From:
Environment Portfolio
To:
Wes Patrick
Cc:
Nicola Tynan [EXTERNAL] (Parliament); environment portfolio [EXTERNAL] (parliament); Anne Haira; James
Palmer; Lorena Stephen
Subject:
RE: Advice requested on additional funding for Lake Tarawera Reticulation Scheme
Date:
Thursday, 26 June 2025 2:08:13 pm
Attachments:
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Kia ora Wes,
As conveyed telephonically, Ministers Simmonds and McClay met this morning and
have confirmed that Option 1 is their preferred option, with a funding amount of $1
million to support the operations of the Lake Tarawera sewage reticulation and
treatment project.
I can also confirm that there will no additional conditions required for the variation of
this contract.
Minister Simmonds has kindly declined to make a media announcement on this and
has suggested instead that I contact Minister McClay’s office to confirm if he would
like to make a statement. I will confirm as soon as I hear back from his office.
Please also note that Minister Simmonds has informed Minister Hoggard of this
funding decision.
Please let me know if you require anything further to progress the contract variation.
Ngā mihi
Sukie Paras (she/her)
Private Secretary – Environment | Office of Hon Penny Simmonds
Mobile: 022 014 0619 | DDI +64 481 780 72
From: Environment Portfolio <[email address]>
Sent: Wednesday, 25 June 2025 2:23 PM
To: Wes Patrick <[email address]>
Cc: Nicola Tynan <[email address]>; Environment Portfolio
<[email address]>; Anne Haira <[email address]>; James
Palmer <[email address]>; Lorena Stephen <[email address]>
Subject: RE: Advice requested on additional funding for Lake Tarawera Reticulation Scheme
Kia ora koutou,
Ministers Simmonds and McClay have both conveyed their thanks for the speedy and
positive response from MfE. While Ministers are yet to formally agree their preferred
option, Minister Simmonds has conveyed that they find option 1 the most suitable
and to request that work to vary the existing
Lake Tarawera Sewage Reticulation and
Treatment Project funded under the Freshwater Improvement Fund be started.
Please feel free to contact me if you require anything further to progress this request.
Ngā mihi,
Sukie Paras (she/her)
Private Secretary – Environment | Office of Hon Penny Simmonds
Mobile: 022 014 0619 | DDI +64 481 780 72
From: Wes Patrick <[email address]>
Sent: Monday, 23 June 2025 5:17 PM
To: Sukie Paras <[email address]>
Cc: Nicola Tynan <[email address]>; Environment Portfolio
<[email address]>; Anne Haira <[email address]>; James
Palmer <[email address]>; Lorena Stephen <[email address]>
Subject: Advice requested on additional funding for Lake Tarawera Reticulation Scheme
Kia ora Sukie,
As requested, please find below advice to support Minister Simmonds in her
discussions with Minister McClay ahead of his upcoming meeting regarding potential
additional Crown funding for the Lake Tarawera project.
Background and Context
We understand Minister McLay is seeking between $800,000 and $1 million in
funding to support the Lake Tarawera sewage reticulation and treatment project. This
follows concerns raised by residents facing a financial burden of approximately
$46,000 over 25 years (around $3,600 per person). The additional funding would be
used to offset existing RLC debt or existing construction costs as the project is in the
final phases of being completed.
The Ministry for the Environment has already contributed $6.5 million to the Lake
Tarawera Sewage Reticulation and Treatment project under the Freshwater
Improvement Fund (FIF), representing 46.3% of the original $14.02 million total cost.
Co-funding was provided by BOPRC ($750,000) and Rotorua Lakes Council (RLC),
which has since increased its contribution to $9.46 million due to cost overruns
(originally $6.772 million). The current contract concludes on 30 June 2025, and the
Ministry’s contribution has been fully paid.
Additional funding for Lake Tarawera was previously sought through a different
funding arrangement under the Rotorua Te Arawa Lakes Programme (RTALP) that is
currently limited to four priority lakes: Rotorua, Rotoiti, Rotehu, and Ōkāreka. It is a
$72.1 million Crown agreement with RLC, BOPRC, and TALT that runs to 2032.
