Wa­ter tax “dan­ger­ous”

The Labour Party’s re­cent an­nounce­ment that it will im­pose a roy­alty (tax) on com­mer­cial wa­ter users has raised con­cerns among grow­ers and farm­ers through­out the coun­try.

The Orchardist - - Water - By Bar­bara Gill­ham

The pol­icy will see those who make their liv­ing from the land, pay­ing an un­spec­i­fied roy­alty on wa­ter, with the rev­enue (mi­nus a small amount that will go to lo­cal iwi) go­ing to lo­cal re­gional coun­cils to be used to clean up our rivers, streams and lakes. Labour has also said this tax is a roy­alty, or re­source rental, and that it could be used for more than just clean­ing up wa­ter­ways. One sug­ges­tion was that it could be used for rates re­bates.

The roy­alty would also see wa­ter bot­tlers be­ing tar­geted, and farm­ers tak­ing wa­ter for ir­ri­ga­tion schemes.

So what is the cost? When the pol­icy was first an­nounced it was vague when it came to ac­tual fig­ures. There were many pos­si­ble charges be­ing bandied about, with some as high as 10 cents per litre. More re­cent fig­ures now in­di­cate that farm­ers may be look­ing at a price of 2 cents per cu­bic me­tre or 1000 litres; how­ever this may very well change if Labour comes into power at our next elec­tions.

While 2 cents a cu­bic me­tre may not sound overly high, es­pe­cially to those who live in our cities, grow­ers know that when mul­ti­plied by the vol­ume of wa­ter they use, they are look­ing at thou­sands of ex­tra dol­lars in tax an­nu­ally. This was made only too clear at a meet­ing in Ash­bur­ton last month, when a lo­cal arable farmer said he had cal­cu­lated that at 2 cents per cu­bic me­tre, his an­nual wa­ter tax bill would equate to half of his an­nual in­come.

The whole is­sue has un­der­stand­ably raised enor­mous con­cerns in the ru­ral sec­tor where the im­pact on farm­ers will be im­mense, and where it has the po­ten­tial to crip­ple re­gional economies if it is ever im­ple­mented.

Michael Smith, an arable farmer in Can­ter­bury, wrote an article in which he raised sev­eral thought pro­vok­ing points about the im­pact of the wa­ter tax, and how Ash­bur­ton’s econ­omy has grown and ben­e­fit­ted from lo­cal grow­ers in the dis­trict.

“I live in a dis­trict, whose main town has vir­tu­ally the low­est un­em­ploy­ment in New Zealand. We have a vi­brant, multi- cul­tural com­mu­nity that offers a wide range of em­ploy­ment op­por­tu­ni­ties and a very high level of com­mu­nity fa­cil­i­ties.

“Ash­bur­ton is a town that has been trans­formed in the last 25 years; this is a town that has been trans­formed by the de­vel­op­ment of ir­ri­ga­tion, both in arable and dairy­ing land uses. This dis­trict grows over half of the world’s car­rot and radish seeds, along with a wide va­ri­ety of other crops that are ex­ported world­wide.

“I am an arable farmer us­ing ir­ri­ga­tion to grow seed crops that are ex­ported world­wide, and grain and veg­etable crops for do­mes­tic food con­sump­tion.

“We first put ir­ri­ga­tion on in ’98 and then in 2011 in­stalled piv­ots to achieve more ef­fi­cient wa­ter use and lower leach­ing, than the older ir­ri­ga­tors we had orig­i­nally op­er­ated, at a cost of $1 mil­lion. We did that vol­un­tar­ily be­cause it in­creased our pro­duc­tion, re­duced our wa­ter use and sig­nif­i­cantly re­duced our en­vi­ron­men­tal foot­print.

“Our busi­ness proudly sup­ports lo­cal firms for the pro­vi­sion of goods and ser­vices, and like our fel­low farm­ers, most of the gross in­come is spent in the lo­cal com­mu­nity, and profit if any is largely rein­vested in our busi­ness via lo­cal firms.

“On Fri­day night I at­tended a public meet­ing to hear Labour Wa­ter Spokesper­son David Parker present his pro­posal for a tax on ir­ri­ga­tion wa­ter. At no point did I hear any pos­i­tive com­ment of the ac­tions of the farm­ing com­mu­nity in New Zealand. The pur­pose of the meet­ing and con­tin­u­a­tion of his pre­sen­ta­tion was to ex­plain the Labour Party’s in­ten­tion to im­pose a tax on ir­ri­ga­tion in New Zealand, with the in­tent of us­ing the money raised to re­pair en­vi­ron­men­tal dam­age.

“The miss­ing part of this logic was that his slide show did not de­pict ir­ri­ga­tion as the cause of degra­da­tion and this is con­firmed by a re­port by Ir­ri­ga­tion NZ, which shows there is no cor­re­la­tion be­tween ar­eas of high ir­ri­ga­tion de­vel­op­ment and re­gions with poor wa­ter qual­ity in New Zealand.

