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Guy: Speech to Irrigation NZ conference

Nathan Guy

8 APRIL, 2014

Speech to Irrigation NZ conference

Thanks for the invitation to say a few words tonight.

Your conference theme is “Securing the next generation’s future” – which is a very good vision.

Tonight I want to say a few words on the importance of irrigation to New Zealand’s future, and what the Government – and industry – can do to help it succeed.

The potential of irrigation

I’m sure I don’t need to remind this audience of how important the primary industries are to our country.

They make up 72% of our exports and generate around $35 billion a year. They are the powerhouse of New Zealand’s economy, and they are largely underpinned by water.

New Zealand is lucky to have a plentiful supply of freshwater.

It drives our economy in the same way that minerals do for Australia and oil does for Saudi Arabia.

Yet only about two per cent of the rainfall in New Zealand is stored for irrigation use, with the rest running out to sea.

Clearly, we don’t have a shortage of water – we have a water storage issue.

This was reinforced by the drought last year, the worst in 70 years. It affected all of the North Island and even the West Coast of the South Island.

Once again it is a topical conversation this summer with localised drought conditions in parts of Northland and Waikato.

These droughts have reinforced for many people the importance of improving how we manage water.

Done properly, irrigation and water storage schemes offer huge potential benefits to New Zealand.

Economic modelling by NZIER suggests that irrigation has the potential to increase our agricultural exports by over $4 billion annually by 2026.

Government investment

This is why, since 2008, the Government has invested $32 million through the Community Irrigation Fund and the Irrigation Acceleration Fund.

These have helped support the development of irrigation plans, water harvesting and storage infrastructure.

This investment has been predominantly in Canterbury but also includes the Hawke’s Bay, Wairarapa, Waimea and Marlborough.

In last year’s Budget the Government allocated $80 million to support irrigation projects, and it remains the Government’s intention to increase this over time to around $400m.

We have established Crown Irrigation Investments Ltd as an independent company to invest in water schemes.

The company’s aim is to be a bridging investor. This means early-in, early-out, to kick start projects that wouldn’t otherwise happen. All the investment decisions will be made by a highly qualified, independent board.

We know the average age of a farmer is around 58 and this can affect investment decisions.

I am proud to hear that Crown Irrigation Investments has made its first investment, agreeing the terms for a $6.5m investment into the Central Plains Water scheme.

This will enable excess capacity in the headrace to be built during Stage 1 construction that is needed for later stages of the scheme.

This project will distribute reliable water to approximately 60,000 hectares of land on Canterbury Plains, once all three construction stages are complete.

The partnership will be for five years, with the potential for this investment to be expanded in stages 2 and 3 of the scheme.

Without this investment from the Crown, the project wouldn’t be developed to the scale required for the long term.

The project will be a real boost to the region’s economic growth.

I’ve seen for myself what a difference irrigation makes to rural communities, revitalising schools and entire towns, creating jobs for locals.

A study by the Waitaki Irrigators Collective Limited in February this year found that irrigation directly contributes $77 million a year into the Kurow and Duntroon areas of North Otago & South Canterbury.

Of course, we have a high profile project here in Hawkes Bay with the Ruataniwha Water Storage Scheme. This would be the largest irrigation project in New Zealand.

This project has been led by the Hawkes Bay Regional Council and is currently being considered by an independent Board of Inquiry.

This is a rigorous and independent process, and I know there are a number of important considerations that the Board of Inquiry will have to work its way through.

This will involve looking in detail at the economic and environmental impacts and hearing public submissions.

We all know that Hawkes Bay has a great climate and productive land, but it’s also

prone to drought. In fact from 2006 to 2009 there was four consecutive years of drought with which was a major economic blow.

According to the Hawkes Bay Regional Council’s business case, it’s estimated the Ruataniwha project would boost Hawke's Bay GDP by 4% and create 2250 jobs.

I note that Hawke’s Bay has an unemployment rate of 7.3%, compared to a national rate of 6%, so any projects to promote employment and exports are worth serious consideration.

The Irrigation Acceleration Fund provided seed funding to help develop a business case for Ruataniwha, and we look forward with interest to its progress.

Export Double

Irrigation is a key part in our goal of doubling primary sector exports by 2025.

