A water tax debate during an election year? Political madness! Well actually they're not discussing the real problem; Talking bottled export tax misses the point - let's talk charges, allocations and efficencies

By Alex Tarrant

One would think that springing support for a capital gains tax or raising the superannuation age would sit equal top of the list for the most bold, courageous policies announced during recent New Zealand election years.

But a contender to trump them both started to seep through in Parliament this week: Water pricing.

At the moment, the debate is a mere trickle, focussed squarely on water bottled for export. Opposition parties argue we should either ban this, or at least tax those doing so for the privilege.

The first part of the call – ban exports of bottled water – is not actually surprising at all in an election year. You can see crystal-clear its bed of a heart-tugging, can’t-believe-that’s-happening, nationalistic policy hallmarks.

It’s the second part – taxes or charges – that could become a torrent.

Don’t get me wrong – it would be wonderful to have a full-blown debate about water pricing and allocation in an election year. It would flush out those prepared to make bold decisions from those who might suggest waiting 20 years before doing anything.

But a full-on debate is not going to happen. The history of disagreement on the issue of charges and taxes for water use is deeper than Lake Hauroko.

Read pages 68-71 of the Land and Water Forum’s third report. It might sound like a bit of a bore, but if the Forum gave up trying to find consensus among its members, imagine how hard it would be for a political party to get a good ground swell of support from the electorate.

Wading into the Land and Water Forum’s debate:

If however there was a fully allocated catchment but for some reason a transfer system is not operating in an effective manner then a charge on water use (or the right to use water) could improve the overall efficiency of water use in the catchment. This is because in some circumstances a charge might provide an incentive for those with rights to water to use that water efficiently, or to free it up for others to use.

Where water is not fully allocated, the amount of water used could be reduced if a charge was applied. A charge in this case can be argued to work against efficiency objectives. That said, when a catchment is approaching full allocation, charging could be useful to encourage technical efficiency in water use to maintain headroom for development.

And

A minority of members presented the view that resource taxes are more efficient than other forms of tax. They suggested that raising taxation revenue through traditional avenues such as income or company taxes is potentially less efficient than a resource tax, and emphasised that one of the principles associated with taxation is, or should be, to raise whatever revenues are required in a way that imposes as few costs on the economy as possible.

They think that the key to delivering on this objective is a fiscally neutral approach, under which the collection of resource rents for water would enable a corresponding reduction of income taxes. Proponents argue that a shift in the balance of revenues from income taxes toward resource rent taxes would improve the efficiency of the overall economy and release a growth dividend.

Others note that capital value increases due to the availability and use of water are already taxed through higher property rates. They note the economic benefits from the productive use of water (see paragraph 297 above) and suggest that there is a range of investments that have been made in water-related infrastructure in a variety of sectors that would be adversely affected by such a tax.

Imagine how tough it would be to get the ideas and concepts of allocations, efficiency incentives, resource taxes and abstractive versus non-abstractive use across in simple, election-year language. And that’s on top of steering clear of the ownership debate. If we start talking ownership during an election year then that’s a whole different branch taking us through political white water (btw we need to have that talk).

Perhaps not the Greens, but Labour (politically) needs to be careful on taking the discussion further downstream and outside its current narrow parameters. Andrew Little is making a good effort at taking on John Key’s ‘do nothing financially bold’ stance (no tax changes, no super rise in 20 years’ time…), so won’t want anything to ruin this.

To be fair, the Opposition should be commended for re-opening the water pricing gates during an election year.

But I’m going to hold back on giving it. Move on from the bottled-export debate and let’s have a full-flowing discussion on tradeable allocations, charges and ownership. Not on some faux-nationalistic wet dream.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

21 Comments

I really think we have to get a handle on this, foreigners coming in and just TAKING water for a bit of down the back of the couch change is no good. We really are being stupid about it. We must also be careful about water being bottled in areas where it can be short for everyone else. I think provision needs to be made, that in times of shortage, that moratoriums will be placed on water being drawn for bottling purposes and export. We already have regularly water short areas, having foreign company taking it sticks firmly in the craw.
On from that though, I would really, really like us to take a stand on what happens to that water, and by that I mean it all going into single use plastic bottles.
https://www.theguardian.com/environment/2017/mar/13/waste-plastic-food-p...
I do not think we should be ignoring the consequences of this

Before you discuss WATER first you need to discuss the bigger issue of foreign enterprises TAKING the lifeblood out of NZ without paying the piper

example APPLE and other multi-nationals pillaging the New Zealand economy without compunction and the Government unwilling or incapable of doing anything about it - and that's the easy one

Water is built into the NZ domestic psyche as being free - that's the hard one
Farmers and irrigators have built their businesses on the back of it being for free

If you start charging royalties for the extraction of water how would you begin charging for it
NB: we charge royalties for the extraction of minerals - petroleum, coal, gold etc

Then there is the Geothermal Industry extracting (water vapor) steam - would you charge them

If we can't fix the multi-nationals how can we possibly fix water?

