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Dam critics speak out (5 comments)

October 24, 2014

In case you missed them, two excellent Talking Points have been published recently in HB Today regarding the proposed dam. And three highly experienced farm economists trash the dam in a recent academic paper.

First up was Pauline Elliott, chairman of Transparent Hawke’s Bay, writing on 13 October. In ‘Public does not know RWSS uptake’, Pauline wrote: “The stakes are high, the costs to date are great, the lack of transparency is astonishing. A wholly owned council investment company is pushing farmers to increase debt while all advice from farm advisers is to manage current debt carefully and nor increase.”

Pauline’s Talking Point can be downloaded here.

Backing up Pauline’s point about farmer debt, here’s some data on just how well CHB farmers are doing from Crowe Horwath business advisers and accountants, as published in the 13 May CHB Mail. Crowe Horwath looked at returns of 125 CHB farmers and found:

  • Overall return on assets dropped from 4.3% in 2012 to 1.1% in 2013.
  • Average gross income per hectare of $813 in 2013 was down 23% from 2012′s $1,055.
  • The ‘Economic Farm Surplus’ per hectare — excluding debt servicing and rent — decreased from $335 in 2012 to $69 in 2013.
  • Debt servicing as a percentage of gross farm  income “blew out” to 17% in 2013 from 11% in 2012.

Yep, CHB farmers, let’s borrow some more to pay each year for dam water you might use one in ten or twelve years … if it’s available when you need it! The only guaranteed winners in this proposition … bank lenders.

Then, on 20 October, Trevor Le-Lievre, who lives in Waipukurau and has followed closely the dam proposition and the CHB Council’s attempts to promote it, wrote his Talking Point.

In ‘Pull the plug on the dam’, Trevor particularly critiques the latest CHB Council proposal to buy drinking water from the dam scheme. He concludes his analysis: “Advancement of the Ruataniwha dam is now being driven by political and not any rational economic imperative. There are reputations at stake and awkward questions to be avoided, namely, which dark hole have Regional Council ratepayers just poured an estimated $15 million into?”

Trevor’s Talking Point can be downloaded here.

If you really want to dive into the dam’s economics in detail, read the paper recently published by Peter Fraser, a former head of dairy policy for MAF, and two other deeply experienced farm economists/advisers, Barrie Ridler and W.A. Anderson. After 13 pages of detailed analysis, their paper — The Economics of the Ruataniwha Dam – Is it the son of Clyde? — concludes:

“The conclusion this paper reaches is simple and clear: there is no economic or commercial rationale to proceed with the RWSS – indeed, HBRIC’s own analysis confirms the former and the withdrawal of two major private sector investors (including one with significant hydro experience), the apparent difficultly in securing alternative investors, and the tardy response from farmers to sign up for water contracts provide a telling commentary regarding the latter.

In addition to being wary of the sort of local (and potentially national) boosterism associated with large scale regional development initiatives, this paper also finds claims that failing to progress the RWSS will doom Hawke’s Bay to third world status are overblown and unconvincing.  The example of lucerne use in Marlborough shows that there are viable development alternatives in the agricultural space – and not all of them happen to go ‘moo’.”

The study was reported in some detail in NZ Farmers Weekly on 13 October and appears to be causing severe heartburn for dam advocates within and outside Hawke’s Bay.

You can download the full paper here.

Tom Belford

P.S. Meantime, Regional Councillors will receive a public update on the dam scheme from HBRIC at the Wednesday, 29 October meeting of the Council. It’s an open meeting folks.



Mystery dam investor identified (one comment so far)

October 11, 2014

While the rest of the world puzzles over the whereabouts of North Korea dictator Kim Jong Un, BayBuzz has snapped these exclusive photos of Kim’s recent surprise trip to Hawke’s Bay, where his eminence toured the site of the Ruataniwha Dam and announced his decision to invest.

In our first photo, Kim arrives at Hawke’s Bay Airport, greeted by the Republic of Napier Colour Guard.

Keeping to the water theme of his visit, Kim’s first stop was the National Aquarium.

Getting down to business, he was then briefed on intricacies of the RMA by regional councillor Christine Scott.

Then off to a rally in Waipukurau sponsored by Federated Farmers, who entertained Kim with synchronized sheep whistling.

Kim then inspected the dam site, from a safe distance (given his phobia about earthquakes). Project leader Graeme Hansen was suitably garbed to host the site visit.

HBRC chairman Fenton Wilson, pulling out all the stops, impressed his money-bearing guest with a look-alike doo.

Later, Kim inspected a water slide that will become part of the recreational offering at Lake Newman.

Furious at a breach of security, Kim fired several rounds at intrepid BayBuzz photographer Tim Whittaker, who suffered a minor graze wound.

And finally, Kim signed his investment certificate and Water User Agreement. Kim has agreed to purchase the Ruataniwha dam and its entire water supply outright, with plans to market bottled water under the ‘Korean Klear’ label. In a humane gesture, Kim announced he would donate several cases of Korean Klear to meet CHB’s drinking water needs.

