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High Court sides with enviros on Tukituki appeals (one comment so far)

December 12, 2014

The High Court has ruled on the Tukituki Board of Inquiry plan for the catchment, supporting the environmental appellants, and awarding reimbursement of costs to Fish & Game and Forest & Bird, to be paid by HBRC, HBRIC and co-respondents Dairy NZ, Fed Farmers and Fonterra.

Here’s the crux …

“The effect of my judgment is that the Board will need to reconsider Rule TT1(j) and devise an appropriate mechanism for monitoring the amount of DIN that enters the Catchment Area. The Board will also have to reconsider its terms of consent for the Ruataniwha Water Storage Scheme.”

And then …

“[218] The parties have all said that if I find the Board made a material error of law I should direct the Board to reconsider the relevant portion of its report in light of my findings. I agree that is the appropriate course to follow. The Board is seized of significant quantities of evidence and information that could not be properly conveyed to me when dealing with appeals based only on questions of law. I therefore direct the Board to reconsider and change Rule TT1(j). When the Board changes Rule TT1(j) it will also need to amend the conditions of consent to the Ruataniwha Water Storage Scheme project. In making this direction I am not suggesting the Board should necessarily revert to its draft Rule TT1(j). The Board will need to consider a range of possibilities and ensure the parties have had a fair opportunity to comment on the final version of Rule TT1(j).”

So … back to the drawing boards on how DIN (nitrogen) limits should be implemented in relation to both Plan Change 6 and the dam. More uncertainty ahead for the dam.

The Regional Council is scheduled to get a progress report from HBRIC at its Wednesday the 17th meeting.

Might be worth attending.

More to come on implications.

Tom Belford

P.S. The full decision is here: Hawke’s Bay and Eastern Fish and Game Councils v Hawke’s Bay Regional Council.


one comment so far »

Why move to New Zealand? (one comment so far)

December 12, 2014

People often ask me (and wife Brooks) why we moved to New Zealand.

Two reports in today’s NY Times provide a hint …

The first says that, for the first time in two decades of polling, a majority of Americans (52%) now say it is more important to protect gun ownership rights, while 46% say the priority should be controlled access to firearms. In 2000, only 29% chose gun rights over gun control.

The second says that 50% of Americans now believe that torture of terrorism suspects can ‘often or sometimes’ be justified. In 2005, this percentage was 38%.

Not auspicious trends.

Meantime, the hottest ‘education’ topic in the US news is campus rape and the hottest environmental issue is fracking.

I guess those might be considered reasons for leaving the US, rather than for choosing NZ.

As for that, one important reason was that we thought NZ was ‘clean and green’.

We like to think we still have some ability to influence that.

Tom Belford

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Dam and biodiversity — dates to note (no comments yet)

November 25, 2014

Here are some meeting dates that might interest you.

Ruataniwha Dam

Transparent Hawke’s Bay is sponsoring a public forum in Waipawa on Tuesday, Dec 2, 7pm to critically examine the proposed dam scheme.

The meeting, at the CHB Theatre in Waipawa, will feature a number of well-informed critics of the scheme — Peter Fraser, policy advisor to Treasury and MAF (now MPI) looking at the project’s overall economic and financial viability; Barrie Ridler, farmer, farm advisor and former Massey lecturer on farm economics looking at the scheme’s suitability for individual farmers in CHB, and CHB farmer Andrew Wilson.

Bring your questions. Don’t expect a sales pitch!

Biodiversity Strategy

A wide range of stakeholders — land owners, farmers and growers, Fish & Game, Forest & Bird, Maori, DoC — have been working together with the Regional Council to develop a biodiversity strategy for the region.

A draft strategy is now ready for public consultation, which includes a series of public workshops scheduled next week as follows:

Wairoa — 1 December, 11:30 – 3pm, at the Wairoa Community Centre

CHB — 2 December, 12:30 – 4pm, at 260 Woburn Road, Hatuma, Waipukurau

Napier — 3 December, 9:30-12:30pm, at Kennedy Park

Havelock North — 3 December, 5 – 8:30pm, at Havelock North Community Centre (Magdalinos Room)

Each meeting will include a briefing by members of the working party, followed by small group discussions to get feedback on the draft strategy and next steps … and nibbles!

