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October 2012 Issue
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Storm brewing over Milford

Daybreak at Milford Sound
Is getting tourists to Milford Sound more quickly about creating a better visitor experience or turning a quick buck? Josh Gale investigates

Department of Conservation Director-General Alistair Morrison received an unusual piece of mail in April last year. Inside the envelope was one of the Conservation Awards DOC confers on volunteers who have done outstanding conservation work. Only it was torn in half.

Earlier that year, DOC had given the award to 70-year-old Rosalie Snoyink for volunteer predator control work.

Snoyink lives in Canterbury and was proud to receive official recognition for her work.

But, when Morrison decided to give private developers freehold title to a sub-alpine valley supposedly protected by the Nature Heritage Fund (NHF) for all New Zealanders in perpetuity, Snoyink’s attitude towards her award changed.

“It somehow made the voluntary work I was doing seem pointless,” Snoyink says. “Why work hard to restore and protect one area when a priceless valley, unique because of its [near] pristine state, could be so easily sold to the highest bidder?

“Tearing up my award and posting it to Al Morrison was the strongest way I could think of to convey my feelings about the sale.”

The valley in question is Crystal Valley, a 198ha basin in the Craigieburn Range. In 2004, The Nature Heritage Fund (NHF) purchased the land, which adjoins the Porters Ski Area, because of its “outstanding conservation values”.

Last October, in a feature article looking at DOC’s new business-friendly ideology – underpinned by its new tagline ‘conservation for prosperity’ – Wilderness reported how DOC overrode the NHF and gave Crystal Valley freehold to Blackfish Ltd which at the time also owned neighbouring Porter’s Ski Area. In return, DOC received from Blackfish Ltd a 70ha block of coastal lowland forest on Banks Peninsula that critics of the land swap said was already protected by virtue of its topography and the local council’s district plan.

Shortly after DOC’s decision to grant freehold title, Blackfish, an Australian-owned company, was sold to PSA Capital which is 60 per cent owned by Russian investors and 40 per cent by Australian interests.

PSA Capital wants to carry out a $500m redevelopment of the Porter’s Ski Area, including building a ski resort with a village, 3,400 bed accommodation, access roads and an underground car park.

At the time of the Crystal Valley deal, Forest and Bird’s Nicola Toki told Wilderness that if DOC’s new business-friendly approach – driven by Alistair Morrison – meant more deals like that one, then she was deeply concerned. Less than a year later, two new development proposals on the conservation estate are making headlines and creating far greater public outcry than the Crystal Valley deal: the Milford-Dart Tunnel and the Fiordland Link Monorail.

Minister of Conservation Kate Wilkinson has notified her intention to approve these proposals, angering legions of citizens like Snoyink across the country, especially in the South Island.

In early August, three representatives of Glenorchy, a community of about 250 people, presented Deputy Prime Minister Bill English with a petition of 25,000 signatures against the Milford-Dart Tunnel.

Collective resistance groups Save Fiordland and Stop the Tunnel have formed in response to these proposals and plan to fight them until the bitter end. Aotearoa is Not for Sale called the two proposals “asset sales by stealth” and new Federated Mountain Club (FMC) president Robin McNeil called them “an attack on the core of democracy” and says FMC has given an undertaking to provide a substantial financial contribution to fight the proposals because they override recently established national park management plans.

McNeil says if either application is granted a concession, FMC will join other groups in seeking a judicial review which he is confident they would win. In June, Save Fiordland began fundraising for what it expects will be ugly court battles with each of the companies behind these proposals.

Save Fiordland spokesperson Daphne Taylor told Wilderness no one expects either development to be built by the proposers.

One of the directors of Milford Dart Ltd (MDL) and its parent company Southern Hemisphere Proving Ground Ltd is project manager and former Resource Management Act lawyer Michael Sleigh. Other directors and shareholders include prominent Christchurch businessman George Gould, Tom Elworthy and Sir Tipene O’Regan.

They want to mine an 11.3km single lane tunnel beneath the Humboldt and Ailsa mountains with access roads near the start of the Routeburn Track in Mt Aspiring National Park and in the Hollyford Valley in Fiordland National Park.

More than 25,000 people have signed a petition against the Milford-Dart tunnel

More than 25,000 people have signed a petition against the Milford-Dart tunnel

Michael Sleigh was also a director of Blackfish Ltd from 2006 to 2009 and a director of Porter’s Ski Area Ltd. Currently he is a director of a company called Crystal Valley Ltd.

