As well as the future of the Ruataniwha Water Storage Scheme, a question mark now hangs over its value to date.

Despite new Hawke's Bay Regional councillors being elected over the weekend, members of the former council yesterday gathered for an extraordinary meeting to sign off on the annual report.

It was approved in September, except for issues concerning the carrying value of intangible assets in Hawke's Bay Regional Investment Company Ltd (HBRIC Ltd) and Hawke's Bay Regional Council's (HBRC) financial statements.

In the annual report, Stephen Lucy of Audit New Zealand made a qualified opinion on the council's financial statements - that their work was limited due to insufficient evidence to support the carrying value of the RWSS development expenditure intangible asset.


The amount spent developing the scheme has been recognised as an intangible asset - which has an indefinite life and is tested for impairment at each balance date. If an asset is considered to be impaired, it must be written down to its recoverable value immediately against revenue.

In August the Court of Appeal upheld Forest & Bird's appeal that a land swap involving areas of the Ruahine Forest Park which would allow the Ruataniwha Dam to proceed, was unlawful.

In his report, Mr Lucy stated this decision had significantly reduced the probability of gaining access to the land required through that means.

Late last month the Minister for Conservation and HBRIC applied for leave to appeal this decision to the Supreme Court, and for urgency.

Currently, HBRIC is also pursuing alternative means of gaining access to the land through the Public Works Act.

However, Mr Lucy stated they had been unable to obtain sufficient appropriate audit evidence that it was probable access to the land required would be obtained.

"It is uncertain, and unable to be determined at the date of this report, whether the RWSS assets are impaired."

The council had not impaired the intangible asset "because it considers the final outcome of the litigation, and the timing and likelihood of alternative means to gain access to the required land, is uncertain".

Although the report was carried, there was discussion on Mr Lucy's qualified opinion during yesterday's meeting.

Councillor Rex Graham said he did not understand why Mr Lucy had not impaired the accounts, given he had not found any probable evidence there was access to the land.

He suggested Mr Lucy should have said that if there was a change in the balance of the council - as appeared to have happened in the elections - this would also create "probable" risk.

Councillor Tom Belford said he agreed with points made by councillor Alan Dick and Mr Graham.

"It's very clearly stated why it's qualified because the signal is definitely out there, in front of the public," he said.

"The part of what councillor Dick said that I don't agree with is I don't think [Mr Lucy] did his job."

The auditor should have drawn a conclusion "as opposed to writing a carefully crafted political compromise statement", Mr Belford said.

"But be that as it may it is clearly a qualified opinion, a very specific point which is basically whether the project will proceed or not."

The report states there would be enough information in December - for the HBRIC half-year report- about the probability of success of acquiring the land.

HBRIC would then have a "sounder basis for assessing whether impairment of the RWSS assets is required".