Simon Cowan: Core business ahead of fairytale

Simon Cowan.

I find it truly amazing this project is still alive.

As a ratepayer I still feel that when things do not turn out as expected that I will have to pay.

It could be that the HB Regional Council is clever enough to pass the risk of things not turning as expected to the taxpayer. Even though there are more taxpayers to share the load it is a hollow victory.

I am a retired qualified accountant from the commercial sector so I have some experience with investment projects.

The financial justification for this project is based on having more water available so we can grow more and sell it to make a profit. It is not based on what we are currently producing without this dam.

This means we are looking into the future so we have to make assumptions on what we think is going to happen. An easy example is the exchange rate. There are lots of different opinions on what that will be going forward but at the end of the day an assumption has to be made. You can always change assumptions and I am sure the HB Regional Council advisers have done this. You can also create what if assumption to say use a more adverse exchange rate to measure risk.

By its complex nature there has to be a lot of assumptions in this project so you need to be careful and look closely at these assumptions to confirm viability. Most of these assumptions can be made in the back office on models and I suspect these have been changed because there have been a lot of adverse events, in respect of dairying for example, yet we are told the dam is still a financial success (with little evidence tabled).

Another saying it is who you know and not what you know and perhaps that is also a factor because lots of potential investors have walked away after reviewing the numbers. In the commercial world a prospectus is prepared to attract investors which presents core financial data. This sort of evidence has not been tabled I believe. Any independent investor is going to want a financial return and they will not want to take risk so they will be getting ratepayers/taxpayers for example to cover them if things do not turn out as expected. Farmers clearly feel they have enough at risk because they do not want to take 100% of the risk by investing 100% of the funds less $80 million from the HB Regional Council. The HB Regional Council keeps saying they are not a risk beyond $80million but have not clearly stated who carries the cost if things do not occur as assumed

There are other assumptions made on things like water flow to fill the dam and what can be grown (on the 17200ha or is it 25000ha another make it fit assumption) if we had more water and how that will affect the environment. I know experts, one who held a senior position with the HB Regional Council, who have lived and tramped through vast areas in Central Hawkes Bay over the decades. Based on data supplied via these experts it seems to me that:

1. If you accept you cannot reduce the river flow below the level to keep the river environmentally healthy you cannot fill up the dam proposed. To fill the dam you have to assume Bola like storms occurring at the right time of the year for this to happen. Central HB does not have snow melts such as what happens in the South Island to fill the dam.

2. When you look at soil types, terrain and climate even with more water you cannot grow the increased production needed to financially justify the dam proposed. Dairying is the only land use that can bring significant increased production so high pollution management needs to be factored in plus on farm investment in infrastructure and operations

I have made submissions to the HB Regional Council but at best they listen but do not hear. They are simply ticking boxes so they can say they have complied. I am not going to waste my time doing more submissions on this project because the majority of councillors want to proceed regardless.

I think this dam bringing prosperity is like a fairy tale and it should be abandoned and councillors focus on their core business.

- Simon Cowan is a retired qualified accountant and is the founder of the White Heart Victims Remembrance Trust.

- Views expressed here are the writer's opinion and not the newspaper's. Email: editor@hbtoday.co.nz