Proposal 3: Funding the rehabilitation of Lake Hayes

Funding the rehabilitation of Lake Hayes

What’s wrong with Lake Hayes?

Otago generally has good water quality in our lakes and rivers, however there are some waterbodies that have degraded. Over the next 10 years we plan to work closely with communities, at a water catchment level, to improve the quality of our precious waterways.

Lake Hayes is one of these degraded waterbodies. Located near Queenstown, it’s a national treasure, known as one of the most photographed lakes in New Zealand. However, over the last 70 years this lake has suffered from a build-up of nutrients from human activity, including:

  • Historic fertiliser application
  • Industry development
  • Septic tank effluent
  • The removal of wetlands and riparian plantings

As a result, Lake Hayes now suffers from periodic algal blooms caused by the build-up of the nutrient phosphorous, which is in lakebed sediment.

We’ve been working with the local community to improve its water quality and have three options for how we propose to fund the work ahead.

Communities in Otago have also said they want to improve other degraded waterbodies, and we have prioritised Tomahawk Lagoon and Lake Tuakitoto to follow Lake Hayes. It is important to note that this funding proposal only relates to Lake Hayes.

Photograph of Lake Hayes and the surrounding mountains in winter.

What do we need from you?

We have a decision to make about how to fund the ongoing work to improve Lake Hayes. We’ve put together three funding options and let you know our preferred option based on the factors outlined below. Your feedback is an important part of making this decision so let us know what you think.


There are some important considerations that we’ve made in developing this proposal. They include:

  • Scale of work – it is likely to be large, involving infrastructure that requires ongoing maintenance (total spend is estimated at $3.5M over the 10-year plan)
  • Who benefits from the work? Is it the entire region, any identifiable part of the community, or individuals?
  • When are the benefits expected to be seen?
  • How we fund other infrastructure

To support the consideration of who benefits, an external company completed an economic benefits assessment for us. The map below gives a geographic view of the benefits.

MAP + TABLE Map of Otago with a table showing the geographic distribution of benefits of improved water quality. Area 1 is Lake Hayes with a 40% proportion of benefits, area 2 is Lake Hayes South which includes Lake Hayes Estate and Shotover Country and would receive a 30% proportion of benefits, area 3 includes all Queenstown Lakes District residents who would get a 15% share of benefits, area 4 is all Otago residents who would get a 7.5% share of benefits, and area 5 represents everyone outside of Otago including national and foreign tourists who would also get a 7.5% share of benefits.

View rating map

What are the options?

We’ve prepared three funding options for you to consider. Let us know which option you like best:

Option 1 (PREFERRED)

New targeted rate for Lake Hayes.

Create a new targeted rate for Lake Hayes. This is based on the economic benefits assessment. Under this option:

  • 70% of the funding will come from the benefit zones of Lake Hayes and nearby residents (Lake Hayes Estate and Shotover Country)
  • The residents closer to Lake Hayes enjoy more benefit and therefore pay more of the funding requirement to rehabilitate the lake
  • There are smaller benefits to and funds payable by the wider district and region

Option 2

Fund via existing river and water management targeted rate.

Use the existing river and water management targeted rate to fund this work. Key points to note include:

  • Funding is allocated across the entire Queenstown Lakes district and includes both the Wakatipu and Wanaka river and water management rating zones
  • This option only includes the Queenstown Lakes district as this rating method is more suited for smaller operational funding requirements that generally do not need broader funding support from other districts and/ or the wider region
  • This option reflects a benefit-based approach and is used for funding other service delivery and implementation activities like flood protection and drainage schemes, biodiversity initiatives including Predator Free Dunedin, and harbour management, where the cost is funded by the district where that activity occurs

This is not our preferred option as the economic benefits assessment shows a district-wide approach is inequitable when there is a concentrated benefit to a defined localised area.

Option 3

New uniform targeted rate.

Create a new uniform targeted rate, spreading the cost evenly across every ratepayer in Otago. Under this funding option:

  • Funding is allocated across the entire Otago region
  • Under the uniform targeted rate the cost of work is allocated evenly across every rating unit in the region – every property pays the same amount
  • This option is inconsistent with the benefit-based approach we use for funding other service delivery and implementation activities
  • While this appears similar to the Wilding Pine uniform targeted rate, the benefits of wilding pine control are not localised to specific areas and control is undertaken to prevent further spread throughout all of Otago

This is not our preferred option as it is inconsistent with existing funding policies and will result in a disproportionate amount of funding burden placed on those who receive little benefit.

How much will each option cost you?

TABLE Under Option 1 which is our preference, there would be a new targeted rate based on capital value. The 290 ratepayers in Lake Hayes would pay 39.5% of the allocated cost with an average rate of $334.86, the 1569 ratepayers in Lake Hayes South would pay 28.9% of the allocated cost with an average rate of $45.35, the 27,239 ratepayers in the Queenstown Lakes District would pay 23.9% of the allocated cost with an average rate of $2.16, and the remaining 119,389 ratepayers in Otago would cover the remaining 7.7% of the allocated cost with an average rate of $0.16. Option 2 would be funded via the existing river and water management targeted rate. The ratepayers of the Queenstown Lakes district would pay 100% of the cost with an average rate of $9.03. Option 3 would be funded by a new targeted uniform rate where everyone in Otago pays the same rate of $2.17.

NOTE: above numbers are average for Options 1 and 2 – actual will vary depending on CV. Option 3 is based on a uniform rate and will only apply to 113,000 contiguous rate units. For all three options the total rates amount is $214,000 (for year 1).

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