However a proposal to include Lake Tarawera as a fifth priority lake was declined by
the RTALP Strategy Group in April 2025, which opted to maintain focus on the
Incentives Scheme and wetland engineering initiatives led by BOPRC. The RTALP
Deed of Funding requires unanimous Strategy Group agreement for any changes.
It is important to note that in January 2025, the RTALP Deed was varied to reprioritise
funding to address cost-overruns for the Lake Rotoiti scheme ($10 million) and to
include TALT as signatories. Minister Hoggard also advised at that time that no
additional funding would be made available under the Deed.
As part of the January 2025 variation to the Rotorua Te Arawa Lakes Programme
(RTALP) Deed of Funding, Minister Hoggard requested an independent cost variance
report on the Lake Rotoiti Sewage Reticulation programme. This was prompted by
significant cost overruns from RLC. The report, scheduled for discussion at the 30
June 2025 Strategy Group meeting, identifies several contributing factors including
the pace of delivery, cost estimation methods, inflation, risk management, cultural
requirements, and financial reporting practices.
s 9(2)(a)
, a Lake Tarawera advocate, has raised detailed concerns about
RLC’s financial reporting and delivery of sewerage infrastructure. She has highlighted
unsubstantiated inconsistencies in reported expenditure across council and
programme documents, questioning the accuracy of capital contributions and total
project costs. Her analysis suggests potential overstatements and a lack of
transparency.
The cost variance report will be released under the Official Information Act following
the Strategy Group meeting, in response to multiple requests including one from s 9(2)(a)
Funding Options for Consideration
1.
Preferred Option – Vary the Existing Lake Tarawera Sewage Reticulation
and Treatment Project funded under the Freshwater Improvement Fund
Pros:
There is sufficient funding available in FY 25/26 within the
Freshwater Improvement Fund category of the Waste Minimisation
MCA (Waste levy MCA).
It addresses cost pressures for the project, while maintaining our
original 46.3% co-funding contribution.
It is in keeping with the objectives of the current project which has
previously sought additional funding given the increase in overall
costs.
The project and associated funding agreement is already
established, reducing risk and aligning with Treasury carryover
agreements under the March Baseline Update (limited to existing
funded projects or new projects that are linked to the Freshwater
Farm Plan implementation)
Requires Minister Hoggard’s approval, though Minister Simmonds
may also need to sign off due to the fund’s transition to the
Environmental Investment Fund category of the (Waste levy MCA).
Cons:
Approval processes under the new Environmental Investment Fund
which came into effect via B25 processes have yet to be
established. Advice is under development and anticipated to be
provided to Ministers in August 2025.
Reduces available funding within the Environmental Investment
Fund, which is currently reliant on underspends.
As a publicly contestable fund, additional funding to an existing
project may raise equity concerns.
2.
Vary the RTALP Deed of Funding, if the RTALP Strategy Group Unanimously
Agrees with the Reprioritisation of Funding
Pros:
Would not contradict Minister Hoggard’s January letter, as it
involves internal reprioritisation.
Relies on the RTALP Strategy Group of RLC, BOPRC, and TALT to
first agree on the reprioritisation of funding
Cons:
Unlikely to receive unanimous Strategy Group support, particularly
from TALT and BOPRC who recently voted it down in April 2025.
Would divert funding from existing programmes, potentially
impacting 2032 nitrogen reduction targets.
3.
New Contract under the EIF
Pros:
There is sufficient funding available in FY 25/26 within the
Freshwater Improvement Fund category of the Waste Minimisation
MCA (Waste levy MCA).
Cons:
The EIF framework is still under development as per above.
Funding decisions may face scrutiny due to the absence of a formal
prioritisation framework. We would need to consult with the
Treasury and the Minister of Finance.
Ngā mihi,
Wes
Wes Patrick, PhD (he/him)
Manager, Environmental Investments
Partnerships and Investments Business Unit
Ministry for the Environment | Manatū Mō Te Taiao
022 646 7958 | [email address] | mfe.govt.nz
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