Headline: Treasury undermines Govt’s business case for irrigation subsidy
It is not sound economic management to throw hundreds of millions of taxpayer money into projects that Treasury says do not make economic sense.
Treasury documents released to the Green Party under the OIA show that the Government’s favourite Think Big irrigation projects don’t make economic sense, the Green Party said today.
“It is not sound economic management to throw hundreds of millions of taxpayer money into projects that Treasury says do not make economic sense,” said Green Party Co-leader Dr Russel Norman.
“The Government is proposing to spend $400 million from their failed assets sales programme to subsidise large-scale irrigation projects, claiming that these produce benefits that Treasury says simply aren’t there.”
According to the Treasury documents the rates of return for large-scale irrigation projects are low to average at best. Treasury says that the ‘farm gate analysis indicates that irrigating the proposed areas would (in aggregate) constitute a loss-making investment’ and that broader economy-wide effects ‘arise principally from the stimulatory effect of the construction activity’.
“Treasury found business cases for the Government’s irrigation projects were low quality and that it would require significant due diligence to get them to a passible level,” said Dr Norman.
“In Question Time today the Prime Minister said that he intends to proceed with these subsidised Think Big irrigation projects regardless of their poor business cases. This shows gross economic negligence.
“Along with the Government’s ‘Roads of National Significance’, these massive infrastructure projects have been picked because they are National Party favourites, not because they make good business sense.
“This Treasury information which damages the Government’s case for its irrigation programme comes hot on the heels of the Government’s suppression of DOC’s submission on the negative environmental effects of the Ruataniwha irrigation project.
“The Government is hell-bent on ramming through these un-economic projects no matter what the cost to taxpayers or the environment
“The Board of Inquiry into the Ruataniwha irrigation scheme has been carefully chosen by the Government and does not include anyone with water quality experience.
“The Board of Inquiry was chosen by the advocates of the scheme: the National Government.
“This is the National Government picking favourites instead of being prudent economic managers, and the cost to the taxpayer and the environment will be enormous,” said Dr Norman.
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