You are asked to RSVP by Friday, 28 Nov at www.hbrc.govt.nz (keyword search: biodiv) or phone 833-8061.

You can view/download the draft strategy at www.hbrc.govt.nz




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It’s all about growth! (2 comments)

November 21, 2014

There is only one issue, after all!



What?! Research slanted? No way! (no comments yet)

November 5, 2014

The National Business Review (NBR) just posted a remarkable survey, following up its story of last month, Guns For Hire.

Here is the question it posed to its readers … who hardly represent the radical vanguard of New Zealand:

Are you confident about the validity of reports commissioned from NZ’s economic research institutes?

The response:

Yes, they maintain a rigorous independence from their funders — 17% agree

No, they’re influenced by the outcome desired by their commissioning clients — 83% agree

NBR reported the comments of Dr Eric Crampton, director of research for the New Zealand Initiative, a think tank representing several dozen of  NZ’s major corporates. He said:

“The commissioning agency in some cases might not want to know the real number.” … “They might just want to have a number that can show up on the headlines for a few days and put it into the public debate around the time some policy is being decided upon.”

Golly, consultants dancing to the piper’s tune?!

The fact is, in tiny New Zealand, there are very few paying customers for ‘independent analyses’ and, my favourite, ‘peer reviews’.

Councils are one of the most significant and reliable sources of $$ for consultants’ studies. But how much repeat work do you suppose a consultant or consulting firm (or university researcher) gets if they report back to a council … “Your proposition sucks and would be an insulting waste of ratepayer dollars!”

Does that happen in Hawke’s Bay — ie, consultants rubber stamping council wishes? You can bet $250 an hour or more on it!

Tom Belford


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Councillors offer alternative dam proposal (4 comments)

November 2, 2014

On Friday, Councillors Barker, Beaven, Graham and myself offered an alternative dam proposal that we believe is superior to the $300 million scheme (plus another $300 million in on-farm costs) advocated by HBRIC and five of our HBRC colleagues.

As argued in the proposal, we believe our approach reduces key risks inherent in current HBRIC scheme, while still accomplishing the key goals intended for water storage at roughly half the cost, and therefore deserves public consideration.

In my view, our more affordable proposal poses less risk to the environment, because both the effectiveness of the new water quality safeguards and the actual reliability of dam water supply would be established in practise before unconstrained farming intensification was encouraged.

As Councillor Beaven said in releasing the proposal: “Water storage is critical to the Bay’s future. This alternative option reduces risk to ratepayers and gives us a lower cost opportunity to grow the region’s economy.”

Our proposal is pasted in below and attached here as PDF.

As you will see, we are asking HBRIC’s assistance in fully vetting our alternative. Our Council has spent nearly $20 million attempting to make a case for the silver bullet some believe will transform Central Hawke’s Bay into a Garden of Eden. Surely ratepayers deserve a careful look at a reasonable alternative.

We will seek Council support for vetting our proposal at upcoming Council meetings this month. So far, HBRC Chairman Fenton Wilson has not yet made a public comment. However, HBRC/HBRIC did manage to make same-day delivery of our proposal to Irrigation NZ chief executive Andrew Curtis, who immediately dismissed it as “naive”, even though it is built upon core aspects of the HBRIC scheme.

As Councillor Barker describes: “This proposal is an affordable two-stage option. The first, for this generation to build the dam that will protect the Tukituki, while providing significant increases in irrigation capacity for economic growth. And the second, leaving a platform for a future generation, should they chose, to make a similar-sized, second-stage investment in the more efficient but costly piping system.”

Councillor Graham sums up our goal: “We need to find a commercial solution that allows our farmers to successfully manage their business’s in harmony with the environment.”

Stay tuned.

Tom Belford

The right dam

A proposal from Councillors Barker, Beaven, Belford and Graham

We have consistently endorsed water storage as a prudent strategy for enabling Hawke’s Bay to better manage its water to meet the equally important challenges of mitigating impacts of climate change, improving farming productivity, and protecting the environmental integrity of our rivers and aquifers.