HBRIC chief executive Andrew Newman praised the deal, saying: “I’d rather sell the water to North Korea than to any friend of CHB mayor Peter Butler.”

After the agreement signing ceremony, Kim took a private call from Napier mayor Bill Dalton, who sought advice on Napier’s proposed de-militarized zone.

Commented a bellicose Dalton afterwards: “With the Berlin Wall down, there’s no better model to follow than a de-militarized zone to protect Napier from our southern aggressors.” Kim was heard to remark to an aide: “Now that’s one crazy dude!”

BayBuzz understands the visit ended on a sour note when Kim was informed his promised tour on the famed Art Deco buses would not occur. Efforts to placate Kim with a boat ride around the harbour were unsuccessful.

HBRIC chairman Andy Pearce equivocated on whether the dam investment would stand, but noted: “Kim Jong Un is not the only despot on the planet with deep pockets.”

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Show us your agreements (2 comments)

October 3, 2014

This past week, nine farmers from Central Hawke’s Bay ran a large advert — Open Letter from the Farmer Reference Group — in the CHB Mail.

These farmers — Eliot Cooper, Graham Anderson, Hugh Ritchie, Jeromy Greer, Phil King, Richard Dakins, Will Foley, Campbell Chard and Bob Cottrell — implored CHB farmers to sign water user agreements (WUAs) that would commit such farmers to purchasing irrigation scheme water for 35 years. The agreements would require farmers to pay for their stipulated water each year, whether or not the water was actually needed or used.

The advert asserted the benefits of the dam scheme and touted the discount being offered to early signers of WUAs, noting “the time to do it is now”. It made no mention of the substantial on-farm costs farmers would need to bear — estimated at up to $300 million over and above the cost of the proposed dam and its distribution network to farm gates — if they indeed signed on to the scheme.

The advert closed with this offer from the Farmer Reference Group: “We are happy to discuss this opportunity with you and discuss the potential of irrigation in your farming  operation.”

What is amazingly missing from this advert is the strongest possible persuasion point these nine farmers could possibly have made — “We’ve already signed up.”

Their statement might have read something like this:

“We nine fellow CHB farmers have already put ourselves on the line, each of us having signed water user agreements committing us, collectively, to purchasing [insert big number] cubic metres of water from the scheme each year for the next 35 years.”

Surely that would be impressive! HB Today would give it 3-inch headlines. The CHB Mail would run photos of each signer.

Why is there no such statement in the advert?

Three possible reasons I can think of:

  1. Some or all have not yet signed WUAs.
  2. One or another might not farm in the projected scheme’s footprint.
  3. Or maybe they’ve all signed WUAs and they’re all just too bashful to talk about it.

So here’s a simple suggestion for the Ruataniwha Farmer Reference Group. Why don’t you lay your signed purchase agreements on the table, in full public view? The HBRIC Board conducts its annual shareholder public meeting on Monday afternoon. That might offer a decent opportunity.

I have no doubt that demonstrating your confirmed ‘skin in the scheme’ would do far more than your advert to impress the other farmers you are urging to tie their fortunes to the proposed scheme.

It would certainly impress me as a Regional Councillor, because I’ve yet to be shown any evidence by HBRIC — publicly or privately — that Water User Agreements are actually being signed.

Tom Belford






The Big Six Issues (no comments yet)

September 23, 2014

The Regional Council is now conducting informal consultation around six key issues that could be addressed in next year’s re–write of its Long Term Plan (LTP).

The ‘Big Six’ issues are:

1. Our Energy Future — what path should we be on … oil & gas, solar, electric cars, converting waste to energy, energy conservation?

2. Relationship With Maori — with numerous treaty settlements coming to closure, including commitments councils must meet, as well as creating new governance arrangements and economic potential, plus a resurgence of marae-based leadership, we need to revamp our formal and informal consultation and decision-making practices.

3. Climate Change — it’s real, it’s happening, it will have major impacts on Haawke’s Bay. How must we mitigate and adapt?

4. Connecting Our Region — roads, railroads, buses, i-Ways and fibre lines, port and airport, how do we best connect ourselves in the region … and our region to the outside world?

5. Regional Economic Development — ‘one for all and all for one’ … or ‘let a thousand flowers bloom’ … how do we get off the bottom rungs of NZ’s socio-economic ladder?

6. Wise Land Use — our land and soil is essentially irreplaceable … what should we be doing to protect, restore and enhance our most precious regional asset?

These issues are briefly teased out in this highly readable 16-page booklet, The BIG SIX. I urge you to take a look, have a think, and get your views to the Regional Council.

As I said above, this is an informal consultation (more information on the process here). It will help inform the Council discussions through the balance of the year that will shape what initiatives and funding priorities are set forth in the next draft LTP, which will appear next March/April.

