In what has been labelled as being "pretty close to a Ponzi scheme", regional ratepayers have been committed to a $35 million buy into the Ruataniwha Dam with no public consultation.

At yesterday's Hawke's Bay Regional Council general meeting it was approved 5-4, for what chairman Fenton Wilson said was a "provisional decision" on entering the region into a 35-year water user agreement, subject to the scheme proceeding.

The proposal was put forward for the benefits it may yield in regards to the augmentation of environmental flows, such as increased flushing flows for the mainstream rivers.

During debate councillor Peter Beavan raised the point of a lack of public consultation around what he said was a $35 million commitment that had to be decided upon on the spot.


"Can you explain to me how we can do this without going through the public consultation process?" he asked.

Regional council chief executive Liz Lambert said the process around the scheme had been through public consultations, even if that specific proposal has not. She said the key driver of the council had always been about how further development in the Tukituki could benefit the environment.

"The proposal put before you by HBRIC [the council's investment company], is around a different way of getting that environmental benefit to that which is currently in the consent concession agreement," she said.

Councillor Tom Belford said that decision was not a minor footnote, that it was taking an $80 million commitment and turning it into a $115 million one.

"And you are trying to tell me that the public doesn't have a say in that?" he asked.

Ms Lambert said the latest deal had nothing to do with council's $80 million commitment around capital investment in the scheme.

"[With this] you have an asset as well as potential liability," she said.

Councillor Rick Barker proceeded to read out Ms Lambert's first recommendation to council


"That council agrees that the decisions to be made are not significant under the criteria contained in council's adopted Significance and Engagement Policy," he read out.

"That council can exercise its discretion and make decisions on this issue without conferring directly with the community and persons likely to have an interest in the decision.

"Can you explain to me how a $35 million liability is not significant?"

Mr Barker also asked for an example of any other activity that involved a $35million price tag where it did not have to go to its community to explain its actions.

"I can't think of any," Ms Lambert replied.

Mr Belford said it was a bid for financial security "masquerading as an environmental proposition".

Mr Barker said several things about the proposition made him very nervous.

"We have got numbers being calculated on the back of an envelope; we are putting council up to being a water trader; we are making long-term commitments which the public have had a view in," he said.

He said the other thing that worries him is that the finance for the project was supposed to be driven by the agricultural sector, that it was going "to buy up and buy up large".

"Well we haven't seen much sign of that," he said.

" ... It makes this seem to me, I have to say, we are getting pretty close to a Ponzi scheme."

Mr Beaven said he had no choice but to characterise the proposal as "dance of the desperate".

"HBRIC have gone into denial about the benefit of us entering into this contract for a significant amount of water," he said.

Mr Wilson said Mr Beavan raised a valid point in asking about public consultations.

"We have gone back to the auditor and we are in a discussion with them about what this could look like going forward," he said.

Advice from Deloittes will also be sought as part of the due diligence process.