Sleigh pursued and acquired freehold title to Crystal Valley and says he’s  proud of the outcome because he believes the land swap has protected a rare piece of costal remnant forest and because the ski field development will create an amazing recreational opportunity and be good for the economy. Sleigh told Wilderness Snoyink is part of a “small fringe element” and most of the public actually supported the deal.

Green Party MP Eugenie Sage also opposed the Crystal Valley deal and was surprised when it was suddenly sold off to Russian investors in 2011.

Sage says because Michael Sleigh is behind the Milford-Dart Tunnel proposal, she wouldn’t be surprised – if the concession is granted – if it is later sold to foreign investors.

However, Sleigh said the two projects are very different and by the time Crystal Valley was sold to the Russian and Australian investors in 2011 he was no longer a director, only a minority shareholder, and didn’t make the decision.

When Wilderness asked Sleigh if Milford Dart Ltd planned to build the tunnel if the concession was granted or if it would sell the concession on, Sleigh said: “Our intention has always been to build the tunnel. That’s what we’ve applied for, but we’ll see. We are not in any discussions with foreign investors and are confident this can be funded locally.”

However, a number of people spoken to during research for this story suggested both the proposals are an example of “concession fetching” whereby a paper company, without sufficient capital, goes through the concession application process, gets the concession and then on-sells it to another company. One who was prepared to speak on the record is former DOC Southland conservator Colin Pemberton. Pemberton is opposed to the tunnel and said “tell me something I don’t know” when asked about the possibility of these projects being an example of concession fetching. Pemberton said this is a concern raised in some of the submissions against the proposal.

However, Sleigh denies this is the case.

“We intend to see the project through,” he says. “There’s no intention to obtain a concession and then flick it on to a third party. There are far easier ways to do business than that.”

When asked whether Milford Dart Ltd has enough capital to fund the project or whether it will need to bring in foreign investment, Sleigh replied he and other directors for the Milford-Dart Tunnel project “haven’t crossed that bridge yet”.

“We’re confident we can fund it one way or another,” he said. “It could well be through local investors.”

A source inside DOC, who spoke on the condition on anonymity, told Wilderness that department staff are scared of speaking out at the moment because of pressure from the Government to fall into line and “if you don’t tow the party line, you’re gone”.

Other DOC staff would like to speak out about their concerns for tunnel and monorail proposals, but won’t because they’re afraid of repercussions. At the time the Crystal Valley deal was going through, the then chair of the Canterbury Aoraki Conservation Board Steve Lowndes spoke out against the deal and against heli-hunting.

This, he says, resulted in him being axed from the role after serving only one term and even though he still had the support of the board.

Lowndes told Wilderness he believed he wasn’t reappointed by Kate Wilkinson because of his decision to give The Press a copy of the board’s recommendation that Wilkinson reject the Crystal Valley deal.

This, The Press reported, ‘broke an unwritten rule not to embarrass the minister by releasing advice before she had the chance to consider it’.

After losing his position, Lowndes was quoted in The Press as saying the Government ‘seems hell-bent on making the department earn money. The whole direction of the department is being shifted towards a financial return, and that is putting a huge amount of strain on it in all sorts of ways’.

Lowndes calls the Crystal Valley deal a distasteful “sleight of hand” because of “the subsequent and immediate sale to a consortium of Russian investors.

“They were obviously lined up waiting for the Minister’s decision,” he says. “I can only speculate that more foreign investors lurk in the wings.”

Save Fiordland media liaison Robert Krausz says there are good reasons to worry the concessions for the tunnel and the monorail might be sold on.

The company behind the Fiordland Link Monorail proposal is Riverstone Holdings Ltd which is directed by Bob Robertson and John Beattie who are also the directors of Pegasus Town Ltd which recently went into receivership.

Their proposal is to construct and operate a multi-modal transport link from Queenstown across a World Heritage designated area and would involve a boat, all-terrain vehicles and a 41km monorail.


But Krausz questions whether Robertson and Beattie are in a financially sound position to build a $150m monorail when another one of their companies, Pegasus Town, couldn’t secure a $50m loan to avoid going into receivership.

“There is what I’d call a ‘strong suspicion’, which I cannot confirm, that both the tunnel and monorail proponents are looking for a piece of paper they can turn around and sell for a quick profit,” says Krausz.

