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'Well-deserved' $80m for irrigation

The government is stepping in to support irrigation schemes with an $80 million investment fund.

The taxpayer support to the rural sector is a necessary boost because banks have refused to fund such schemes and farmers cannot afford them.

The $80 million is "well deserved", Irrigation NZ chairman John Donkers says.

The money will pave the way for dams on main rivers in Canterbury, Hawke's Bay, Tasman, and Otago.

David Carter made the announcement in a parting gift to the rural sector as he relinquishes his agricultural ministerial role to become Parliament’s new Speaker.

Mr Carter describes the $80 million as bridging investment.

In 2011, the government signalled plans to invest up to $400 million in regional-scale schemes to encourage third-party capital investment.

Cabinet has now directed that $80 million for the initial stages of the company’s operation be set aside in Budget 2013.

“The Crown-owned company will be a minority investor in any development project and it will also plan to be a relatively short-term investor.

“A number of groups are developing proposals for these larger, regional-level schemes and the government expects to consider at least one proposal in the next 12 months,” Mr Carter says.

In Canterbury there are two main contenders – Central Plains Water and Hurunui Water Project.

The news of the subsidy comes at the same time as publication of an Environment Canterbury report that shows only 39% of water allocated under resource consents was used in the 2011-12 season. In the previous year farmers used 52%.

The findings raise questions about why some rural property owners have been allocated so much water that they do not use, and how imperative new irrigation schemes are.

One of the Environment Canterbury authors of the latest water use study, Judith Earl-Goulet, describes the July 2011 to July 2012 period as “an average year”.

Even though only about 58% of water consent holders have installed meters – defying a November 2012 government deadline – Ms Earl-Goulet believes the findings are fairly accurate because they include some of the larger existing irrigation schemes, as well as farm wells.

The Canterbury Water Use Report (2011-12) measured water consent holders with takes of 20 litres per second.

Consent holders were required to install water meters by November 10, 2012, under the government’s national regulations on water measuring. But around 42% of them had failed to so by the deadline.

For surface water – taken from rivers mostly for big irrigation schemes like the Rangitata Diversion Race – 43.4% of the volume of allocated takes was used, compared to 49.5% the previous year.

c.hutch@clear.net.nz

More by Chris Hutching

Comments and questions

Ah, loverly pork for the farming industry. There was I thinking that farmers produced pork, when in actual fact they are the recipients! Note to self - must remember when another industry asks for help and is turned down in short order on the basis that the government does not choose winners.

If the irrigation schemes are economically viable, they would have no problem getting finance. There is plenty of competition in the finance industry in New Zealand and no shortage of funds to lend. Of course, economically viable also means having a viable ownership and governance structure, with the owners putting up some equity.

So the subsidy from the government means either the irrigation schemes are not economically viable or else the government just loves giving subsidies to its favourite industries.

Are there any industries in NZ that do not receive welfare from the government of one type or another?

"In 2011, the government signalled plans to invest up to $400 million in regional-scale schemes to encourage third-party capital investment."

$400m - the exact amount to build a new cable to the US.

Given they are spending $1.5b on a local intranet, you would think an extra $400m to connect NZ to the world would be a worthwhile investment.

About time the govt gave a little back to farming. They are producing 60% of NZ GDP, after all ... not to mention the tax take.

Yes, indeed - and they pay virtually nothing for the byproducts of their activities, such as the waterways pollution. Oh, I forgot, the rest of us taxpayers have to pick that particular bill up, don't we? Love the way that farming has managed to privatise the earnings but socialises the cost of its activities.

Where on earth do you get 60% of GDP from?

It is interesting to see that cabinet papers on the Irrigation Fund recommended that existing schemes be upgraded first to reduce water loss. They also suggested that the government be cautious about new schemes. Who will lose out if these schemes are not established with effective governance structures? The farmers or the taxpayer I expect.
Other issues that still need to be determined are where the water will come from if most surface water is already fully allocated. In 2012 the PCE published a report entitled Hydroelectricity or Wild Rivers. Perhaps a future publication may be Irrigation Schemes and Wild Rivers.
The government needs to make sure that the water financial structures are robust so the risk to farmers is limited. I support the scheme if it provides real benefits to primary industry. I hope another round of Crafar farm type sales does not eventuate if the underlying structures are not there. It's time to be professsional about farming as a business and the value of water in our primary products.

Of course the govt picks winners. Nothing has changed since Muldoon was so roundly criticised for doing just that.
Wonderful to be able to use Other People's Money to play with. OPM is alive and well.
liberte

I'm a little confused here.
Currently, we use around half of exisitng capacity. Why do we need more capacity?
I've driven through Canterbury farmland in winter storms and wondered why farmers are still irrigating. Has any study been done to see how effective these guys are?
To me, we are not using exiting capacity and it appears we don't use it particuarlty efficiently.

The problem I have is that these schemes are mostly set up to irrigate feed for animals. Why not specify that at least 40% should be used for horticulture, and fresh and processed human food crops?

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