A conservation lobby group is challenging an exemption to conflict of interest rules in Canterbury.
It started with the best of intentions.
In the shadow of the Government’s sacking of regional councillors in 2010, a regime of water zone committees, overseen by a regional body, was established by the Canterbury Mayoral Forum.
Each zone committee – made up of community, iwi, and council interests, and overseen jointly by Environment Canterbury (ECan) and territorial councils – was tasked with solving that catchment’s vexed water interests which for years have pitted environmentally minded people against farming interests; those concerned about declining water quality against those pushing for more irrigation development.
(Canterbury has almost two-thirds of the country’s irrigated land, leading to worries about nitrates in drinking water.)
A problem identified early was conflicts of interest. How could a person who has shares in an irrigation company participate in the committee’s work when they had a vested interest in the outcome? An exemption was sought from, and granted by, the Auditor-General, in 2011. That exemption was extended in 2013 and again last year.
But that’s now being challenged by Forest & Bird, in a move that could shake the foundations of the region’s collaborative water management regime. The question is, as far as the conservation lobby group is concerned, did the Auditor-General ever anticipate a situation in which a zone committee supposedly stacked with rural interests would have a say on initiatives that might cost them hundreds of thousands, if not millions, of dollars?
Lack of balance alleged
Forest & Bird’s statement of claim, filed in the High Court at Wellington in May and released to Newsroom by the court, names the Auditor-General and ECan as defendants. The claim centres on attempts to introduce a new minimum flow regime on the Hurunui River by the local water zone committee. But if the court action is successful it’ll no doubt affect the other nine zones.
In December 2017, seven of the 12 members of the Hurunui Waiau Zone Committee represented farming interests, Forest & Bird says. They include committee chairman John Faulkner, a dairy farmer whose irrigation water is supplied by Amuri Irrigation Company Ltd (making him a shareholder), and a director of that company, James McCone.
The court document notes Amuri Irrigation has a resource consent to divert water from the Hurunui to a storage pond at Balmoral. Those takes can only happen above a certain minimum flow – to ensure there’s sufficient water for the health of the river and whatever lives in and around it.
However a new plan, the Hurunui and Waiau River Regional Plan, decided by independent hearing commissioners in 2013, set new minimum flows in the Hurunui, which, from December to April, were higher than those contained in the Amuri Irrigation consent. That should mean more water is left in the river, leading to less reliable water for irrigators.
ECan asked the Hurunui Waiau Zone Committee if water-use consents, including Amuri Irrigation’s, should be reviewed to change minimum flow provisions, and, if so, when. In December 2013, the committee recommended such a review should be deferred for at least three years.
Four years later, in 2017, the committee created a working group to consider the issue. However, six years after it was apparently decided, the issue is yet to be resolved.
Amuri Irrigation is one of the largest water-take consent holders for both the Hurunui and Waiau Rivers, and its consents expire in 2033. A zone committee working group has warned that immediately raising minimum flows might lead to a “strong and vociferous” farmer backlash. What seems likely is minimum flows being raised in stages, with Amuri Irrigation paying for a range of environment projects.
In its High Court claim, Forest & Bird says Faulkner and McCone have participated in discussions and “voted” on the minimum flow and consent review issues. (Faulkner says that’s wrong – that the committee provides consensus recommendations to ECan that don’t involve voting. However, a report in the committee’s latest agenda says the exemptions allow members with conflicts to “discuss and if necessary vote”.)
A hearing is scheduled for September.
“We are concerned that the zone committee, which is supposed to represent the community, has long been dominated by farming interests.” – Jen Miller
Forest & Bird’s case seems to boil down to the idea that either the Auditor General’s declarations were flawed in the first place or ECan’s interpretation was wrong. Or both.
It may hinge on language used by Melanie Webb, the assistant Auditor-General legal, in a letter written last year confirming a five-year extension to the exemption from conflicts. Webb said all committee members, despite their pecuniary interests, could participate in discussions and decisions “relating to the development of implementation programmes to achieve the targets and goals set out in the Canterbury Water Management Strategy”.
The letter was written to ECan chair Steve Lowndes. Webb writes that Lowndes had noted that the reasons for the declaration still apply – that basically the committees, tasked with collaboratively coming to a consensus, were “deliberately appointed” for a balance of views, and members represented a range of interest groups.
Forest & Bird, however, has had longstanding reservations about the make-up and operation of zone committees, particularly Hurunui Waiau.
“We are concerned that the zone committee, which is supposed to represent the community, has long been dominated by farming interests,” says Jen Miller, Forest & Bird’s conservation and advocacy group manager, says in an emailed statement. “This has been reflected in zone committee decisions and recommendations which have prioritised farming and irrigation over the environment.”
Last year, Forest & Bird, alongside advocacy group Fish & Game, walked away from the zone committee process – although it never had a formal seat at the table – saying its views were only given “token consideration”. In a letter to the committee sent in April last year, Fish & Game’s Scott Pearson pointedly said committee member Ken Hughey “does not represent the majority of environmental agencies”.
(Earlier this year, the Rural Advocacy Network also withdrew from committee talks, accusing ECan of using the committees to achieve its own agenda.)
