Four regional councillors have called on the Office of the Auditor-General to investigate the provisional $35 million buy in to the Ruataniwha dam.

In a letter to the Controller and Auditor-General Lyn Provost, councillors Rick Barker, Rex Graham, Tom Belford and Peter Beaven say while there is nothing seemingly controversial on the surface of the decision, there are many issues with the proposal as it stands.

Not least what they claim could see a 5 per cent rating increase imposed on constituents for 25 years

Mr Barker has labelled the proposal as being "pretty close to a Ponzi scheme", whereby the regional council effectively committed regional ratepayers to a $35 million buy into the Ruataniwha dam with no public consultation at the general meeting held this week.


Chairman Fenton Wilson said a "provisional decision" was made with five councillors — himself, Alan Dick, Debbie Hewitt, Dave Pipe and Christine Scott, on entering the region into a 35-year water user agreement, subject to the scheme proceeding.

During debate Mr Beaven 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.

According to the meeting agenda's Item 10, under the decision making process council can exercise its discretion and make a decision without consulting directly with the community or others having an interest in the decision.

"Given the nature and significance of the issue to be considered and decided, and also the persons likely to be affected by, or have an interest in the decisions made," it reads.

The four councillors said there were many issues with the proposal.

"The [scheme] has an $80 million commitment from [the council] and it was extensively consulted on over a long period of time," they write.

"This sum of $35 million, minimum, is almost half that amount and not a word to the public, or even clear disclosure to councillors. The figure was only winkled out by questioning at the meeting."

They said the last rate increase was for an amount approximating this annual cost and it caused rates to increase by five per cent.

"This was also extensively consulted on and debated," the letter reads.

"This proposal is effectively a five per cent increase imposed for 25 years and no consultation at all."

The councillors said what also concerned them about this decision was the cost.

"By deciding on $35 million of revenue forgone in this proposal what could the $35 million have been spent on as an alternative.

"No other options were provided for.

"Alternatively the $35 million could have been used to relieve the rate burden.

"Again this stands in stark contrast to the [Ruataniwha Water Storage Scheme] where specialist consultants were hired to provide work on opportunity cost, as they should have for this $35 million proposition."

They end their letter highlighting three broad issues that they asked Ms Provost's office to investigate — process, significance and alternatives to what was on the table.

"Does the process and information supplied to the public and councillors meet minimum satisfactory standards for a council, if not what would represent good practice for a transparent and open public body such as the [the council]," they said.

"Is the [chief executive' Liz Lambert] recommendation which was adopted by council, correct or not, that this commitment over 35 years totaling $35 million was not significant, if not what should have been the recommendation.

"Should your office find that the matter was significant and or the process deficient recommendations on how this may be remedied would be appreciated.

Ms Lambert said council was seeking advice from Audit New Zealand on consultation on this matter, because it potentially altered the financial dividend expected from the scheme.

"If Audit NZ advises that consultation is required, [the council] will make a call on whether or not it wishes to proceed with obtaining additional environmental flows for the Tukituki or not," she said.

A spokesperson from Office of the Auditor-General confirmed it had received a request to inquire into matters relating to the decision on the scheme.

The provisional decision on entering the council into a conditional water user agreement with HBRIC subject to the scheme proceeding, was put forward by the investment company for the benefits it may yield in regards to the augmentation of environmental flows.