MP Chris Tremain defends building dam increasing the debt

By Lawrence Gullery


A plan to build a multi-million-dollar dam, which is among projects increasing Hawke's Bay Regional Council's debt by 530 per cent, is being defended by Napier MP Chris Tremain.

Mr Tremain, in his role as the Minister of Local Government, faced a series of questions from the Green Party's Eugenie Sage in Parliament this week, taking him to task over the regional council's debt, which would rise from $15 million to $99 million by 2022.

She asked whether the debt worried him and why he supported the regional council building a dam when the Government wanted councils to focus on core services to reduce debt.

"Isn't the regional council's role as an independent environmental manager compromised by spending on a dam reservoir, and on the CEO and several staff working on the dam and irrigation project such as the Ruataniwha?"

Mr Tremain said the debt level needed to be assessed against the council's balance sheet. "While the debt is projected to increase by about $80 million, the equity will increase by $154 million and that is good economics in my book."

He said building the dam in Central Hawke's Bay fitted in with the Government's goal to encourage councils to produce new initiatives which could bring more jobs to the region.

"This will bring job growth for Hawke's Bay in terms of 36,000ha of additional land (for primary production) and $300 million of added exports."

The dam would also improve the environment of nearby streams by increasing the water available at low-flow times.

Regional council chief executive Andrew Newman said the debt was currently $15 million, which he considered "not large in overall balance sheet" and the forecast increase was flagged in the council's long-term plan.

"This debt is against an asset that, assuming the Ruataniwha Water Storage Scheme goes ahead, is designed to deliver a rate of return on the investment."

Mr Newman, addressing Ms Sage's conflict of interest point, said all councils were subject to their own policies and rules if they wanted to develop, repair or maintain an asset.

"This is absolutely no different to a district council requiring consent to develop a grandstand at a sports park it owns."

Mr Newman said the council would ask the Environmental Protection Authority to consider the Tukituki Plan Change and Ruataniwha Water Storage resource consents as matters of national significance.

"They can then be considered by a single board of inquiry at the same time, at arm's length to HBRC."

Mr Newman confirmed the regional council's debt was forecast to increase from $15.7 million to $99.3 million from 2012 to 2022.

It put the council seventh in terms of greatest debt movement and first in debt percentage movement at 530 per cent.

The regional council's financial strategy had several substantial investment projects.


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