Dam payback ‘may be $400m’
A go decision on the proposed Waimea dam would commit the Tasman district community to paying back between $300 million and $400m, with general ratepayers shouldering the lion’s share, says an experienced chartered accountant.
Ian MacLennan said that along with repaying the bulk of the debt, general ratepayers would also be responsible for all of the project and interest rate risk.
He estimated that irrigators would gain at least 80 per cent of the benefit from the proposed dam, earmarked for the Lee Valley, but would pay $136m of the $300m-$400m project life cycle costs.
This represented a ‘‘massive’’ transfer of wealth from the public purse, which he estimated could be between $71.46m and $227.98m depending on the interest rate and term of borrowing.
Tasman District Council and Waimea Irrigators Ltd (WIL) are proposed joint-venture partners in the dam project, which is tipped to be funded by a mix of ratepayer, irrigator and Crown funding.
Council chief executive Janine Dowding said MacLennan did not claim to be an expert in dam building and operating costs but ‘‘given his financial expertise and experience, we will ensure that his assumptions around increased project costs are examined’’.
MacLennan, who is also a Tasman district ratepayer, said irrigators and industry made ‘‘millions of dollars’’ out of using water as a business input that ‘‘should be paid for in full’’.
‘‘Councils and ratepayers have no legal or moral obligation to underwrite water for irrigation or industry,’’ he said.
He said that as a chartered accountant, it was ‘‘alarming to me that at no stage has there been open and honest financial modelling of either project risk or interest rate risk to underpin the discussions, decisions and commercial arrangements’’. In the absence of such a financial model from the council, he had prepared one himself.
MacLennan said he had taken publicly available information from the WIL disclosures for its capital raising and disclosures in the council’s Long Term Plan 2018-28 consultation documents, and calculated the GST-inclusive cash commitment required, ‘‘as most of us ratepayers cannot get that back’’.
Three build and operating cost scenarios, three interest rate scenarios, and three loan term scenarios – of 25, 30 and 40 years – were run.
Dowding said two features of the model related to matters outside the dam construction project costs, and would not be examined further – MacLennan’s view that the costs should be apportioned 80 per cent to irrigators and 20 per cent to the council, and his modelling of total costs over 25 years or more.
The council had a ‘‘quite a different view’’ on cost apportionment between irrigators and the council, while all large infrastructure projects had costs apportioned over time, she said.