Policy a threat to dam - Smith

Nelson MP Nick Smith says Labour's irrigation policy would scuttle the Lee Valley dam proposal and hurt the region, but West-Coast Tasman MP Damien O'Connor says such projects must stand on their merits.

Horticulture industry leaders say it is vital that the Lee Valley dam is built.

Labour announced this week that it would abolish the $400 million Crown Irrigation Fund, launched in 2011 to help establish regional water schemes and speed up economic development.

Its first payment was approved last month, a $6.5m loan to Canterbury's Central Plains Water Scheme.

The cost of the Lee Valley dam - now called the Waimea Community Dam - has been estimated at $42m, with the funding formula yet to be decided.

Labour says it will honour existing contracts but will do away with the fund and replace it with a freshwater pricing regime that would encourage economically marginal water schemes.

Smith said the abolition of the fund would be "a real blow" to the Nelson economy and a setback to the environment.

He said the dam was of huge importance to Nelson's future and critical to increasing horticultural exports and improving minimum summer river flows.

"If the dam does not proceed, there will be severe shortages in water availability for Waimea Plains apple, hop, berryfruit, vegetable and wine growers, and drops in employment and exports."

Smith said Labour was ignoring the fact that the dam had the support of Fish & Game, Forest & Bird, iwi and other recreational users because of its environmental benefits.

"The bottom line is the Lee Valley dam will not proceed without government funding support.

"The cost to landowners, ratepayers and the impacts on council debt would be too large if the Government does not come to the party with a portion of the cost," he said.

O'Connor said the Labour policy would replace the Crown Irrigation Fund with a yet-to-be-calculated resource rental on fresh water to contribute to water management, science and investment in water schemes.

He said Labour would support viable, worthy and sustainable schemes, but not through lump sum payments.

O'Connor said the Government had made too much of its potential contribution. "The bottom line is that schemes have to stack up economically and environmentally."

Labour still had to work through the details, but he felt there was growing acceptance that a levy for research, monitoring, management and investment in water storage was a fair approach to a public resource being made available to the private sector.

O'Connor said he had discussed the Lee Valley dam numerous times with parties on both sides of the debate but had yet to see a full presentation from the Tasman District Council.

A 70-30 funding split between Waimea Plans landowners and TDC ratepayers has been mooted.

There had been a mixed response from around the region to the funding proposal, O'Connor said.

"There are some very intensive land use operations on the Waimea Plains now, some of which struggle to make a profit under their existing regime - for example, high-volume vegetable growing.

"The additional cost that would be imposed upon them may break the back of their commercial operation. And, of course, there are others who need the reliability of water which, for the most part, has been fairly reliable."

Residents and landowners have been told that without the dam, there will soon be tight water restrictions, and that a targeted rate could cost up to $580 extra per hectare, prompting some to say they will have to sell up.

O'Connor said the dam plan was "still under scrutiny by many players".

"Like many other people through the community, there's a lot more information I need to know."

Waimea Water Augmentation Committee chairman Murray King said that if the government help did not come, it wouldn't necessarily kill the dam project, but it would make it "exceedingly harder".

"The thing that needs to be understood is that it's not just irrigators who are beneficiaries - it's the environment and recreation as well," King said. "For the health of the river, we can't continue to operate as we have."

He said the dam was important to secure future exports.

"If it doesn't go ahead, you might as well cover the whole plains in houses and have one big subdivision."

A resource consent application would be lodged "any day", King said. Without a consent, the committee was still working to the $42m cost, and any government share would help. He had a figure in mind but "not one I would want to publicly state".

Horticulture New Zealand president and Wai-West Horticulture executive director Julian Raine said Labour's policy was news to the organisation and he didn't know the details of the proposed levy, but "on the face of it, it appears to be unworkable".

"It raises a number of questions as to how they collect it, who collects it, and does it stall everything that's in the pipeline and push it back 10 or 20 years?"

The Lee Valley dam had been planned for 12 years, Raine said. "To push it back when we've got major [water] shortages already doesn't appear to be sensible."

Tasman District Council communications manager Chris Choat said the governance and funding models for the dam were being reviewed. It was expected that this would be done in time for public consultation on the proposal in the third quarter of this year.