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Farmers have been given another $40 million to fund irrigation schemes, as part of a programme which Labour has called "the privatisation of freshwater by stealth".
Budget 2014 allocated $40m from Government's asset sales regime to the Crown Irrigation Fund. This followed an $80m investment last year.
Primary Industries Minister Nathan Guy said New Zealand needed to do a better job of storing water. At present, just 2 per cent of rainfall was captured for re-use.
"After the extreme drought most of the country suffered last year, and the one earlier this year in Northland and Waikato, the need for better water storage is obvious," Mr Guy said.
Irrigation is likely to be a contentious election issue.
The Labour Party has promised to scrap the fund if elected, replacing it with a resource rental on large irrigation takes. The price would be set after discussions with interested parties, and domestic use of water would be exempt.
Deputy leader David Parker said the current scheme transferred massive natural wealth to a small subset of the private sector.
The Green Party would also introduce a "fair price" on freshwater.
The Ministry for Primary Industries says the fund is not a farming subsidy because it does not provide direct assistance and it supports infrastructure that would otherwise not be developed.
Federated Farmers' president Bruce Willis said the additional boost for irrigation was welcome.
"Water storage in this country just makes sense. You just need to read the latest [climate change] reports and see the increased dry periods that we can expect in parts of New Zealand."
He rejected the description of the fund as corporate welfare, saying any beneficiaries were required to meet strict commercial requirements.
The Crown Irrigation scheme invested in proposals which would not be established with private finance alone.
It made its first investment last month, putting $6.5m towards the Central Plains Water Scheme in Canterbury.
National planned to invest a total of $400m in the fund.
Mr Guy estimated the proposals being considered by the scheme would make a further 420,000 hectares of irrigated land available to several industries.
Budget 2014 also allocated $20m for freshwater management, including money for communities to protect waterways.
- By Isaac Davison of the NZ Herald