Ratepayers getting fleeced under dam plan, says economist
Tasman district ratepayers will be left ‘‘holding the baby’’ for the proposed Waimea dam, says economist Peter Fraser.
The former Treasury economist yesterday stood by his earlier claims that water from the proposed dam in the Lee Valley would be 50c-60c a cubic metre – more than three times the 14c per cubic metre average cost of water supplied in 2016 by irrigation schemes across the country, according to Irrigation NZ figures.
‘‘It’s a really, really expensive dam for really, really expensive water,’’ he said. ‘‘Irrigators can’t afford it. I think, they’re [ratepayers] going to be left holding the baby the whole way through.’’
His comments come after Tasman District Council released a new funding and governance proposal under which the council will pump $26.8 million into the Waimea dam project, underwrite a further $29m and face the cost alone of any overruns above $3m. The overall project cost is estimated at $82.5m with a build price of $50m tipped, including $13.5m for changes in scope and unexpected costs.
‘‘These schemes: Try to find anything that comes in on cost,’’ Fraser said. ‘‘It seems ratepayers are on the hook alone for anything above $3m if there’s a blowout of the build cost.’’
However, mayor Richard Kempthorne said the dam costing was based on a ‘‘P95’’ confidence level, which meant the council could have 95 per cent confidence the dam would be constructed at or below the estimated cost.
Fraser said the proposed dam was too big for the area to be irrigated and the water would be too expensive for irrigators.
‘‘What I object to is ratepayers and taxpayers paying for it.’’
The new model incorporates a $7m grant, announced in August, from the Government’s Freshwater Improvement Fund and an interest-free $10m loan from Crown Irrigation Investments Ltd (CIIL), announced last week.
Kempthorne said he was fully supportive of the use of the Freshwater Improvement Fund and CIIL loan because it was a ‘‘huge challenge’’ to get a funding model across the line for large infrastructure projects.
Under an earlier model, the council was to pay two-thirds of an environmental flow component with its likely joint-venture partner, Waimea Irrigators Ltd (WIL), due to pick up the other third. Fraser described this as the ‘‘Meat Loaf solution – Two Out Of Three Ain’t Bad’’.
However, under the new model, the environmental component of $22.7m is to be funded by the $7m Government grant, the $10m CIIL loan – that the council will pay back – and ratepayers directly.
‘‘Ratepayers are getting fleeced,’’ Fraser said.
Waimea Irrigators and Water Users Society consultant Brian Halstead described the proposal as a ‘‘massive subsidy’’ to affiliated irrigators at ratepayers’ expense.
However, Kempthorne said irrigators were coming to the party, signing up for $40m – $15m in shareholder funds and responsibility for the repayment of a loan of up to $25m from CIIL.
‘‘This is a big challenge for irrigators,’’ the mayor said.