Krausz points out that Sir Tipene O’Regan, one of the directors and shareholders of Milford Dart Ltd, was one of the directors of Hanover Finance, which in 2008 ceased trading leaving 36,500 investors out of pocket by $554m. In April, O’Regan told The National Business Review he fears legal action against Hanover could wipe him out financially.

“Whatever [these companies’] true intentions, the fact remains there exists a concession system within DOC whereby it is not hard for a concession-holder to do this flipping for profit,” Krausz says. “DOC says concessions can’t be sold, but then adds they can be transferred with its approval.

“There is in fact a well-established history of concessions being transferred, for money, which means sold by most people’s definitions.”

Concession applicants go through a vetting process including public input. In the case of the tunnel and monorail proposals, this has yielded hundreds of written and oral submissions. Krausz doubts if a concession is transferred to a third party whether it would go through the same scrutiny as the original applicant. This, he says, creates a “back-door option for developers who might otherwise not make the grade”.

“Another problem is there scope for pseudo-developers to make a profit by getting and then flipping these concessions. I don’t think it’s healthy for DOC to be creating a new industry for speculation with these concessions.”

Wilderness emailed Kate Wilkinson questions about the possibility of concessions being on sold, but her press secretary said it would be inappropriate for the Minister to reply because the two proposals are presently going through the statutory process.

DOC’s senior media advisor Herb Christophers confirmed in a written response to questions that the Minister can transfer a concession to another party on application from the concessionaire, He also reiterated a concession cannot be sold. However, he noted a concession may allow for transfer to someone who has not gone through the rigorous approval process as the original concessionaire: ‘The Minister is required to apply the same scrutiny to the request to transfer as it does to the original application unless the concession allows otherwise,’ he wrote. “DOC concessions allow the Minister to choose whether or not we require an application for transfer, assignment or sublease to go through the entire application “assessment of effects” process.’

Labour Party conservation spokesperson Ruth Dyson said she wouldn’t be surprised if these concessions, if granted, were sold off to foreign investors. “I would be very angry if no provision is made to protect New Zealand land from such an action,” Dyson says. “This is not a piece of residential or commercial land suitable for development.

“This is pristine land – important to be protected – for the benefit of future generations.”

Dyson acknowledged New Zealand often needs additional foreign investment for big development projects.

“That is quite different than giving a concession for the use of World Heritage and national park areas solely for the economic gain of an overseas owner,” Dyson says. “Who would be getting the primary benefits of this if it happened? Not New Zealanders.”

Eugenie Sage said the high capital costs and the risk of major cost overruns of the tunnel and monorail projects make concession transfers likely.

“The tunnel would be similar to mining in Fiordland National Park given the tonnes of potentially acid-generating waste rock which would be produced,” Sage says. “Creating a waste rock dump adjacent to the Milford Te Anau Highway and the Hollyford River does nothing to give New Zealand’s clean green brand integrity.

“Similarly, the monorail would involve the logging and clearing of thousands of trees in old growth beech forest.

“The landscape scarring and erosion which would occur given the steep country and high rainfall would be permanent and brutal.

“As foreign-owned infrastructure, we would suffer the environmental damage while offshore investors would take the profits.”

Opponents to the proposals are also concerned these projects might fall over halfway through their development due to problems with the global economy or poor management.

“I believe that not only is this a distinct possibility, but would be the worst outcome of all,” says FMC’s McNeil. “For this reason the Southland Conservation Board called for the directors to post personal guarantees for the projects, just as directors of any small business have to personally guarantee the business’ overdraft to the bank.

“Making the directors put some of their own skin in the game may make them think twice.”

Michael Sleigh says Milford Dart Ltd is prepared to “sign up for a bond” which is standard for large scale development projects.

“If for any reason outside of our control the project can’t be completed the bond will be exercised by DOC,” he says.

But that does not satisfy people like Rosalie Snoyink who, like hundreds of others, has submitted opposition to these proposals and expressed concern that, if granted, these projects might run out of money before completion.

“DOC used to be the voice for conservation, on behalf of the New Zealand public,” Snoyink says. “Nature’s voice now depends on poorly resourced volunteer groups and individuals.”

With thousands of people opposing the tunnel and monorail proposals, Alistair Morrison can expect to receive more unhappy mail in the post.