The Central Hawke's Bay District Council has agreed at a secret meeting to buy water from Ruataniwha Water Storage Scheme subject to further due diligence and public consultation.
An artist's impression of the proposed new dam. Photo: Isthmus Group
Mayor Peter Butler said using stored water to supplement urban supply for Waipukurau and Waipawa had significant environmental benefits because the towns would no longer source water from rivers at times of low flow.
Mr Butler said it would cost the district's ratepayers about $50 per year whether they used the water or not.
Some ratepayers have raised concerns about a potential conflict of interest and Mr Butler admitted almost all councillors do have a conflict.
Concillor Sally Butler was the only one to declare a formal conflict of interest but she was allowed to participate and vote anyway, he said.
"You could just about say we always do have a conflict of interest. The whole council agreed that Sally could talk and could have voting rights because it was such an important decision to make."
The council had not explored any other options for the town water supply, Mr Butler said.
"There was no other option. This is the option. This is good for the district. If we went back to the old system, we were running short of water during the summer so this is the option.
"If the dam goes ahead we are going to need water. We haven't got water for vegetable washing plants and that sort of thing if this dam goes ahead and of course we won't be taking it if the dam doesn't go ahead."
Mr Butler would not reveal the price the council has been offered for the water or the terms of the contract saying it was commercially sensitive.
"The terms of the contract and the price we are paying at the moment is not a final decision and that is why it was done in public-excluded because it is commercially sensitive."
The Ruataniwha Plains which would be irrigated by the dam. Photo: RNZ / Peter Fowler
Mr Butler would not say if the council had been offered a discount, and also said it was commercially sensitive when asked if any discounted price would revert to the full price of 26 cents per cubic metre in the future and cost ratepayers even more.
He said it was commercially sensitive when asked if the council had any guarantees the price of water from the profit making venture would not go up in future.
He refused to answer when asked how ratepayers could fully assess the proposal to buy water from the dam when he could not talk about risks, such as whether the price of water would go up in future.
"There will be a lot more information available to the public by the time we go to public consultation."
Some irrigation already takes place on Ruataniwha Plains. Photo: RNZ / Peter Fowler
Labour's water spokesperson Meka Whaitiri said the decision by the council to abandon their present free water supply and buy water from the controversial Ruataniwha dam was "a disgrace."
"This is nothing less than an attempt to make the poor ratepayers of Waipawa and Waipukurau foot the bill for a scheme that simply doesn't have the financial backing to go ahead.
"The fact that the council's development company HBRIC can only get 55 percent of the required sign-up by farmers for water from the scheme paints a clear picture of a project in deep trouble," she said.
Ms Whaitiri said the council had been told that a full uptake of water from Ruataniwha would add to the rates bill when at present the central Hawke's Bay towns drew their water free from the Tukituki river.
"This is nothing short of a ratepayer's subsidy for a scheme that the council claims will improve the river's environment. They seem to ignore that fact that a massive dam will also have a huge environmental impact on the Tukituki," she said.