptics — myself and Councillors Barker, Beaven and Graham — succeeded in ensuring that final approval of the dam, contingent upon several conditions the project is far from satisfying, would come back before the Regional Council by 30 September for another vote.
Consequently, your elected Councillors will still need to give final approval to the scheme, considering all of its aspects.
The requirements still to be met include unconditional sales contracts for 40 million cubic metres of irrigation water, a satisfactory investor/financing package, a firm construction contract that caps HBRC liability, and a workable set of environmental mitigation conditions.
Since not one of these conditions was satisfied on Wednesday, in my view it was premature — in fact, irresponsible — to be voting at that time on any ratepayer investment in the project.
Thursday, the Board of Inquiry released its final decision on management of the Tukituki catchment and the dam. That decision will take some time to comprehend, but I expect to offer some initial assessment over the weekend.
Meantime, here are the comments I made at the conclusion of Council debate …
Statement on HBRC Investment Decision
The process we are following to make this investment decision is indefensibly defective.
In the overview of her report on the Kaipara Council’s mismanagement of its $63 million wastewater scheme, the Auditor-General wrote:
“This report highlights lessons about governance – such as the need for members of a governing body to have the courage to keep asking questions until they understand what they are deciding…”
As Councillors we still await detailed information on critical contractual and financial assumptions. The only financial briefing from HBRIC to Councillors was verbal and presented in a workshop … a practice also criticised by the A-G.
As Councillors we have not been permitted to engage with the supposedly independent consultant, Deloitte, selected to advise us on the viability of the project, despite the fact that it is we Councillors, not the staff, their insights are intended to satisfy. As we sit here today Deloitte concedes that it cannot actually give a final assessment of the project’s viability.
Meanwhile, total mystery prevails around the readiness of farmers to actually back their rhetoric with their dollars, and around the conditions and escape clauses they are being offered to do so.
Most foolishly, we are asked to authorize an investment today that might be rendered entirely moot by the BOI within 48 hours, given HBRIC’s interpretation, or further challenged in court.
And regarding the BOI, as much as senior leaders of this Council and HBRIC attempt to paper over the fact, the draft decision of the BOI to reject the environmental mitigation scheme proffered by HBRC is a blow to the credibility of the scheme team. If they got it wrong on the Plan Change, where else have they got it wrong – on the ability of the dam to supply sufficient water in dry years, in the projected increases in farm productivity in an area with serious limiting factors other than water, on the claimed jobs and downstream economic benefits?
Critical as they are, my lingering concerns in these areas are trumped by the deficiencies in our decision-making readiness, as I’ve outlined.
From the Kaipara report: “There is a tendency to discount such points as bureaucratic, but they are fundamental to an effective and trusted public sector. In several reports recently, we have emphasised that, in the public sector, decisions have to not only be right but also be seen to be right. The process for decisions also matters, because the use of public money and power has to be clearly and properly authorised.”
The process this Council is following makes it impossible for me today to properly meet my fiduciary responsibilities to the ratepayers of Hawke’s Bay and to their environment. And I am not prepared to hand those responsibilities over to HBRIC, anointing them to judge whether requisite conditions are satisfied, which is the recommended proposal.
This investment is not ripe for a vote, even a symbolic one that would suggest that a compelling case has been made, which is where the amended language leaves us today.
Consequently I have only one option and that is to vote against the proposed Regional Council investment in the Ruataniwha scheme.13 comments »