So we need water storage that works for everyone and I'm just not convinced that this model before us is the best that we can do or even that it works.
The RWSS is the only corporate, non-famer owned model ever proposed in NZ. To clarify this, farmers will not be able to add this to their balance sheet except as an intangible asset, that is to say that they have access to water, which I admit is significant.
But not as a tangible asset as the farmers do in other NZ schemes where they have gained considerable balance sheet value.
The HBRC has confirmed that it will invest $80m into the RWSS.
This was originally marketed as "social capital" ie with reduced dividend demand or return on capital for the entry period.
The investment number of $80m hasn't changed.
It may surprise you but I am a big supporter of social capital but only as a start-up and only if there is proven wide economic benefits and flow-on.
This project should have fitted in to my model but it went "haywire" as it collected add-ons and warts in it's progression.
As an example the relatively recent proposal to use the Napier Port as security to secure the councils 6% return was a moment in time.
As a matter of interest this was not inspired by the HBRIC directors and none of them are very happy about it.
I will be working very hard to make sure this doesn't happen.
And whilst we are at it I can assure you that I will be working equally hard to ensure that the ratepayer will not be buying an extra 4m cu of water from this project at a cost of $36m for extra "flushing flows". There is absolutely no way I am going to agree to that and I am very certain that this new council will support me. This is also not going to happen.
The new revised McFarlane report was another moment in time. The report which is still proposing 9000 ha of dairying, 8000ha on light soils, was a particular clanger that we all had to get our heads around
Nobody on either side of this debate thinks that this is ever going to happen. But this is what the economic report which underpins the viability of the investment say, plus 4000 ha of horticulture.
It is also very unfortunate that the promoters have chosen a piece of protected land that requires a law change to become a part of their dam site.
They must have considered this and understood that this action would provoke the exact reaction that it has.
It is very ironic that we now have a regional council and a Government department, both charged with protecting the environment , in a very public court case to secure the right to flood protected land.
This is not a great situation and I do wonder, how did this happen ?
Our new council still has to take a position on whether we continue supporting this court action with DOC against Forest and Bird.
But be very clear, regardless of whether the council continues to support the court action of not , if this action fails there is little support in this new council to use the publics works Acts to take land out of conservation status, That is not going to happen.
The council's $80m investment was subject to certain "Conditions precedents" being met and I want to deal with some of them.
That the scheme has a viable consent
This was ticked off.
I'm not very happy about some of the contentions in this consent but I have personally moved on. Some of my councillors have not and this remains a lingering issue that needs to be resolved.
I do think that the directors of HBRIC do have a genuine desire to improve the environment even if I sometimes don't like their methodology that much.
That the scheme sold 40m Cu of water
Three years ago I asked where this figure came from. Why 40m?
And we were told that this was the breakeven figure and this is what we have accepted and debated for three years.
But oh no, when we come to vote of the precedent it was in its pure form, 40m cu only and nothing to do with breakeven.
Let me tell you this is not a good way to treat your fellows or your community and I am very annoyed that this was signed off by council when no one who can count to ten would agree that the project is breakeven at 40m cu or 42.8 which was the figure at the time.
So all those debates and number crunching was just a waste of my time and energy.
And the public aren't stupid and most of them can count and they are really angry about this.
We simply haven't sold enough water to make this business viable and I suggest that is why the commercial investor is holding off.
The simple reality is that our farmers in the catchment have as a collective half heartedly supported this scheme .
And for the record I don't blame them for being cautious as entering into these water purchasing contracts is a huge leap of faith, expensive and adding substantial contingency risk to their businesses.
For some I'm sure it will work but the bottom line is, the RWSS water storage business right now ,doesn't have enough business at the right price to make it viable.
It is also a condition precedent that the project has a commercial investor
Well where are they, its been three years?
They could turn up and say we are in this deal subject to the court ruling, That is how business is done, we have all done deals subject to certain things being achieved.
But they are not there and I suggest its because they can also add up to ten.
From their perspective this is a long term commercial investment and they have an obligation to their shareholders just as we all do.
So don't blame us if the investor is also a bit faint hearted.
One of our farmers asked me, so how much water do we have to buy to make this variable. Well, I'm not sure right now and I'm certainly not an expert in all the machinations of this business but I do intend to find out.
We need to have a cup of tea, our community is demanding that we have a cup of tea, so that is what we must do.
We need time to reflect on all the fundamental's, the environmental impacts ( good and bad) the economic benefits and the business model and viability KPIs.
I'm sorry that my message is not exactly what you want to hear but I am trying to get my heard around all this and understand all the issues and it will take a bit of time.
■Rex Graham is chair of the Hawke's Bay Regional Council. This is a speech he gave to the Central Hawke's Bay Rotary Club earlier this week.
■Views expressed here are the writer's opinion and not the newspaper's. Email: editor@hbtoday.co.nz
Our new council still has to take a position on whether we continue supporting this court action with DOC against Forest and Bird.
But be very clear, regardless of whether the council continues to support the court action of not , if this action fails there is little support in this new council to use the publics works Acts to take land out of conservation status, That is not going to happen.
The council's $80m investment was subject to certain "Conditions precedents" being met and I want to deal with some of them.
That the scheme has a viable consent
This was ticked off.
I'm not very happy about some of the contentions in this consent but I have personally moved on. Some of my councillors have not and this remains a lingering issue that needs to be resolved.
I do think that the directors of HBRIC do have a genuine desire to improve the environment even if I sometimes don't like their methodology that much.
That the scheme sold 40m Cu of water
Three years ago I asked where this figure came from. Why 40m?
And we were told that this was the breakeven figure and this is what we have accepted and debated for three years.
But oh no, when we come to vote of the precedent it was in its pure form, 40m cu only and nothing to do with breakeven.
Let me tell you this is not a good way to treat your fellows or your community and I am very annoyed that this was signed off by council when no one who can count to ten would agree that the project is breakeven at 40m cu or 42.8 which was the figure at the time.
So all those debates and number crunching was just a waste of my time and energy.
And the public aren't stupid and most of them can count and they are really angry about this.
We simply haven't sold enough water to make this business viable and I suggest that is why the commercial investor is holding off.
The simple reality is that our farmers in the catchment have as a collective half heartedly supported this scheme .
And for the record I don't blame them for being cautious as entering into these water purchasing contracts is a huge leap of faith, expensive and adding substantial contingency risk to their businesses.
For some I'm sure it will work but the bottom line is, the RWSS water storage business right now ,doesn't have enough business at the right price to make it viable.
It is also a condition precedent that the project has a commercial investor
Well where are they, its been three years?
They could turn up and say we are in this deal subject to the court ruling, That is how business is done, we have all done deals subject to certain things being achieved.
But they are not there and I suggest its because they can also add up to ten.
From their perspective this is a long term commercial investment and they have an obligation to their shareholders just as we all do.
So don't blame us if the investor is also a bit faint hearted.
One of our farmers asked me, so how much water do we have to buy to make this variable. Well, I'm not sure right now and I'm certainly not an expert in all the machinations of this business but I do intend to find out.
We need to have a cup of tea, our community is demanding that we have a cup of tea, so that is what we must do.
We need time to reflect on all the fundamental's, the environmental impacts ( good and bad) the economic benefits and the business model and viability KPIs.
I'm sorry that my message is not exactly what you want to hear but I am trying to get my heard around all this and understand all the issues and it will take a bit of time.
■Rex Graham is chair of the Hawke's Bay Regional Council. This is a speech he gave to the Central Hawke's Bay Rotary Club earlier this week.
■Views expressed here are the writer's opinion and not the newspaper's. Email: editor@hbtoday.co.nz