“So why tax ir­ri­ga­tion? And ir­ri­ga­tion pre­dom­i­nantly in Can­ter­bury and Otago that are re­gions with good wa­ter qual­ity?

“I sat in the meet­ing and heard a whole lot of vit­riol and bit­ter­ness ex­tended to­wards the agri­cul­tural com­mu­nity and I re­flected on the fact that it was Au­gust 18 and that night our monthly bills would be paid, and a not in­signif­i­cant sum would be trans­ferred to lo­cal busi­nesses, busi­nesses that the at­ten­dees re­lied on for ei­ther direct or in­di­rect em­ploy­ment, or for tax­a­tion to fund their so­cial pay­ments. The re­ceipts

from our pro­duc­tion re­cy­cle many times through our lo­cal com­mu­nity, and I’m pleased about that.”

There is no doubt if a wa­ter tax is in­tro­duced, those dis­tricts where there are sig­nif­i­cant ar­eas of ir­ri­ga­tion could lose mil­lions of dol­lars from their lo­cal economies in ad­di­tional tax. There is also no doubt the ‘flow on’ ef­fect of a tax will be felt by con­sumers as the cost of fresh pro­duce will in­vari­ably rise.

Bren­dan Balle, of Balle Broth­ers Pukekohe, is one of a num­ber of grow­ers who have se­ri­ous con­cerns about the pro­posed tax and what it will mean.

“Labour’s pol­icy ap­pears to say that re­gional coun­cils will be handed the power and dis­cre­tion to set the rate of the ‘roy­alty’ (tax) and Iwi will be en­ti­tled to a share of it.

“Are re­gional coun­cils ca­pa­ble of such a re­spon­si­bil­ity? Should cen­tral gov­ern­ment de­volve such a re­spon­si­bil­ity to re­gional coun­cils that will likely cre­ate a bloated bu­reau­cracy to col­lect the tax? What per­cent­age of the tax will ac­tu­ally trickle out the bot­tom to pay for ini­tia­tives to im­prove wa­ter­ways? What check and bal­ance mech­a­nisms will need to be put in place to en­sure that the tax rate does not keep ratch­et­ing up, and that the money col­lected will be spent wisely?

“Hand­ing the power to re­gional coun­cils to set a tax opens up a ‘pan­dora’s box’, and they are set­ting a very dan­ger­ous prece­dent by what they’re do­ing. “They should be ac­tu­ally tar­get­ing the things or the ac­tiv­i­ties that cause pol­lu­tion and not wa­ter, be­cause wa­ter it­self does not cause pol­lu­tion and the use of wa­ter does not cause pol­lu­tion.”

Bren­dan says the new tax would have a se­ri­ous im­pact on the econ­omy and in no small way on the price of fresh and frozen veg­eta­bles in New Zealand.

Ge­off Lewis of Ten­der­tips As­para­gus (Levin) be­lieves there are two main is­sues.

“We have a world class agri­cul­tural in­dus­try; our hor­ti­cul­tural in­dus­try sup­plies the vast ma­jor­ity of the fruit and veg­etable re­quire­ments of the na­tion. If the cost of pro­duc­tion in­creases for fruit and veg­eta­bles, this cost has to be borne by some­one. From a na­tion’s health and well­be­ing point of view the most im­por­tant part of the com­mu­nity’s diet are fruit and veg­eta­bles. If we con­tinue to load costs on that pro­duc­tion, the price of the food has to rise. The down­stream ef­fect of this is re­duced con­sump­tion of these prod­ucts.

“Why doesn’t the gov­ern­ment of the day spin the equa­tion around and en­cour­age health and well­be­ing and take the GST off the cost of fruit and veg­eta­bles?

“The ma­jor con­cern for wa­ter use is the ef­fect of the waste wa­ter from this wa­ter use on the en­vi­ron­ment. What is the dif­fer­ence be­tween towns and cities that use wa­ter the waste of which goes into wa­ter­ways or land based dis­charge, and farms where the out­come is the same?

“In other words, if there is a tax on wa­ter use on farms there needs to be the same tax on all wa­ter users, as the ur­ban waste has the same ef­fect on the en­vi­ron­ment as ru­ral waste.”

Mike Arnold of Leader brand South Is­land says there has been a lot of con­ver­sa­tion around the pro­posed tax re­cently and de­scribes it as quite an ‘emo­tional’ sub­ject.

“There are lots of num­bers and fig­ures be­ing bandied around, but we re­ally have to wait and see if Labour will be elected first.

“If they are elected it could mean $40 mil­lion dol­lars is lost from our lo­cal econ­omy.

“I think the main thing peo­ple are say­ing if you want one word, is ‘un­fair’ and it’s un­fair how we will dis­trib­ute that ex­tra cost I sup­pose.