The Government is also giving innovation a major kickstart with the Primary Growth Partnership (PGP).

A total of $708 million is being invested by Government and industry into 18 projects to boost productivity and sustainability in the primary sectors.

This is a major research boost, and the potential benefit to the wider economy from these projects is around $7 billion per year from 2025,

Some of the current projects include red meat sector collaboration, manuka honey trials, harvesting trees from steep land, improving the precision of seafood catches, and selective breeding of greenshell mussels.

New trade deals will play a big part, like the free trade deal with China which has already been a major success.

The rise of developing nations, particularly in Asia, represents a huge opportunity. As these populations grow and become wealthier their appetite for safe, high quality food products produced by New Zealand will continue to grow.

This is why we are negotiating free trade deals with India, South Korea and Colombia, and working hard on the Trans Pacific Partnership which includes USA and Japan.

The potential in Latin America and the Middle East is also huge as I’ve seen on my recent trips over the last 12 months.

Environmental issues

When it comes to irrigation, we all know that irrigation projects have to be sustainable – both economically and environmentally.

I’m sure I don’t need to remind you of a recent survey by Fish & Game, or the Parliamentary Commissioner for the Environment’s report on dairying in November last year.

An Irrigation NZ survey from February found that 71% of respondents said overall irrigation was good for NZ, but 58% cited potential drawbacks of irrigation being taking water away from rivers and irresponsible wastage.

So not all perceptions of irrigation are negative, but there is work to do.

It’s worth stressing that irrigation is not simply about dairy expansion. It offers opportunities for a variety of other industries, such as horticulture and small seed production.

Improving water quality

We need to ensure that new projects are well investigated, designed and funded.

By improving water use efficiency on farms we can minimise drainage and runoff that carries nutrients into waterways.

There are many good examples among you in this room – I congratulate all of you for making moves in this direction in your schemes and on your farms. Schemes such as Ashburton-Lyndhurst, Waimakariri, and Amuri are showing what can be achieved on a large scale.

Of the of new potential irrigation I mentioned earlier, 12000ha is due to improvements in existing infrastructure, effectively meaning that no additional water is used for this extra area.

A reliable supply of water will encourage farmers to invest in technology such as water scheduling and variable rate application, which also reduces nitrogen leaching.

Irrigation can reduce pressure on groundwater supplies.

The best example is Central Plains Water, where 75-80% of current groundwater takes in the scheme area will be replaced by surface and stored water once the scheme is operating in September 2015.

And of course it can help maintain summer river flows, which is good for aquatic and marine life. The Opuha dam in South Canterbury has been there so long now that people forget the river used to run dry every summer and fish were trapped and dying in pools. Infrastructure has fixed that.

And lastly, but often not recognised yet, irrigation schemes provide a workable compliance and management regime.

Environmental reform

As a Government we have an ambitious programme of water reform.

This includes a National Objectives Framework, national bottom lines for freshwater, collaborative planning processes, better water accounting and spending hundreds of millions of dollars on freshwater clean-ups.

We are also legislating for independent environmental reporting to improve New Zealanders’ understanding about the state of our environment.

In the future, I’m confident the overall allocative efficiency of water will improve in two ways.

Currently only about 65% of water that is allocated is actually used for productive purposes, due mainly to lack of reliability of supply and low efficiency distribution systems. Also, I expect farmers will change the way they think about water, from flow per area measures to volumes used and therefore to kg of product per cubic metre (as the Australians do).

New technology will play a part. Centre pivots can deliver variable applications using GPS, and by measuring leakage below plant root level.

This in turn will encourage a system that can move water from one use to another use without any specific intervention.

Where infrastructure exists, this already happens seamlessly – hard to argue that a crop farmer shouldn’t be able to purchase some water from a neighbouring dairy farmer if he/she doesn’t need it that year.

Conclusion

The challenge for industry, and the government, is to communicate these positive messages with the public.

I’m sure I don’t need to remind you how important New Zealand’s reputation is to our overseas markets. Issues like animal welfare and environmental management are very important to consumers and this will only increase.

Water management can and will be a flagship policy for New Zealand.

Irrigators need to work within their community to engage on these concerns as they are real.

The opportunity is there to secure the next generation of New Zealand’s future through irrigation, and there is time. The test is whether you take up the challenges I have presented.

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