We will all end up paying dearly for Labour’s water tax

You can look forward to paying more for bread, vegetables, fruit, cereals and lamb and beef as well as dairy products.

Labour’s announcement of a tax on water will hit not just the dairy industry but is bad news for all New Zealanders. Labour won’t be drawn on how much the tax would cost. Apparently it may vary by region based on the scarcity and quality of water. And no assessment has been made of how it would affect the average Kiwi.

However if there’s one thing you can be certain of, it is that like all taxes, it is not actually a tax on the supplier of goods, because like all taxes it will be passed on to the consumer. In the same way that businesses factor in the costs of paying company tax and GST on goods they use, we will all end up paying.

There is an alarming lack of detail around what has been announced. It can hardly be called a policy, or a plan, because all we have to go on is a one page press release. Calls to the Labour party headquarters asking for details were fruitless.

I can only think the lack of detail on such a complex issue — arguably the biggest change in a generation — means the implications have either not been thought through or they are being deliberately withheld until after the election. Neither possibility gives me confidence.

Debate so far has focused on a water tax for dairy farmers as a way to clean up rivers. But around half of New Zealand’s irrigated land has other uses — sheep, beef, crops, vegetables, fruit and grapes. If a water tax is introduced you can look forward to paying more for bread, vegetables, fruit, cereals and lamb and beef as well as dairy products.

In a time when obesity is creating a mounting public health crisis, why would we want to add to the cost of purchasing healthy food for New Zealand’s poorest families?

Then there is the use of water for industries like construction. The water royalty will add to the cost of a new house in some areas — quarrying and concrete use water, and construction firms would also pay for clearing high level groundwater which is then poured down the drain.

Philosophically, either you agree with the idea of a royalty on water or you don’t. If you do, just think for a moment about the difficulties of applying it in practice. Labour says that if you have a water consent you will be charged for water for irrigation but if you take water from a council water supply you won’t.

It’s not that easy. It would mean a lifestyle property owner using a council water supply wouldn’t get charged, but another lifestyle block owner down the road who happened to be connected to an irrigation scheme would.

Some irrigation schemes supply towns, so would town dwellers connected to an irrigation scheme pay, or not? Other irrigation schemes generate hydroelectric power with some of their water — which is to be excluded from the tax.

Some local communities have built water storage using their own money. Can you charge communities a water royalty for a supply of water they’ve created?

The local councils will be holding their heads in their hands wondering how they are going to administer such a complex scheme.

The debate around charging for water ignited around a small number of water bottling companies. In reality, a minuscule amount of the water taxed through this royalty would be on bottled water.

Everyone agrees, including farmers, that we need to do better on pollution, and many farmers are already working hard to clean up their local rivers and streams. A blanket water tax is not the answer.

In trying to solve one problem , Labour has unleashed a host more. Their proposal isn’t a fair solution to water charging. Instead it will hurt the average Kiwi just trying to do their best for their family by putting some healthy local food on the table.