Government to honour existing commitments while winding down irrigation funding

The Government has begun winding down public funding for large-scale irrigation through Crown Irrigation Investments Limited (CIIL), in line with the Coalition Agreement and the Confidence & Supply Agreement.

Its decisions are the result of an extensive review of how to wind down funding through CIIL while honouring existing commitments, as provided for in the agreements signed on the formation of the Government.

These decisions will provide certainty to the individual schemes which had applied for Government funding alongside private investment, Finance Minister Grant Robertson says.

“This represents a shift in priorities to the previous government. Large-scale private irrigation schemes should be economically viable on their own, without requiring significant public financing. We must also be mindful of the potential for large-scale irrigation to lead to intensive farming practices which may contribute to adverse environmental outcomes.”

All existing CIIL commitments for development contracts will be honoured to the close of the current phase of each contract. In addition, three schemes will be funded for their construction phases due to their advanced status, subject to meeting the normal requirements of the fund. One is already under construction and the two other schemes have signed term sheets with CIIL.

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New environmental focus is set for irrigation funding

A change to the constitution of Crown Irrigation Investments Limited (CIIL) will allow it to fund water storage projects with direct environmental and economic benefits, rather than on the basis of purely economic grounds, Primary Industries Minister Nathan Guy has announced.

This was an important change to CIIL’s mandate which recognised and reinforced the environmental importance of water storage and distribution projects, Guy said.

The current rules limit CIIL’s purpose to considering the long-term economic benefits from projects that it invests in.

But Guy said it made sense to broaden the scope given the wider benefits of these projects.

“It will now be able to provide concessionary loans to local authorities for projects that directly lead to environmental benefits.”

The change was requested by CIIL and has been formally approved by Cabinet.

Guy said this was good news for potential projects like the Waimea Community Dam near Nelson. The project captures Lee River flows and allows for the controlled release of stored water into the river system during periods of high water demand and/or low natural flows.

“Reliability of water provided by this project would allow pasture to be converted to higher value crops like apples. It would also recharge aquifers, provide water for municipal supply and improve water quality for recreational use.

“Likewise, projects like Central Plains Water is replacing 75-80% of groundwater take consents in the area, helping improve water flows into Lake Ellesmere.

“This change makes it even more disappointing that Labour and the Greens want to scrap all irrigation funding and tax water. This would be disastrous for growers, farmers and the regions. Industries like horticulture and viticulture need a reliable source of water to meet international demand and deal with droughts.”

CIIL is a Crown Entity Company established in 2013. Its purpose is to co-invest in schemes, provide grants for schemes in development, and apply commercial expertise and leadership to irrigation schemes.

With CIIL’s proposed change now approved, it can also provide concessionary loans to local authorities.