“There are lots of num­bers and fig­ures be­ing bandied around, but we re­ally have to wait and see if Labour will be elected first. If they are elected it could mean

$40 mil­lion dol­lars is lost from our lo­cal econ­omy.”

“Its wor­ry­ing a lot of peo­ple, that’s what it’s do­ing. The cost will have to go up if a wa­ter tax does come in; there is no ques­tion about it the cost of veg­eta­bles will go up. Busi­nesses have to re­coup that money and there is no way there won’t be price in­creases.”

Chair­man and di­rec­tor of Veg­eta­bles NZ Inc., An­dre de Bruin, says he be­lieves strongly that wa­ter is a ‘ com­mon’ and as such needs to be avail­able to wa­ter users.

“Now I don’t see how charg­ing for a ‘com­mon’ can be ap­plied fairly. We’re go­ing to take wa­ter, we’re go­ing to re­lease wa­ter back into the en­vi­ron­ment, we are ac­tu­ally only util­is­ing the wa­ter, it’s not dis­ap­pear­ing.

“We’re over sim­pli­fy­ing a very com­plex is­sue and I think they are try­ing to find a one size fits all which does not work. Wa­ter is one of those things that is im­por­tant to ev­ery per­son in New Zealand.

“We should be us­ing it with care­ful man­age­ment through­out the coun­try for the best of the whole coun­try, I don’t be­lieve just ap­ply­ing a charge to use it should be done. I think it starts to set a very dan­ger­ous prece­dent.”

Mark Apatu (Apatu Farms Ltd) in Hawke’s Bay says he has heard that Labour don’t think there will be any in­crease in food costs.

“Of course there will be in­creases. Per­son­ally I think it’s just an­other cost that we don’t need and it brings up a lot of other is­sues doesn’t it, such as who ac­tu­ally owns the wa­ter and how do you de­ter­mine who is go­ing to pay and who’s not.

“I heard early on in a dis­cus­sion there was talk of Coke Amatil not hav­ing to pay any­thing be­cause they al­ready pay spe­cial wa­ter rates for mu­nic­i­pal wa­ter they use, but that’s crazy.

“I think this is a po­lit­i­cal stance that has ob­vi­ously cre­ated a lot of at­ten­tion and prob­a­bly peo­ple are go­ing to vote for it, par­tic­u­larly those in the cities, but re­ally they don’t know what the ram­i­fi­ca­tions of it are.

“The crazy thing is the min­is­ter is say­ing there will be no ef­fect on the price of food, which is in­cor­rect.

“I just think the more peo­ple who are aware of that prior to the election the bet­ter; we need to get it out there.”

Si­mon Wat­son man­ag­ing di­rec­tor of NZ Hot­house Ltd be­lieves Labour have been very ‘vague’ about the pol­icy. “From a busi­ness point of view a vague pol­icy is very dis­turb­ing be­cause we can’t make any plans, be­cause we don’t know what’s go­ing to hap­pen.

“Will veg­etable prices go up? Yes def­i­nitely. What you have to re­mem­ber is we are farm­ers, we are grow­ers and we pro­duce food, fresh, clean, healthy food and we do it in a very sus­tain­able way. That is what they are threat­en­ing, our food pro­duc­tion.

“My con­cern is if you in­tro­duce a tax and it might be 10 cents a litre or what­ever the num­ber is it’s there, it’s a creep­ing thing. A year later they may make it 20 cents a litre, then two years later it be­comes 50 cents a litre, there’s no end to it, it just be­comes an easy method of col­lect­ing rev­enue. It’s a very fright­en­ing thing.

“There’s an­other point too, in New Zealand our rain­fall, the wa­ter that falls from the sky is one of our very great com­pet­i­tive ad­van­tages that we have over the rest of the world. It’s the rea­son we are sus­tain­ably able to pro­duce large vol­umes of food and sell it to the rest of the world, our rain­fall is our huge ad­van­tage.

“So from our point of view in New Zealand, we are 4.8 mil­lion peo­ple and we’re pro­duc­ing enough food for more than 30 mil­lion peo­ple and that’s un­usual in the west­ern world. Most west­ern nations don’t pro­duce enough food they have to im­port it, we don’t we feed the rest of the world. It’s our rain­fall that en­ables us to do that.

“An­other im­por­tant thing is that com­mer­cial grow­ers are very ac­tive har­vesters of wa­ter. What I mean by that is with glass houses for ex­am­ple, the ma­jor­ity of the wa­ter we use in our glasshouses is col­lected off our roofs and stored, its har­vested wa­ter.

“Are they propos­ing to tax wa­ter that falls from the sky? Is that what they are propos­ing? At the mo­ment we don’t know.”

“From a busi­ness point of view a vague pol­icy is very dis­turb­ing be­cause we can’t make

any plans, be­cause we don’t know what’s

go­ing to hap­pen.”

Mike Arnold

Ge­off Lewis

Si­mon Wat­son

An­dre de Bruin

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