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The government is stepping in to support irrigation schemes with an $80 million investment fund.
The taxpayer support to the rural sector is a necessary boost because banks have refused to fund such schemes and farmers cannot afford them.
The $80 million is "well deserved", Irrigation NZ chairman John Donkers says.
The money will pave the way for dams on main rivers in Canterbury, Hawke's Bay, Tasman, and Otago.
David Carter made the announcement in a parting gift to the rural sector as he relinquishes his agricultural ministerial role to become Parliament’s new Speaker.
Mr Carter describes the $80 million as bridging investment.
In 2011, the government signalled plans to invest up to $400 million in regional-scale schemes to encourage third-party capital investment.
Cabinet has now directed that $80 million for the initial stages of the company’s operation be set aside in Budget 2013.
“The Crown-owned company will be a minority investor in any development project and it will also plan to be a relatively short-term investor.
“A number of groups are developing proposals for these larger, regional-level schemes and the government expects to consider at least one proposal in the next 12 months,” Mr Carter says.
In Canterbury there are two main contenders – Central Plains Water and Hurunui Water Project.
The news of the subsidy comes at the same time as publication of an Environment Canterbury report that shows only 39% of water allocated under resource consents was used in the 2011-12 season. In the previous year farmers used 52%.
The findings raise questions about why some rural property owners have been allocated so much water that they do not use, and how imperative new irrigation schemes are.
One of the Environment Canterbury authors of the latest water use study, Judith Earl-Goulet, describes the July 2011 to July 2012 period as “an average year”.
Even though only about 58% of water consent holders have installed meters – defying a November 2012 government deadline – Ms Earl-Goulet believes the findings are fairly accurate because they include some of the larger existing irrigation schemes, as well as farm wells.
The Canterbury Water Use Report (2011-12) measured water consent holders with takes of 20 litres per second.
Consent holders were required to install water meters by November 10, 2012, under the government’s national regulations on water measuring. But around 42% of them had failed to so by the deadline.
For surface water – taken from rivers mostly for big irrigation schemes like the Rangitata Diversion Race – 43.4% of the volume of allocated takes was used, compared to 49.5% the previous year.