Eugenie Sage

Conflicts of interest in regional councils’ management of water

by Eugenie Sage

Judith Collins failed to recognise the conflict of interest in having dinner with a Chinese border official and the CEO and director of the Oravida company on which her husband is a director. An equally troubling conflict of interest is occurring in regional councils.

Water is a common property resource which regional councils manage on behalf of the Crown and all New Zealanders. The Resource Management Act (RMA) charges councils with maintaining and enhancing water quality and maintaining water quantity.

Under National regional councils, instead of being independent managers of water on behalf of a wide range of public values, are shelling out millions of dollars of  Council funds to help promote and subsidise big new irrigation developments.

In Hawke’s Bay the regional council has an investment arm, the Hawke’s Bay Regional Investment Company (HBRIC). It has reportedly spent more than $626,000 in one month alone on the proposed Ruataniwha water storage scheme in the Tukituki River catchment. MPI has forked out another $1.9 million for the scheme and the Council has earmarked another $80 million of public money to funnel  though HBRIC to build the Ruataniwha dam and reservoir.

Greater Wellington Regional Council is spending $1.28 million to investigate irrigation storage proposals in the Wairarapa to irrigate another 30,000-50,000 ha. This could include a series of storage reservoirs in the Wairarapa Valley foothills.  Another $1.28 million of public money for investigation work is coming from the Government’s Irrigation Acceleration Fund.

In Canterbury the Government appointed Environment Canterbury Commissioners have ensured that irrigation expansion is a major part of the Canterbury Water Management Strategy (CWMS). A chunk of the $15.5 million annual spend on the CWMS in 2013/14 is helping fund feasibility studies on new irrigation infrastructure. While it hasn’t gone as far as “lending” Central Plains Water Ltd $5 million as Selwyn District Council has done, it has funded numerous  studies on Think Big irrigation projects such as a Lees Valley dam in the Ashley River catchment.

Further south Otago Regional Council’s (ORC) Long Term Plan provides for a $3.5 million spend by Council to buy shares in the $39 million Tarras irrigation scheme which would take water from the Clutha River to irrigate around 6,000 ha. in the Tarras district.   A 30 % share stake in the scheme means the Council would be expected to spend another $2.09 million in fixed charges in the five years to 2018/19 as its share of  bank loan interest costs, power and other costs. Rates are ecpected to have to increase to cover these costs.

Councils such as Otago claim that “rigorous internal processes” allow them to manage the schizophrenic role of being the planning agency which sets minimum stream flows and the amount of water available for allocation in a regional plan  and the decision maker on resource consents for any new  water takes  while also actively supporting new irrigation proposals by pumping in Council funds.

These regional councils appear to see themselves as being some kind of economic  development agencies keen to help advance National’s pro irrigation agenda when there is a shortfall of farmer investors or private capital for new dams, canals and reservoirs.

There is the potential for serious conflicts of interest when regional councils which are responsible of managing our rivers, lakes and aquifers, supposedly on behalf of all New Zealanders, also take on the role of  assisting the agribusiness sector by investigating the feasibility of, promoting, buying shares in and helping fund large scale water takes and new irrigation dams and reservoirs .

Feasibility studies for such schemes rarely include anything more than a superficial look at potential  impacts on riverine habitat and ecological values, water quality or fishing or kayaking and other recreational values. Instead narrowly focused economic reports overstate likely farm gate returns and potential new jobs,  and understate or ignore the economic costs of increased water pollution.

When senior council managers and councillors are backing a new irrigation scheme and ratepayers’ funds are at stake, council staffers may be reluctant to critically analyse scheme impacts of costs for fear of being passed over for promotion and employment opportunities.

By using public funds to subsidise one business activity and not others they are attempting to “pick winners” which can cost ratepayers.

As a report to the ORC  on the Tarras scheme noted, buying shares in an irrigation scheme is a “high risk investment.” There may be no buyer when council comes to sell its shares, if the scheme goes bellyup the Council is last in the list of creditors, and if interest charges and power prices (to pump water) rise so do the extra fixed charge costs to shareholders including the council.

By diverting public funds to one sector– irrigators and agribusiness – regional councils are buying into the National government’s agenda of expanding irrigation. In the process, councils risk undermining public confidence in their independence and integrity as regulators.

What chance does clean water have when the agencies charged with maintaining water quality are subsidising the activities which numerous scientific reports have shown to be the major cause of water pollution in the last 20 years?

Published in Environment & Resource Management by Eugenie Sage on Tue, March 18th, 2014   

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