Govt begins watering down irrigation funding
The Government has begun winding down public subsidies for large-scale irrigation projects, but has agreed to honour previous commitments to existing schemes and three that are still in the works.
Finance Minister Grant Robertson said the wind-down — signalled in the Government’s confidence and supply agreement — came after a review into how to tail off funding through Crown Irrigation Investments Limited (CIIL), while honouring existing commitments.
“The decisions will provide certainty to the individual schemes which had applied for Government funding alongside private investment.”
All existing CIIL commitments for development contracts would be honoured to the close of the current phase of each contract.
Three schemes would also be funded for their construction phases due to their advanced status, subject to meeting the normal requirements of the fund.
Those commitments were for the completion of the $200m Central Plains Water Stage 2 (CPW2) in Canterbury, and constructing the Kurow-Duntroon scheme in South Canterbury and the Waimea Community Dam in the Nelson region.
CIIL was contractually bound to honour its $65m loan to CPW2, due to be complete by August, and had signed a construction funding term sheet with the Kurow Duntroon scheme, which served a mix of dairy, sheep and beef, viticulture and other sectors, and included replacement of existing aged open-canal to piped irrigation infrastructure.
CIIL had committed $35m toward the Waimea scheme, which was mainly targeted toward the horticulture and viticulture sectors in the Nelson region, and would increase minimum flows in the Waimea River.
Robertson said the wind-down represented a shift in priorities to the previous government.
“Large-scale private irrigation schemes should be economically viable on their own, without requiring significant public financing,” he said.
“We must also be mindful of the potential for large-scale irrigation to lead to intensive farming practices which may contribute to adverse environmental outcomes.”
Robertson said funding for the three projects still in development could be met with the current appropriations, should Waimea and Kurow Duntroon reach financial close within their allowed timeframes.
Smaller-scale, locally run and “environmentally sustainable” water storage projects could be considered on a case-by-case basis through the Provincial Growth Fund.
Irrigation NZ chief executive Andrew Curtis said his group was disappointed that some other schemes would miss out. They included the Hurunui Water Project and the Hunter Downs Irrigation Scheme, both in Canterbury.
National’s agriculture spokesperson Nathan Guy said the move was “a huge blow to regional New Zealand”.
The decisions will provide certainty to the individual schemes which had applied for Government funding alongside private investment. Grant Robertson