All needs attending to. With water you simply put the charge on the actual water that leaves the country and do something different for that used in any process such as wine making, beer, and even dairying, clearly then dried milk powder would not attract the same attention. It is very simple.
And yes we have to address how foreign money is taking the country over, I believe there is little now left that is not foreign controlled, look at the meat industry, look at our largest fruit and vegetable distributor, look at iconic kiwi brands under the Goodman Fielder brand. Sadly, it's probably too late..

Exporting meat is also is a form of exporting water (maybe more so?). I suspect the furore over exporting bottles of water has more to do with the absurdity of bottled water as a product.

TOP party addresses the issue......just another one the current mob hasnt got the guts to.

up
12

yes - its a bit hard to see what the National party is actually interested in doing. Obvious things like money/financial laundering, immigration problems, water pollution, facts on foreigners housing purchases etc are just being let to run their course.

I suspect most of them are too busy managing their housing investment portfolios to spend time doing what they were elected to do.

The Boy Stood on the Burning Deck

The Battle of the Nile

There on that burning deck they saw a boy standing alone. Cassabianca was the 12 year old son of one of the ship's officers. There he stood, alone at his post. He was surrounded by flames and facing the astonished English foe. Soon afterwards the fire reached the powder magazine deep down in the hold. The boy perished when the whole ship erupted in a massive explosion.

http://endtimepilgrim.org/boystood.htm

Go On Make My Day

As the peons and plebs ready themselves to go to the polls September here is another analogy

Clint Eastwood as Dirty Harry Callahan pointing a 44 Magnum at a hapless clot, saying

If you vote for National this year you have to ask yourself one question

Do ya feel lucky ?
Well do ya punk ?

Go on make my day

https://www.youtube.com/watch?v=8Xjr2hnOHiM

maybe need to check the boards of these overseas water companies, it would not surprise me to see ex MP's on board

http://www.stuff.co.nz/business/78652406/The-bottled-water-giants-who-ar...

ORAVIDA WATERS LIMITED Jennifer Mary SHIPLEY

Would surprise me not to.

Isn't Judith Crusher Collins married to one of the ORAVIDA directors?

Don't you mean Judith Casher Collins?

we charge royalties on minerals ie gold and oil
Government collects around $400 million in royalties per annum from petroleum (and has collected over $4 billion in royalties to date
Waihi Gold
Over the past six years we have paid an average $1.3M in royalties per year.
why should our water be treated different especially in this case
http://www.stuff.co.nz/business/88099749/From-national-park-to-overseas-...

Haast - Jacksons Bay - Okuru Enterprises

Too much business in New Zealand is done down in the sludge at the bottom of the swamp where the sun never penetrates

clever comment
"People go to Haast to be decimated by sand flies and see the view, they don't go to see giant ships out in the bay waiting to suck our water away."

That thing has been in the wind for a couple decades and more, and what I have always wanted to know is how much electricity they would use, as the Haast area is not on the national grid and is served by one small generator on the Turnbull River, its capability is only about 1,000kw per day and with all the new development there, must be going close to that much of the time, now.
I would also be extremely concerned about foreign greeblies making it in via ballast water and as we have seen recently in the case of ship containing pke, dirty hulls.
Then there is the small matter of the whole area being home to the unique Haast Tokoeke (kiwi) which are not found anywhere else. I also wonder how the Fiordland Crested Penguin will fare, as they nest at Jackson Bay as well.
I doubt this will bring much in the way of jobs at all.
This lot also gained consent for several hectares of ocean between Jackson Bay and Neills Beach for mussel spat gathering, so they are determined to ruin one of the few almost untouched areas we have. I am not sure if that went ahead or not.

.. yes Mr ShareTrader , even ole Gummi Bar , who has been said to be unbrighter than a sick fire-fly's backside , can see that all natural assets of a nation ought to be vested within the crown ...

And as such , holders or users of the land , water or air , should be charged a per unit or an annual rent ...

... which ought to off-set some of the onerous taxes currently bedeviling PAYE tax-payers and businesses ... the productive sector ...

Water under the bridge...just helping out "Old Friends"....free as a bird, nothing to see here...it will evaporate and all be forgotten...by the next election.

Will be as clean as a whistle....by 2040....when all is done and said...so who cares...let us not rush into things....(We is "clean and very Green.....now). YUK.

I have to wonder if this isn't deflection to get peoples minds off the real problems, such as housing. Obviously the government wants certain things to be election issues, and they want the top things to be things that they can control easily

It's not really a water issue. What upsets us is that a foreign buyer can buy and sell NZ's assets.

Isn't that the National party vision for a prosperous New Zealand?

I would have thought that the volume of water exported pales in comparison to the volume of water ruined by the dairy industry.