We do not believe the dam scheme presently proposed by HBRIC is a defensible response to that challenge, for reasons we have consistently raised, including its pricing of water at 26 cents per cubic metre.

Therefore, today we offer an alternative water storage proposal for the Tukituki catchment.

Our proposal, still in development based upon expert advice as to detail, has these main features.

1. Initiating a programme to actively support, including financially, farmers in the Tukituki catchment who wish to improve their own on-farm water storage capacity and water use efficiency. This would include support for on-farm dams, improved irrigation technology and use, and improved soil management approaches.

2. Building a dam on the Makaroro, much as presently proposed, utilising the engineering work completed to date as the basis of planning. This would include the electricity-generating capacity now contemplated, and potentially enhanced.

3. Using the stem of the river as the irrigation channel instead of building the extensive and costly distribution infrastructure currently proposed by HBRIC. Farmers more distant from the river on the Ruataniwha Plains could still draw water from the aquifer. Whether from the aquifer or from surface water, such extractions would be compensated by dam water released back into the river. This approach could serve the bottom part of the Tukituki as well as the Ruatanwha plains area. In contrast, the distribution infrastructure HBRIC proposes effectively doubles the cost of the project but provides no extra water.

4. Farmers using irrigation water would pay for that water, but at a far reduced rate – we anticipate half the rate or less – from that projected by HBRIC’s current proposal.

The advantages of our alternative proposal are:

  1. Costs are reduced by approximately half. The dam alone is estimated by HBRIC to cost $140 million (distribution infrastructure is estimated at about an extra $135 million – this amount would be saved).
  2. Reduced maintenance and operating costs, because no distribution pipework involved.
  3. No outside investment with high commercial returns required – project could be funded by HBRC and the Crown. Better cash-flow for HBRC – no costly returns for commercial investors.
  4. Cheaper water – less than  half the current proposed HBRIC price. At full uptake of 93 million cubic metres water at $0.10 per cube would generate $9.3 million. Sufficient to generate a return on Council’s investment of $80 million plus repay the Crown, when added to electricity revenue, next point.
  5. Greater power generation because no water diverted into a distribution system or used to pressurise the water. Revenue from power generation is estimated at $3 million.
  6. Greater environmental benefits from significantly increased water flow in the Tukituki. HBRIC in fact has indicated that a smaller dam holding 10 million cubic metres of water and costing $30 million would be sufficient to ensure environmentally needed minimum flows and offset the economic constraints of Plan Change 6. We propose building storage capacity up to the amount originally proposed.
  7. Better opportunity for farmers and growers in the lower Tukituki catchment. Our scheme would result in more water being available throughtout the catchment, including downstream.

This approach is prudently future-proofed in three critical respects:

  • First, operating in this fashion would allow time for Plan Change 6 to gain traction and, importantly, to indicate whether the environmental requirements of that Plan were: a) being met; and b) sufficient to protect the Tukituki ecosystem, before potentially unconstrained intensification of farming in the catchment was encouraged to proceed.
  • Second, similarly, operating in this fashion would allow verification of the actual water collection and storage capacity of the dam over time. Dispute exists over the actual quantity and reliability of water flows in the Makaroro and whether these are adequate to deliver the volume of water HBRIC current projects selling. Our alternative allows the system and its recharge capacity to be tested. If it proves lower than HBRIC estimates, it would still generate a fair return on investment for HBRC.
  • Third, assuming these two conditions were met and the scheme is successful in getting sufficient farmer support to commence, a distribution system could be considered as a future additional investment.  If sufficient demonstrated farmer demand for irrigation water developed and could be managed, at a future point the building of distribution infrastructure could be re-assessed, on the basis of water-user (not ratepayer) willingness to invest and own.

We are requesting staff and consultants support to flesh out the feasibility details of this alternative proposal, including re-pricing of water and alternative financing options.

At issue is a $600 million public/private investment that is projected to have a 100 year life benefitting Hawke’s Bay. Given the magnitude of this investment and its huge environmental and economic stakes and risks, we think it only prudent that Council consider a no frills alternative that provides water at a more viable rate. We do not need to hurry this decision, nor make it in a vacuum with the only one option presented so far.



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.