In election year 2017, water was a top political issue – who owns it, who can use it, whether it’s drinkable or swimmable, and whether profit-making companies should be permitted to ship billions of litres of our most pristine drinking water off overseas. “No-one owns the water”, said National PM John Key. That seemed to mean not Māori, and not the rest of us either.  Yet some people are able to sell it for export.

A petition signed by thousands calling for a moratorium on water exports was rejected by then Environment Minister Nick Smith. The other political parties seemed to think exporting water was okay too, as long as the Government received a royalty. Say, 10c bottle, as the Green Party proposed as its first election campaign policy, or 1-2% per litre going to regional councils, which Labour described as “fair”. 

If you see Aotearoa as “NZ Inc” (www.mfat.govt.nz/en/trade/nz-inc-strategies/) this is about investment and business growth. Deep sea mining, fresh water mining – what’s the diff?  Certainly, it’s business as usual under our overseas investment rules. In May 2018 the Coalition government was in the middle of passing Overseas Investment Act amendments about forestry and residential housing when an Overseas Investment Office (OIO) consent was granted for Chinese-owned bottled water company Creswell to obtain six hectares of “sensitive land” at Otakiri Springs, near Te Teko in the eastern Bay of Plenty. 

A very sensitive issue. Creswell promised development capital, job creation and high-speed technology that would increase extraction from the spring by 900%.  These all met the criteria in the Act, end of story. Consent was signed off by David Parker, Labour’s Associate Minister of Finance and Environment Minister, and Eugenie Sage, the Green Party Minister for Conservation and also for Land Information NZ, which houses the Overseas Investment Office.

The Ministers noted the OIO consent was still dependent on various resource consents from the regional and district councils, but those had been granted just days earlier. The Ministers did not hold up their Bill to amend a few more criteria – about conservation or taonga such as water, for example – but said there would be a wider review of the OIO Act. No time frame given. 

Political Disaster

It was a political disaster, particularly within the Green Party. It was one of several “dead rats” the Green Party has had to swallow as the price of participation in Government.  The land is currently leased by Otakiri Springs Ltd, which comprises a kiwifruit orchard (co-managed by Eastpack Kiwifruit), the existing bottling plant and a bore into the Awaiti aquifer; the retiring land owners being Otakiri Spring’s major shareholders.

In recent years, other interested buyers did not complete. Creswell NZ Ltd is a subsidiary of Nongfu Spring, China’s largest water bottler and second largest globally after Nestle. Nongfu Spring operates 16 bottling plants across China, with an operating revenue of approximately $NZ2.7 billion. It is 80.6% owned by Mr Shanshan Zhong, who also has interests in healthcare, food and pharmaceuticals. Creswell says it will disestablish the orchard and invest more than $42 million over four years to upgrade the plant and establish two new bottling lines, increasing daily bottling capacity from two million litres a year to 580 million litres.

Within six years, Creswell expects to export $6.56 million worth of bottled water a year, mostly shipped to China – 85 truck movements a day, on the minor Te Teko to Matata road, then SH2 to Tauranga. That’s how many plastic bottles and how many carbon miles? Creswell plans its own blow moulding machine to produce glass and polyethylene terephthalate (PET) plastic (for export) bottles. Creswell projects that this expansion will provide 32 jobs within two years and 60 within five years, being technical and professional jobs as well as on the bottling line.

Local groups consider this unlikely, given largely automated bottling processes. The November 2017 Ministerial Directive to the Overseas Investment Office identified the “jobs factor” as being of “relatively high importance” for consent, and Eugenie Sage has suggested that, if the 60 jobs did not eventuate, the Overseas Investment Office’s increased enforcement role might include requiring Creswell to sell the land. That seems unlikely, too.

The Otakiri bore takes water from the Awaiti aquifer below the Rangitaīki and Tarawera Rivers, which flow to the Bay of Plenty. Two other bottling companies, Oravida and Distinction Water, also take water from the Awaiti aquifer.  Land Information NZ’s memorandum of 3 March 2018 noted, based on the Regional Water and Land Plan, that Awaiti Canal has a total annual recharge rate of 764 litres per second, and 35% of that is available for allocation.

Creswell would take 34.88 litres per second in addition to the current consented water take of 167.1 litres per second, providing it with a total allocation of 201.98 litres per second. The Awaiti Canal would have a remaining 65.42 litres per second.  Alternative possible water uses include dairying, which would not be major in this area of good rainfall, and horticulture, with local kiwifruit in decline. 

The Awaiti aquifer is within the rohe of Ngāti Awa. Te Rūnanga o Ngāti Awa, the Ngāti Tūwharetoa Settlement Trust and the neighbour group Sustainable Otakiri are all contesting Creswell’s resource consents in the Environment Court. Creswell has applied to have these appeals struck out, for reasons the Court has declined to provide to Radio Bay of Plenty prior to a hearing.  Ngāti Awa says it is seriously concerned about irreversible harm to the aquifer, the people and the land, as well as the undermining of the iwi’s status as kaitiaki and tangata whenua (Radio NZ, 5/7/18, www.radionz.co.nz/news/te-manu-korihi/361173/whakatane-iwi-appeal-water-bottling-consents). 

That kaitiaki role appears to have been under-considered when – as Official Information Act requests have revealed – NZ Trade and Enterprise (NZTE) facilitated the deal between Nongfu Spring and Otakiri Spring’s owners. In 2015 NZTE initiated contact with Nongfu Spring and similar companies around the world about investing in New Zealand water businesses.

Government Facilitated Deal

In April 2016, Zhong was one of ten Chinese investors who attended an investor roundtable with former Prime Minister John Key in Shanghai, and in September 2016 met with the NZ Ambassador the day before the Embassy’s New Zealand Ball, for which Nongfu Spring was a major sponsor. In December 2016, Zhong visited New Zealand and was hosted by Ngati Awa with a powhiri at Kokohinau Marae, attended also by Ngati Tuwharetoa, Ngati Rangitihi and Ngati Makino kaumatua. No doubt that was before Ngati Awa knew the size of Nongfu’s extraction plans. 

And, certainly, before the present Government knew the size of NZTE’s activities on behalf of NZ Inc.  Prime Minister Jacinda Ardern says she was appalled to find out that Franz Josef had been listed as a pristine glacier that overseas investors might want to take a stake in. It appears that, having rolled back and sold off half the State – leaving just the branches they are themselves sitting on – our esteemed past Government’s Business Growth Strategy included selling off the very scenery. NZTE’s excuse? They were just introducing “willing buyers and willing sellers” and the “final decision rests with the regulators” (Radio NZ, 5/7/18). Yeah, right.

For decades our Governments have legislated “light handed” regulation to reduce “transaction costs” for business. Examples range from the Resource Management Act to alcohol sales laws. As Eugenie Sage found with the Creswell consent, our current laws give regulators little power to say no, and communities even less.  This Government will no longer put up fresh water for sale, says the current Prime Minister.  And yet this and other fresh water sales to overseas interests are still going ahead.  As are various oil and gas rights. Will this Government face up to changing the whole raft of NZ Inc laws and policies that are enabling the cut-price sale of New Zealand’s resources?

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