Miller: “These frustrations were such that we had a good look at the Auditor-General’s declaration that the zone committee’s members are exempt from the usual conflict of interest requirements. We concluded that the declaration was not properly granted and have asked the High Court to rule on its lawfulness.”
‘Money better spent on environment’
ECan’s chief executive Bill Bayfield says the High Court action is another attack by Forest & Bird, using different legal grounds, following an unsuccessful challenge last year to the process of setting minimum flows in the Hurunui Waiau zone. “We are frustrated at continually needing to divert resources to fund legal costs when they would be better spent on important environmental work in the region.”
He adds: “We strongly believe that the collaborative process that brings many issues to the table as exemplified by zone committees results in better environmental outcomes for their communities.”
(Forest and Bird has appealed an Environment Court decision over the controversial “10 percent rule”, which puts clamps on farmers with nutrient losses that have increased by more than 10 percent since 2013. ECan has notified a change to the rule, protecting dryland farmers with increasing losses from having to get a resource consent.)
The Office of the Auditor-General had no further comment, beyond what was said in its statement of defence.
Forest & Bird claims the office’s declarations were a U-turn from its November 2010 position, in which it said “a declaration that was so general that it effectively suspended the law for all members of all these committees across all their activities would be unlikely to be lawful”.
The Auditor-General’s statement of defence appears to reject that it was a reversal, noting the 2010 letter called for further information and suggested a meeting be held “to discuss how we might find a workable way through our legislative obligations and the practical challenges”.
The document also says it was for ECan “to determine whether particular matters before the committee fell within the terms of the 2018 declaration”.
ECan, for its part, launches a staunch defence in its statement to the court, saying the 2018 declaration isn’t limited to the development of implementation programmes. Only ECan has the statutory power to review resource consent decisions, it says, while noting that power is discretionary.
Restrictions could cost hundreds of thousands, if not millions
What could be the effect of higher minimum flows on Hurunui farmers?
A report submitted to the Hurunui Waiau zone committee in November 2017 said “seasons with significant irrigation restrictions will have a significant impact on profitability”.
The estimated cost of irrigation restrictions was between $55,000 in a good year and $300,000 in a bad one. Supplementary feed might cost as much as $260,000. The cost to build on-farm storage could reach $3.3 million for 60 days of water to cover a 15,000 hectare farm. (There have subsequently been lower estimates.)
The report concluded on-farm water storage was uneconomic and a community storage scheme would be “difficult to fund and many years away”.
The following month, December 2017, the zone committee established a working party to discuss with Amuri Irrigation “further deferring a consent review in relation to … minimum flows”. It was agreed that Faulkner, an Amuri Irrigation shareholder, would be part of the working party. He told the meeting that “all zone committee members are conflicted”, but he believed in their integrity and so should the community.
“It concerns me that it’s [the committee’s work] being put into disrepute, potential disrepute. So I need to respond.” – John Faulkner
Faulkner is a dairy farmer at Culverden, North Canterbury. In his notice to appear at September’s court hearing, he says “the conduct and functions of the committee are impugned by the proceedings”.
He won’t comment on the legal status of the Auditor-General exemption. But, speaking personally, he tells Newsroom: “It concerns me that it’s [the committee’s work] being put into disrepute, potential disrepute. So I need to respond.”
In a sign of how some in the community view his role, the first person he spoke to about the looming court battle was a farmer. “And they said to me, ‘What’s going on there? You’re on their side’.”
Faulkner says a lot of remedial environmental work, that will impose huge costs on the community, needs to be done. Where the money comes from for that work is a concern. “When we have battles like this the only participant that loses is the environment.”
He adds that the premise of the collaborative process is to get away from conflict.
Conflicts discussed from the start
Faulkner was at the first committee meeting in July 2010, just four months after ECan councillors were sacked. Minutes from the meeting show one of the first discussions were about conflict of interest declarations.
Mike Hodgen, a director of Hurunui Water Project, which had plans to build a 75-metre high dam on the Hurunui River’s south branch, raising the level of Lake Sumner, to irrigate 42,000 hectares of agricultural land. The minutes note: “He questioned whether this would restrict his involvement in any discussion regarding the Hurunui River, which would significantly restrict his participation as a committee member.”
Asked about the achievements of the zone committee over the past nine years, Faulkner says it halted any damming on the main stems of the Hurunui and Waiau rivers, and created development protection zones in high country areas.
“One of the things that I’m very proud of is the fact that twice I was asked to put Lake Sumner back on the table and twice I’ve rejected that and the zone committee has rejected that as well.”
The collaborative process is what he’s passionate about, he says – “it’s what the community needs”. “Because if we don’t have it, what do we have?”
Forest & Bird might argue that a flawed process, with no true environmental voice at the table, can hardly be called balanced or collaborative.
* This story has been updated to correct that the new water regime was established by the Canterbury Mayoral Forum, as joint committees of ECan and territorial authorities, and to clarify that the 2013 decision on the Hurunui and Waiau River Regional Plan was made by independent hearing commissioners. What has also been corrected is that a warning of a farmer backlash to immediately raising minimum flows came from a zone committee working group, not Amuri Irrigation.