22 Sep 2016

MPI, Water Wairarapa defend dam funding application

12:12 pm on 22 September 2016

The group behind a Wairarapa irrigation scheme has admitted some of the figures used in its successful application for $800,000 of taxpayer money are not up to date.

But the Ministry for Primary Industries, which provided the grant through its Irrigation Acceleration Fund, is standing by its decision to approve the application.

The application, which was submitted by Water Wairarapa, claimed the irrigation project would initiate an impressive boost in the local economy, generating more than $50 million in annual regional GDP, and creating over 400 jobs, through irrigating between 10,000 and 30,000 hectares of land.

But a report by the independent economist Peter Fraser, commissioned by Fish and Game, showed the data used by Water Wairarapa to make those economic predictions was based on a 2014 milk solids payout of $7.07 per kg of milk solids.

Mr Fraser said the milk price had dropped well below that level in recent years and it was unrealistic to expect it to return to those heights.

"The more realistic milk price I've used in the analysis is $5, plus or minus $1. If you apply that figure, then their entire scheme falls over. So the simple reason why they didn't apply it is, because it won't work."

Mr Fraser said the report was predicated on dairy farmers using 55 percent of the water created through the irrigation scheme, but his analysis showed a reduction in dairying in the region over time.

The latest information about water uptake suggests a small short-term increase in dairy, from 36 percent to 38 percent, followed by a long-term decrease down to 29 percent.

The project's manager, Michael Bassett-Foss, acknowledged some data was out-of-date, but said the application was made in good faith, and always allowed for the possibility of changing situations.

"The application was based on the information from the reports that we had at the time, and the application was to undertake another round of investigations to assess things."

Meanwhile, the Ministry for Primary Industries issued a statement defending its decision to fund the project, and criticising Mr Fraser's report as "flawed" and based on old information.

It said irrigation would allow for more reliable production, and boost the hospitality and tourism industries in the Wairarapa.

Mr Fraser said his criticisms were based around the application process, and the fact that out-of-date data was used by Water Wairarapa - and accepted by MPI - when newer data was available.

He said the Ministry was complacent in approving the funding, when the economic arguments were predicated on data that was not reliable.