Labour’s water tax plan has been greeted with alarm by businesses saying it will push up food and housing prices, but welcomed by environmental groups.
In a policy that would tax Canterbury most heavily, new party leader Jacinda Ardern said a Labour government would charge businesses, including farmers and drink bottlers, for water.
Ardern said they would “differentiate” water based on source, quantity, and destination. Royalties would largely be returned to regional councils to clean up waterways.
Sixty-five per cent of New Zealand’s irrigated land is in Canterbury.
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Federated Farmers water spokesman Chris Allen said the policy “terrified” farmers.
Allen said the 10 cent a litre figure some suggested would bankrupt farmers and cripple regional economies and export competitiveness. Even one-thousandth of that figure would be “eye-watering” given the volume used.
The tax would see consumers pay more for food and disadvantage local products against imports, he said.
Any charges should be paid by all, he said, and he was pleased Labour had promised to consult on the policy.
“If you’re going to be stupid enough to bring this in, it’s got to be fair.”
Student-led campaigners Choose Clean Water said they were excited to hear Labour prioritise the health of people and waterways.
“New Zealanders’ calls for healthy swimmable rivers and lakes are finally being heard,” spokeswoman Marnie Prickett said.
The National party criticised the policy’s lack of detail, saying Labour was keeping its plans secret before the election.
Ardern said the policy would be flexible around drought or very wet areas, but a rate would not be set until she had a chance to consult on the issue if elected.
Opportunities party leader Gareth Morgan said Labour’s policy was “a big step in the right direction”.
The policy followed Prime Minister Bill English’s Tuesday announcement that $44 million from the Freshwater Improvement Fund would go towards clean-up projects across the country.
More than 100 rivers and lakes are targeted in the first round of projects, including a large dam, funding for new wetlands, native plantings and fencing.
Irrigation New Zealand chief executive Andrew Curtis said Labour’s tax could not be fairly implemented.
“The majority of irrigation is in the east coast areas – are these communities to be penalised because they live in an area with a drier climate that needs more irrigation?” he asked.
“How could a water tax possibly be implemented in practice given the differences in weather and water use across the country?”
Curtis said the tax would increase prices for food, drink, housing and many other items, affecting every New Zealander.
Horticulture New Zealand chief executive Mike Chapman reaction to Labour’s policy was “let’s not do this”, a play on Labour’s election slogan “let’s do this”.
“Extra costs on growers of fresh, healthy fruit and vegetables will make healthy food more expensive,” Chapman said.
“We do not want to see the cost of fruit and vegetables grown in New Zealand, supporting local economies and providing jobs, pushed up higher than the cost of imported or processed food.”
Bruce Sherman, of the New Zealand Beverage Council, said he “could not see” how costs would not flow through to consumers.
New Zealand’s water bottling industry was not as large or profitable as some believed, and bottlers were “playing catch up” in a hard, competitive market. There were only 27 bottling plants in the country and just 26 million litres exported last year, despite large consents, he said.
“We need a thorough discussion on this, based on fact and not emotion.”
Water New Zealand, a group of environmental management professionals, said the revenue from the policy could help restore waterways, but it would be fairer to charge all water users rather than target some.
ExportNZ said cross-party agreement on water was needed. Executive director Catherine Beard said policies must be clear, and any costs consistent and tradeable.
“There are billions of dollars of exports that embody water and how this is handled is hugely important to the economy and to jobs,” she said.