Farmers' fears far from allayed on water tax
August 9, 2017
Pledges from Labour to consult on a "proportionate and fair" royalty for irrigation water have eased the concerns of farmers - but only by a tiny margin.
They remain terrified by the potential impacts on farming families, rural communities and the entire economy.
Federated Farmers water spokesperson Chris Allen said consultation is welcome "but talking won’t allay the fears of farmers of where this could go".
The Federation remained opposed to any royalty on irrigation water, especially when it remains unclear what purpose it would serve, other than adding another tax.
"At least Labour appears now to be proceeding with caution, recognising the considerable risks. They’ve promised that if they are part of a new government, deciding the levels of any royalty on commercial use of water will be preceded by consultation."
Mr Allen said the 10 cents a litre figure some had bandied around would bankrupt farmers and cripple our export competitiveness and regional economies. Even one thousandth of that figure, if that's a level Labour has in mind, would be "eye-watering" given the volume of consumptive water use.
"With any royalty, farmers and growers would have little choice but to pass on the extra cost, if they could, meaning New Zealand consumers would pay more for food, and our products would be at a disadvantage against imports."
Farmers recognised some positives in the Labour policy announcements. They would applaud that riparian planting would qualify for carbon credits under the Emissions Trading Scheme, "but we hope this is not a hint of a policy announcement to come on including animal emissions in the ETS".
And the idea of activating young people who are out of work to join water quality improvement projects is worthwhile.
"That will get young people out on the land and more familiar with the farming sector, and they’ll get to experience - and help with - the large amount of environmental enhancement work farmers are already doing."
But the whole exercise of adding a new tax on water, even if the revenue is shared with regional councils for water quality work, "is counter-productive, and a money-go-round with administration costs added in.
"Farmers are working hard to live within the limits imposed by environmental standards and the desire by all New Zealanders - farmers included - to clean-up water quality hot-spots.
"Adding an extra cost in the form of a water tax drives a perverse incentive for farmers to intensify their activity, and deprives them of income that at worst puts them out of business and at best leaves them with less money to spend on environmental protection work."
Labour has pledged to consult, and Federated Farmers would take that opportunity, Mr Allen said.
"If we can get round a table with them, we’ll be able to talk them through all the downsides of what they’re proposing in a rational way. This needs to be done without the distraction of a general election."
Federated Farmers believes an important principle is that if there’s to be a charge for commercial use of water, it should be paid by all, with no room of discrimination.
"If you’re going to be stupid enough to bring this in, it’s got to be fair."