Export tax on water ‘would breach TPP’
MPs have been told by a top official that an export tax on water would break the TransPacific Partnership and several other trade agreements.
The Ministry of Foreign Affairs and Trade’s (MFAT) Vangelis Vitalis, the chief negotiator of the new-look TPP, told the foreign affairs, defence and trade select committee yesterday that while the TPP protected the Government’s right to create policy around water, an out-and-out export tax on water would breach it – and several other agreements.
Labour and NZ First promised to charge exporters of New Zealand water a ‘‘royalty’’ in their coalition agreement. Labour’s position before the election involved charging everyone.
The advice from Vitalis got an immediate reaction from the committee. Both Labour’s Louisa Wall and National’s Gerry Brownlee sought to clarify whether an export tax on water would be possible or not.
‘‘If New Zealand wanted to apply an export tax on water it could not do so, not simply as a consequence of this agreement but through several other agreements that we have in place at present,’’ Vitalis said.
‘‘The new agreement contains the same prohibition of export taxes.’’
Wall asked if that meant domestic legislation might be needed to fix that, to which Brownlee – formerly foreign affairs minister – interrupted to make clear that the point was an export tax would break the agreement.
Vitalis said the right for the Government to legislate in the area had been protected and any controls on water could perhaps be managed instead under the Resource Management Act.
‘‘The use of water is protected, the Government’s right to legislate around that is protected.’’
MFAT provided advice for the new Government early in its tenure that allowed a pseudo-ban on foreign buyers by not out-and-out banning them, but instead classifying all existing homes as ‘‘sensitive’’ under the Overseas Investment Act.
Trade Minister David Parker said later he was well aware a straight-export tax would not work.
‘‘We’ve always known that distortionary export taxes are prohibited by all of our trade agreements, so we need to find a remedy for that that is consistent with those obligations.’’
He had not looked in detail at a workaround similar to the pseudo foreign-buyers ban, but had received ‘‘plenty’’ of advice.
‘‘There’s more than one way for us to meet our ambition.’’
At the briefing Vitalis said export taxes were generally opposed by New Zealand negotiators, especially on agricultural products, as they distorted prices in international markets, which hurt exporters.
He was asked if any ministers or the prime minister had been briefed during recent meetings in Vietnam about this water tax issue. ‘‘No,’’ Vitalis replied. ‘‘This is a longstanding policy of New Zealand that has happened through agreements negotiated various governments,’’ said.
‘‘It is a question of the policy instrument you want to use, the point would be that using an export tax might not be the most efficient way to deal with the issue you might have around water.
‘‘We have preserved policy space around the allocation of water. We are confident there are other instruments that could be used that won’t break our agreements.’’
Iwi rights
Prime Minister Jacinda Ardern is to meet with the Iwi Chair Forum ahead of Waitangi events on February 5 and 6 and forum adviser Willie Te Aho has made it clear the group will go back to the Supreme Court if there is no progress on iwi rights to freshwater.
While Labour talked up dealing with the issue ahead of the election, any hope of a freshwater tax and Ma¯ori interests being recognised came to a grinding halt when it did a coalition deal with NZ First, which is strongly against the idea.
Te Aho says it is not a case of whether the Government ‘‘should’’ deal with Ma¯ori water rights but that they ‘‘must’’. by he
"There's more than one way for us to meet our ambition."
Trade Minister David Parker