It would be most helpful if you can get your thoughts in by October 15th, as HBRC will be deep into planning in November and December. Two opportunities to meet with all Councillors are scheduled for 24 September, 3:30-4:30 and 8 October, 3:30-4:30 (both sessions at HBRC Council Chamber in Napier).

However, I and other Councillors will welcome your views at any point. And presentations can be made to inquiring organisations — contact

And of course the formal consultation process will still occur when the draft LTP is issued next year.

Look forward to hearing from you.

Tom Belford

P.S. The Big Six exercise is an effort to raise issues over and above the work that HBRC must do ‘routinely’ given its statutory responsibilities in areas like water quality, biosecurity, flood control and civil defence planning. So don’t be alarmed that such issues are not highlighted in The Big Six document.

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Oil news (one comment so far)

September 18, 2014

Earlier this week, TAG Oil announced it was capping and abandoning its exploratory drilling site outside Gisborne (Waitangi Valley-1). Why? Too dangerous.

Their official announcement read: “Waitangi Valley-1 encountered very high hydrocarbon zone pressures at shallow depths that cannot easily be compared to anywhere else in the world. [Ed: italics added.] We understood this program would be challenging and we encountered extremely difficult drilling conditions in the first 856m of drilling. After consulting with worldwide drilling experts and considering all data ourselves, we have made a difficult decision to plug and abandon Waitangi Valley-1 before reaching the intended total depth of 3600m, to maintain the safety and integrity of the operation.”

TAG is re-deploying the drilling rig to Taranaki … to the relief of some on the East Coast, I suspect.

Ironically, last week a group of Hawke’s Bay Regional Councillors, including me, plus mayors Peter Butler and Craig Little, visited Taranaki for a long day of exploring oil and gas development there. Unfortunately we spent only an hour in focused group exchange with Taranaki staff regarding how they oversee oil and gas operations there. I’ve attached here the Powerpoint presentation we received … heaps of basic information there. However, in view of the criticisms about Taranaki made by the Parliamentary Commissioner for the Environment in her recent report on oil and gas development (she termed Taranaki’s approach “extraordinarily permissive”), we could have devoted half a day to substantive discussion.

Instead, we took the guided tour. The production and drilling sites we visited were impressive in terms of industry technology and professionalism. Certainly we benefited from getting a firsthand sense of the what actually happens on the ground. But that’s no substitute for serious questioning of the regulatory regime.

And of course we met with no critics of Taranaki’s oil and gas programme or its regional/local government regulatory oversight.

Returning from Taranaki, we visited the Horizon Regional Council, where I met Councillor Rachel Keedwell, a PhD ecologist.

Rachel had made a visit of her own to Taranaki, and did a lot more probing that we HBRC folks did. I’ve attached here her report on her trip, and urge you to read it. Among her concerns:

  • Very little control over where wells are located (a primary concern of the Parliamentary Commissioner)
  • No prior — and very little ongoing — monitoring of water quality
  • Responsibility for abandoned wells falls on landholder and community
  • Lack of clarity over who is deemed an affected party (which affects public notification or lack thereof)
  • Non-disclosure agreements forced upon landowners
  • Adverse impacts on adjoining property values and lack of disclosure on LIM reports
  • Waste waters being discharged to waterways
  • Overstatement of local job opportunities
  • Adverse health impacts

And here’s her overall warning:

“…what I saw has left me with grave concerns that Horizons is seriously unprepared for the expansion of this industry in terms of ensuring that our communities are adequately protected. The Parliamentary Commissioner for the Environment recently concluded that the regulatory framework for oil and gas production in New Zealand is not adequate and that regulators may be left ‘scrambling to catch up’ if the industry continues to expand. From what I saw of the industry and the impact on communities, I believe her conclusions are accurate. We need to get onto this as an urgent priority if we want to have a chance of living up to our vision statement of making this region a great place to live, work and play.”

Amen! The same applies to Hawke’s Bay and our Regional Council. Indeed, the recent brouhaha over seismic testing in Napier simply points up the our lack of preparedness, complicated by overlapping jurisdictions (both regional and territorial councils have responsibilities).

I have pressed for $200,000 to be earmarked for the Regional Council to ramp up its own investigation of how we would oversee and regulate oil and gas development if it occurs in Hawke’s Bay. The money — approved by Councillors Belford, Barker, Beaven, Dick and Graham — is presently in the budget. But not all councillors feel the same sense of urgency about getting on with the job!

So, do your homework. Check out the two attachments. And get prepared to weigh in on Hawke’s Bay’s energy future.

Tom Belford

P.S. HBRC has invited the Parliamentary Commissioner to visit Hawke’s Bay and brief us on her recommendations. We’re expecting that visit in early 2015.


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Let there be light! (2 comments)

August 28, 2014

We walked … because we’re not mushrooms.

Click to enlarge.


The Black Budget (6 comments)

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.

Tom Belford